Nvidia (NVDA) doesn't report earnings until after the close of trading on May 25. Let's drill down on the technical indicators and charts to see how traders may be positioned.
In our April 11 review of NVDA, we wrote that "We reviewed the charts of NVDA back on January 24 and recommended that traders should continue to avoid the long side of NVDA. The decline in this stock is not over. Do not try to catch a falling knife. Prices are still weak and I would continue the same strategy - avoid the long side of NVDA as we anticipate further declines in the weeks ahead."
Our advice was hopefully helpful but now that prices reached our $164 downside price target from the Point and Figure chart maybe a new strategy is needed in the short-run.
In this daily bar chart of NVDA, below, we can see that prices have been in a downward trend since late November. Prices have been cut in half and that kind of a pullback or correction can attract long-term investors. Prices are trading below the declining 50-day moving average line and below the declining 200-day moving average line. The trading volume has been very active since November.
The On-Balance-Volume (OBV) shows a decline from early November to the middle of April where it turns sideways. The 12-day price momentum study shows higher lows from the middle of April which is a bullish divergence when compared to the price action. Bullish divergences are an imperfect leading indicator.
In this weekly Japanese candlestick chart of NVDA, below, we can see a mixed picture. Prices are in a downward path but we can see a recent lower shadow that shows us that traders are starting to reject the lows.
The weekly OBV line has been weak but we might be stabilizing. The 12-week momentum study shows a higher low from February to May.
In this daily Point and Figure chart of NVDA, below, we can see a potential upside price target in the $203 area.
Bottom line strategy: I have CNBC on quietly in the back of my home office. This is very subjective but it seems like every guest this Wednesday is finally negative or is at a loss to find something bullish today. I know this is "too touchy-feely" but at the end of the day I feel that this can be a turning point. Looking at NVDA and ignoring the moves in the averages, I would look for NVDA to improve in the days ahead.
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