Nvidia (NVDA) is the company that blew away its recent earnings expectations. Prices surged to the round number of $500 but that proved to be an obstacle. The median price estimate amongst fundamental analysts is $623.75 and with prices trading around $442 on Friday afternoon this price target is looking like a mirage.
Let's check out the latest charts.
In this daily bar chart of NVDA, below, I can see that prices are trading below the rising 200-day moving average line. Prices are down more than $50 from their recent highs. Isn't that interesting in the wake of their blow-out earnings report last month?
The daily On-Balance-Volume (OBV) line has been stalled for the past four months. The Moving Average Convergence Divergence (MACD) oscillator has been weakening since the middle of June and it is only slightly above the zero line now.
In this weekly Japanese candlestick chart of NVDA, below, I can see a bearish engulfing pattern in the last week of August and the first week of September. This is a top reversal pattern. The weekly OBV line has been strong and suggests that traders may be "in trouble" if prices decline much more.
If buyers have been more aggressive in recent weeks, but the market turns lower, it would mean that recent buyers are "underwater" and they may turn sellers. The MACD oscillator has crossed to the downside for a take profits sell signal.
In this daily Point and Figure chart of NVDA, below, I can see a downside price target in the $401 area.
In this weekly Point and Figure chart of NVDA, below, I can see a potential downside price target in the $397 area.
Bottom line strategy: In my September 5
review of shares of NVDA, I wrote that "Is Nvidia NVDA a performer with no encore? NVDA posted this incredible earnings report last month and the question is what could top it? It reminds me of the CEO being interviewed about the quarter and he/she says "It couldn't be better" If the quarter couldn't be better, then the next quarter will be weaker. Traders who are long NVDA from lower levels should consider taking profits and/or raising sell stop protection to lock in gains."
It looks like my comments are coming true and the downside risk for NVDA has increased.
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