What does the NVDA Chart Tell Us?
Big news dropped Tuesday and NVDA dropped with it. Is it a buy here?
This service is for general informational and educational purposes only and is not intended to constitute legal, tax, accounting or investment advice. These are my opinions and observations only. I am not a financial advisor.
If you trust the chart and stick to your plan you can understand your risk with a lot more clarity than you can by studying balance sheets and income statements.
That’s my opinion after many years of experience on both sides of the analysis coin.
First, I worked with portfolio managers that tried to buy the best companies for their fund by doing thorough research and fundamental analysis.
I saw first hand how badly that can break down in 2008 and the years after when they were trying to make up for under performance.
The stories are brutal. The money lost was very real.
Second, I’ve worked as an analyst producing numbers for a Fortune 500 company.
I’ve seen what a complete cluster that process can be and how many different ways numbers can be “adjusted.”
These experiences have taught me to be mindful of the news but to put my focus and trust in the charts.
News can be a distraction. Just like we were on Tuesday.
Everyone was watching the banks and looking ahead to Tesla earnings.
And while we were all distracted, news about NVDA dropped and the leader of the semiconductor stocks took a big hit Tuesday.
But was it really a big hit? Or was there more noise than warranted?
If you missed it, there was news released around the restriction of sales of chips to China and the entire semiconductor sector took a hit.
NVDA shares were down as much as 8% but ended the day down less than half of that amount.
The rest of the sector saw a bounce back after the initial sell off.
I’m not sure if this is a buying opportunity or a reason to take risk off in the sector. It is the kind of news that requires more knowledge than I have on the sector.
In fact, that is often the case. We see a headline and stock prices move, but do we really have a firm understanding of what is going on?
Remember when META announced a new focus on the metaverse and the stock sold off?
There were analysts saying this was the going to be the downfall of the company and others that were wondering how far the stock price would fall.
It did not take long for META to pivot, say the right things, and push the stock right back to the price levels it was trading at prior to the sell off.
My point in all of this is, we never really know what is going to happen behind closed doors and we don’t know how well or poorly a company will respond to adversity.
If you ask me, I would guess that NVDA is the kind of company that will figure out how to address these headwinds and will navigate right through them.
But what do I know about how to run a semiconductor company? I don’t.
What I do know is how to read a chart.
And that is what I will always go back to.
So here’s a look at NVDA and I have to say, after hearing all of the news today you might have thought the chart would look worse.
First thing I noticed was the long wick reflecting the buyers that stepped in to take advantage of the drop in price.
They bought NVDA back up to support near $440 but could not close above.
While it would have been nice to get a close above this level, which is also where the 20-day simple moving average is, the buyers stepping in is a huge positive.
There is still a strong appetite for NVDA stock.
Also note that the volatility for NVDA is nothing new and while the range Tuesday was drastic, shares have been trading between $400 and $475 since June.
That’s a range of about 18% top to bottom!
If shares pick back up on Wednesday, perhaps with momentum from TSLA earnings, this setback could be very temporary for NVDA and the semiconductor industry.
We will see, but I like the way the chart looks!
Schedule Update
I’ve got a lot of great things in the mix. This newsletter, incorporating more audio/podcast material, and posting more on X are just a few things I’m doing.
Here's the new schedule:
Sundays: WOLF Financial Newsletter, A Trader’s Education (ATR) Newsletter, The Trading Triangle Podcast
Mondays: X Spaces
Tue-Wed-Thu: ATR Morning Audio/Written Newsletter Posts, X Spaces
Fridays: X Spaces
Saturdays: Family time!
Thank you for reading and let me know if there is a stock you would like me to cover or any trading topics you want to learn more about.
Have a great day!
-Nate