On Sept. 13, Nvidia (NVDA) announced its plans to acquire Arm Inc. from SoftBank (SFTBF) in a $40 billion cash and stock deal. The shares rallied 5.8% that day, because Wall Street knew it was a great deal, Jim Cramer told viewers of Mad Money Thursday night.
However, now that the stock has gotten caught up in the stock-market pullback, Cramer says it looks much more attractive back near its prior levels before the deal was announced.
In short, "I think it's worth every penny," Cramer said of the deal. But that's if the deal can gain regulatory approval - and that may be a "big if," he added.
It may take 18 to 24 months to close, but it's worth the wait if Nvidia can get it done. With Arm, it will be unstoppable.
Let's check out the charts of NVDA this morning to see if they will be unstoppable.
In the daily bar chart of NVDA, below, we can see that the shares have really soared higher over the past 12 months. The decline in February-March now looks like a small and relatively insignificant dip. Prices tested the rising 200-day moving average line and then took off to the upside.
The On-Balance-Volume (OBV) line made a shallow decline in February and March telling us that sellers of NVDA were not all that aggressive. Prices rallied and rallied and made a V or spike high in early September. We can see a pullback this month with prices approaching the rising 50-day moving average line. The OBV line has been moving sideways this month which is a shift from a rising line and aggressive buying.
The Moving Average Convergence Divergence (MACD) oscillator made a high in early September with the price action and is pointed down toward the zero line.
In the weekly bar chart of SNY, below, we can see an impressive rally from the lows in early 2019. Prices are above the rising 40-week moving average line.
The weekly OBV line is strong and confirms the price gains. The MACD oscillator is also a picture of strength but it has narrowed in recent weeks suggesting that some profit-taking may be in order.
In this daily Point and Figure chart of NVDA, below, we can see a potential upside price target in the $571 area. We can also see that a trade at $475.94 could weaken this chart.
In this weekly close only Point and Figure chart of NVDA, below, the software is projecting much higher prices sometime in the future.
Bottom-line strategy: The weekly bar chart of NVDA looks unstoppable but prices ebb and flow over time and the movement of the broader market can have a big impact. Traders, and maybe even investors, should raise stop protection to a close below $470. Personally, I hate to give back profits to the market and I know I can always rebuy a stock in the future.
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