It takes more than artificial intelligence to rationalize buying Nvidia (NVDA) (March 23, 2018)
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I want to look at NVIDIA ( NASDAQ: NVDA ) today; here is why: I guess if you want to ignore this last bar here, never blow off the last bar, spoken like a true Irishman. This looks pretty good, all we need to do is wait for a breakout above 250.00 and we are off to the races. Of course, at the same time the Nasdaq ( NASDAQ: QQQ ) is not doing so well.
So what does this tell us? What this is telling us is, NVIDIA ( NASDAQ: NVDA ) is still in an uptrend, technically, is relatively stronger than the Nasdaq ( NASDAQ: QQQ ). So then on Friday when the Nasdaq ( NASDAQ: QQQ ) does that we look at NVIDIA ( NASDAQ: NVDA )and it is just barely below the 50-day moving average, but that is almost 4 percent.
So here’s the deal: You could be looking at maybe buying NVIDIA ( NASDAQ: NVDA ) because it is still in a nice uptrend it is just barely below the 50-day moving average so this is a stock that I want to buy. I don’t think so. Here is the way I will look at this type of thing: The only reason that I would ever want to be in this stock is if it is above 250.00.
So between here and here, 7.5 percent, that is really no man’s land. I am not going to buy a stock that I think could move up 7.5 percent; that is just too low of a ceiling for me. Because if I see a potential 7.5 percent move and then it is back up to 250.00 where it has failed all the time here (you see this line here), 7.5 percent upside. But I can see this thing falling down here to $200.00. Why couldn’t it? It was here in January. Now I have got a 14 percent on the downside. That doesn’t work for me. At the same time we have got volume that has totally picked up on Friday on this key breakdown.
And so what this tells me is, frankly, I am looking to go short NVIDIA ( NASDAQ: NVDA ) as opposed to buy this dip. What I WANT to see is, I want to see NVIDIA ( NASDAQ: NVDA ), which I consider, in my view, to have broken down now; not really dramatically but is broken down below the 50-day moving average, on volume. I would not want to short it on Monday morning if the stock is down. I would look to short it if the stock rallies a bit higher.
What we want to see after two days of selling, really three but I don’t really count this one on Wednesday as a big selling day. But on Thursday and then Friday, in particular, we got three days of selling; I want to see a little bit of a rebound. That tells me that there are some buyers for the stock, hence rebound, but there aren’t too many buyers for the stock, hence LITTLE rebound. Once I see the stock move up a bit to get past 240.00 that is when I want to short the stock and I think I am going to make some pretty good money.
If it does get past 240.00, well then I am not going to short the stock. I am just going to kind of watch it and maybe look for something else. So I want to set my trap. I want to look at the stock, decide what my plan is going to be and then wait to execute the plan. If the stock does what I think it is going to do then I will short it. If it doesn’t do what I think it is going to do I am not going to call an audible. I am not going to hear Peyton Manning call an ‘Omaha’. I am just going to move on to something else.
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