Nvidia (NVDA) – Get Free Report stock made a monstrous move off the October lows, but lately the shares have been under pressure.
At the stock’s high on Dec. 13, Nvidia shares were up 74% from the 52-week low made two months prior, on Oct. 13.
The stock has been buried since then, closing lower in eight out of the past nine trading sessions. In that stretch, Nvidia stock is down about 25%.
For what it’s worth, investors have also struggled with Advanced Micro Devices (AMD) – Get Free Report.
The question now becomes: When is Nvidia stock a buy?
The chipmaker has top-end products, excellent management and generally strong margins when demand is healthy.
Unfortunately, demand is not healthy at the moment and that’s creating a lot of selling pressure in the stock. It doesn’t help that Nvidia is struggling for growth, that tech stocks are in a bear market and that the Federal Reserve is maintaining its hawkish interest-rate stance.
Let’s take a close look.
Trading Nvidia Stock
Daily chart of Nvidia stock.
Chart courtesy of TrendSpider.com
The first thing you have to ask yourself is: Are you trading or investing in Nvidia stock?
That’s because the chart above has an interest to traders but potentially not to investors — at least not yet.
Traders likely see this week’s test of the 61.8% retracement and the gap fill near $142. If the shares can regain this area — call it $142.60 — then we could see a rally back to the $150 area.
Otherwise, traders may prefer to wait for a well-established trend in Nvidia before trading it rather than plugging their noses and buying the deep dips. In other words, they don’t care about finding the low.
For an investor, they shouldn’t care much about an intraweek $10 move. They should care more about the $50, $60 and $70-plus moves in Nvidia stock.
Now, generally the 200-week moving average is of interest for long-term investors. That’s because for strong stocks that spend a lot of time in a bull market, this level isn’t tested all that often.
Currently, that measure for Nvidia stock is down near $135 (where the stock is 61% off its all-time high).
Ultimately, the depths of Nvidia stock will likely depend on the depths of the overall market. An area of interest is $125, but so is a retest of the lows near $110 — and $100 could act as an obvious magnet if the selling pressure really picks up.
I don’t know that Nvidia will retest its low, which would require a drop of roughly 22% from current levels.
But if it revisits the $100 to $110 area, it may be worthwhile for long-term investors to consider accumulating a long position.
Source: https://www.thestreet.com/investing/stocks/when-long-term-investors-may-consider-buying-nvidia-nvda-stock-technical-analysis?puc=yahoo&cm_ven=YAHOO&yptr=yahoo