Don't Let a Good Buy Leave the Station

 | May 15, 2013 | 9:00 AM EDT  | Comments
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Stock quotes in this article:

nvda

It's quite easy to find a bullish stock in this market when the overall market continues to make new highs. The tricky part as an investor is trying to figure out if it's worth trying to catch a moving train. And if so, which one?

I'm not a fan of buying shares in a company whose trend is extended to all-time highs, particularly without a correction on the daily or weekly time frame. Right now, anything that has been pulling back has been going against the overall strength of the market. That's rarely appealing.

What to do? What to do?  Well, I will delay trying to jump on the high speed rail for the moment. Nevertheless, I still have a few favorites worth checking out as they are pulling away from the station. While the timing on the daily charts is not ideal in either of the securities I'll be sharing in my column this week, the potential on the monthly charts outweigh my short-term concerns.

My first pick is Nvidia Corp. (NVDA). It's been awhile since chip-maker Nvidia has caught my eye, but over the past year it has again begun to shape up on the technical side. Since 2011 Nvidia has been in corrective mode. It pulled strongly off highs, giving back more than 50% of its share value in less than a year to settle in between $12-$15 a share. Since then, however, it's been holding strong at support on the monthly time frame without attempting to retrench further and in recent months the pace has shifted once again in favor of the bulls.

Shares of Nvidia shot higher on Friday after the company topped analysts' expectations for its quarterly earnings. Nvidia continues to anticipate strong growth in the year ahead, thanks in large part to the growing momentum in consumer gaming.

Although this latest boost from earnings has contributed to its rising share value, it was back in March that the market got wind of something about to take place in Nvidia. Volume dropped sharply even as the stock's value declined. The pace of the selling, however, was slower than previous corrections. In mid-April, the stock rallied sharply to the upper end of its daily trading channel as volume jumped.

Despite its recent gains, I still feel that Nvidia has a lot of upside potential this year and I am looking at an initial price target of $19. Due to the daily extension, I'll be accumulating shares initially on intraday triggers as opposed to a strategy trigger on the daily time frame. A break of $11.90 is my current stop.

Keep an eye out on Friday for my second investment pick of the week!

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