Chip stocks have been a tough trade for investors this year and Nvidia (NVDA) – Get Free Report is no exception. Neither is Intel (INTC) – Get Free Report, Advanced Micro Devices (AMD) – Get Free Report or just about any other semiconductor stock.
The best have fallen by a little under 30%. The worst have coughed up two-thirds of their value or more.
Unfortunately for Nvidia, it’s in the latter group.
However, there is a bright side, which is that chip stocks and Nvidia have been trading much better lately.
The VanEck Semiconductor ETF (SMH) – Get Free Report is up almost 10% this week, has rallied in three of the past four weeks — with the lone down week a loss of just 0.72% — and is up 26% from the October low.
Given that it’s the second-largest holding in the SMH ETF, it’s no surprise that Nvidia stock has been dominant over the last few weeks as well.
Shares are up in four straight weeks and have climbed a whopping 42.5% from the October low. Now though, it contends with a key area on the chart.
Trading Nvidia Stock
Wednesday’s dip sent Nvidia back into the 10-day and 10-week moving averages where it found support. Its action today would hinge on the market’s reaction to the inflation report.
Since it was bullish, it helped propel Nvidia stock higher. Initially it stalled at the critical $150 level, but bulls are now seeing shares push through this zone.
The $150 area was a key zone, as it marked the 50% retracement of the recent range, as well as the gap-fill level from early September.
Now pushing higher, it would be very constructive to see Nvidia stock stay above $150 and especially above the 10-day moving average. If it can do that, bulls’ attention will shift to the upside.
Specifically, it opens the door to the 61.8% retracement near $160, then the 200-day moving average and $185 area. Ultimately, bulls want to see a move up to the $200 to $210 zone and the 50-week moving average.
There will likely be dips along the way if that scenario pans outs, but it’s one situation to keep in mind.
Of course, earnings next week do not make the setup any easier.
On the downside, a break of $150 and the 10-day moving average opens the door down to $130 and the 21-day.
For now though, bulls are in control.
