To The Moon

NVDA Recent Stock Performance

$NVIDIA Corp(NVDA)$ NVDA has been on a tear recently, rising 83.2% year to date compared to $NASDAQ(.IXIC)$ Nasdaq composite below, which only rose by 13%. In the month of March, NVDA has risen 15.3% so far compared to only 3.2% for Nasdaq composite. From the lows in October, NVDA has actually rocketed a whopping 147.8%. In the same period, IXIC only rose 17.2%.

NIVDIA vs NASDAQ

However, the question is whether NVDA will keep on rising after breaking its resistance level time and again. Based on the day chart above, the relative strength index is 69.96, at the overbought region. RSI above 70 indicates the stock is overbought. However there is not much pressure until the next resistance level at 284, which means there could be 6% of upside freeplay.

NVDA next resistance at 284

Looking at the tom demark TD9 sequence indicator below, NVDA closed Friday at a TD count of 8, there is a chance that it will reach the count of 9, which signals a possible reversal, but the perfect sell may not be formed. More on TD9 at the end of the article.

NVDA closed last fridat at TD count of 8

Surge in NVDA with the AI Hype

Let’s look at why NVDA is rocketing. The surge in NVDA stock this year is largely due to the hype around artificial intelligence (AI) technology. As a leading provider of GPU (graphics processing unit) technology, Nvidia is well-positioned to capitalize on the growing demand for AI-related hardware. The company's GPUs are being used to power AI applications in a variety of industries, including healthcare, finance, and autonomous vehicles. Additionally, Nvidia has been investing heavily in AI research and development, with a focus on developing new hardware and software solutions to further advance the field. With the global AI market expected to continue to grow rapidly in the coming years, Nvidia's stock is likely to remain a popular choice among investors.

Short-Term Outlook for NVDA

In the short term, NVDA will mostly likely trend with the broader indices, and short-term traders in the profit may take profit at the slightest hint of bad news. With the hype in artificial intelligence and recent GPU technology conference, there are more people buying into the AI hype or more believers in NVDA. These investors who got in before the stock rocketed will probably hold the stock longer.

Trading NVDA Stock

As a trader, there are two possible trading strategies for NVDA stock based on the outlook and analysis of the stock's performance.

Purchase Put Options for NVDA

For aggressive traders, it would be okay to purchase a small starter size for Put Options for NVDA at $272.5 $NVDA 20230406 272.5 PUT$ or even 267.5 $NVDA 20230406 267.5 PUT$ . This based on the possible short term resistance levels around 268 and 271 based on the 5 min chart below. A Put Option is a contract that gives the buyer the right, but not the obligation, to sell a stock at a specific price within a specific period. If NVDA stock price drops, the Put Option will increase in value, and the trader can sell the Put Option for a profit.

Wait for RSI Divergence Before Shorting NVDA

If the trader is not aggressive, it is advisable to wait for a Relative Strength Index (RSI) divergence to appear before shorting NVDA. RSI divergence is a technical analysis indicator that shows a discrepancy between the stock price and the RSI, indicating a possible reversal in the stock price. When the RSI divergence appears, the trader can short NVDA stock, betting that the price will decrease. I will be looking to see if the broader market will recover from the recent worries on the banking sector and bring NVDA above it’s recent high of 275.89 without the RSI going above 70.

Conclusion

NVDA has had a tremendous year in terms of stock performance. In the recent GPU technology conference, CEO Jensen Huang also took the chance to ride further on the AI Hype. This has pushed the stock to near its 52 week high of 289.185. However I see that the upside for NVDA is limited before its next earnings report expected on 24 May 2023. Therefore, NVDA will be good for bearish traders until the next catalyst comes along.

Thank you for reading. Please give me a like and let me know if you think NVDA can rise further.

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About TD9 indicator

The TD count is a technical analysis tool that is used to identify potential trend reversals in financial markets, particularly in stocks and commodities. The TD count is based on a series of rules developed by market technician Tom DeMark, who created the TD Sequential and TD Combo indicators.

The TD count involves counting the number of bars (or candlesticks) that a financial asset has moved in a particular direction, whether up or down, and then comparing this to a set of predetermined rules. The TD count usually starts at a swing high or swing low, and counts each subsequent bar until the count reaches 9. Once the count reaches 9, it is considered a potential reversal point, and traders will watch for a price reversal to confirm the signal.