Nvidia stock has been on a tear, but is that rally about to slow? Let’s look at the charts.
Nvidia (NVDA) – Get NVIDIA Corporation Report stock has been on a tear lately. While it hasn’t put together a 10-day rally like Apple (AAPL) – Get Apple Inc. Report, Nvidia’s 40% rally off this month’s low is quite impressive.
In a way though, it’s not surprising. We’re talking about a leading tech juggernaut with strong growth and impressive margins and cash flow. Furthermore, we’re talking about a company that is feeding into multiple secular growth themes within the tech sector.
Nvidia caters to the datacenter, cloud computing, supercomputing, artificial intelligence and machine learning, robotics, drones, automotive and autonomous driving, gaming, graphics, and the metaverse.
Phew. That’s a lot of end markets, which all have one thing in common: Growth.
It’s one reason why we’ve seen Advanced Micro Devices (AMD) – Get Advanced Micro Devices, Inc. Report trade so well over the past few years.
With the recent rally, it has investors wondering if the stock can retest its all-time highs, which were hit in November. On the flip side, it has investors worrying if it will retest the lows.
Trading Nvidia Stock
Daily chart of Nvidia stock.
Chart courtesy of TrendSpider.com
There’s no way to know which will occur. For all we know, it could be both. However, we also know that over the long term, Nvidia stock is a winner.
Nvidia is in sort of a gray area when it comes to tech. That’s because it’s a well-established, blue-chip name, but also considered by many to be a growth stock.
The former group — occupied by companies like Apple, Alphabet (GOOGL) – Get Alphabet Inc. Class A Report (GOOG) – Get Alphabet Inc. Class C Report, etc. — has held up pretty well this year, while hyper growth stocks have been killed. From the highs, Nvidia stock came down about 40%.
However, unlike many growth names that are still trapped below the 50-day, Nvidia stock burst above that measure several weeks ago. In fact, Nvidia is above all of its major moving averages.
Now though, we’re starting to see shares stall. The stock couldn’t quite tag the 61.8% retracement, so that’s certainly a level I’ll be keeping an eye on this week.
Beyond that would open the door to $300-plus — and specifically the first-quarter high near $307 — followed $315 to $318. Above that and the all-time high is technically within reach.
On the downside, the $270 area and the rising 10-day are the most immediate short-term support levels to watch. Below them and I think we may be looking at a test of the 50-day and 200-day moving averages currently near $240 to $245.
If Nvidia stock breaks below $238 (and without getting too complicated, that’s roughly the 61.8% retracement of the current rally), then that’s when worries will really dial up about a retest of the lows at $206.50.
It’s impossible to know what the outcome here will be, but at least there is a roadmap to help navigate it in the short and intermediate term.
