Nvidia (NVDA) — Here’s your trade. (December 28, 2016)
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I want to look at Nvidia ( NASDAQ:NVDA ) here. There are just a couple trading days before the end of the year and as I look at this stock this is a bearish engulfing pattern. We got a gap up to almost 120.00 and now we are down below the prior days trading range. In my view this is a stock that you need to be selling. Lets look at this a little more closely. Here is a 1-minute chart, 1-minute. The stock gapped up, I was watching it pre-market, it was up almost $2.00, the stock gaps up, could not push through 120.00, and then just started to sell-off.
At the same time we look at the QQQs ( NASDAQ:QQQ ), rallied up a bit and then started to sell-off. We look at Amazon ( NASDAQ:AMZN ), rallied up and then started to sell-off. This was a nice gap, a breakout above key moving averages, but there was no real follow through. So on these tech stocks in general there was no follow through. Google ( NASDAQ:GOOGL ), a key example. None of these are huge, it is not like this was a huge reversal here, it is 1 percent. But when you look at Nvidia ( NASDAQ:NVDA ), that’s fine. Again, not a huge retracement but more than 1 percent, 8 almost 9 percent from top to bottom. You look at it on the daily chart, now it is down almost 6 percent. So you can see that this is vastly different than some of these other names.
Like Amazon ( NASDAQ:AMZN ) is actually up on the day; I think that is the only one. Google ( NASDAQ:GOOGL ), look at this, it is down .65 percent. So Google ( NASDAQ:GOOGL ) is range bound, Nvidia ( NASDAQ:NVDA ) is decidedly not. And so because of where we are today my strong suggestion is, you need to clear out of Nvidia ( NASDAQ:NVDA ). The stock has gone parabolic, I have talked about this recently, I have drawn this trendline even suggesting to people that, as long as the stock stays above this trendline then it is all good, and it is. But the stock now is 15 percent above where this trendline is. We are into the end of the year. This is like the number one stock in the world it seems like for 2016. So there is not a lot of reason to be buying this stock here. If you have enough money to where taking a position in this stock is going to be so significant in the number of shares that you are buying that you are pushing the stock to new highs. If you have got that much money trust me, you are not watching this video, you are doing something else.
So my point is, with a stock up this much you are not going to see a big move to push this stock higher through additional buying. There is just a real risk of further downside here. I am actually short this stock right now; not a big short because a stock that is up like this, I don’t like to defy gravity. But with it trading at this level on this massive volume, huge volume, and there is no real news on it today. I know Andrew Left has a bearish note on it and all that. But there is no particular news on it, yet this thing is trading on massive volume. I have been watching this thing all day, it is a little too clever by half to say, “Well I am going to hang onto Nvidia and then I will sell at the first of next week because everybody else (as if we know everybody), everybody else is going to be holding this stock through the end of the year, because they don’t want to pay taxes. So I am just going to wait and then I will sell just before everybody else does.”
If only trading were that easy. If only it were that easy back in 2000 when you could have held on to all of your tech names until just before tax day, because you think everybody is going to be selling all of their massive stock profits in order to pay their taxes. Well, instead it was like in early March, something like that. So you don’t want to over think this. If you have got profits in Nvidia ( NASDAQ:NVDA ) you need to take them. If you don’t have profits in it, you definitely need to sell, because you are already in a losing trade. And if you are looking to trade this stock it should not be on the buy side.
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