Here’s my take on Nvidia ($NVDA) – February 22, 2024
Dan Fitzpatrick at StockMarketMentor.com. We had one heck of a move by NVIDIA ( NASDAQ: NVDA ) today.
We initially bought this stock, we had been trading it before but the most recent one was down here at 506.00, just waiting for the stock to break out from this top here. We put on this trade at 506.00 and my initial stop was at 489.00. What I wanted to do is, I wanted to calculate how far the stock had to go in order to give me an appropriate risk/reward trade.
Let’s say, you’re risking a dollar, if you are going to make $1.00, well, that’s a stupid trade. Because you don’t have any reward, you’ve just basically flipped a coin. If you are going to risk $1.00, $2.00 is okay but that isn’t that great either. That’s a 2R, what you really look for is a 3R trade. You want to be able to see and envision the stock paying you off $3.00 for every $1.00 you’re risking.
That’s my rule, I didn’t make that up, there are a lot of great traders that have that same type of thing. That is how I was able to put this thing on when I did. Then this is just something that you just keep holding. I’ve been holding it in a long-term account for a long, long, long term, and we’re still long this stock.
The point is, you get a stock like this, you buy the stock right, and by the time it gets up to this area here, you have quite a cushion. You have a great cushion to hold the stock. You risk what you risk, but let me put it this way, you risk turning an awesome trade into a pretty good trade if the stock goes against you.
In this case with NVIDIA ( NASDAQ: NVDA ); this was the most watched stock I have ever heard of, that I’ve ever seen. Everybody is saying, I know the earnings are going to be awesome. The guidance is probably going to be awesome, but is it going to be enough? That was the big question, is it going to be enough to keep existing shareholders in the stock and to, actually, bring new buyers into the stock?
The answer is, yes and yes. The stock gapped up, it barely traded down, just a little bit here during the first 5 minutes. And as Carl Spackler is famous for saying, “That’s all she wrote.” The stock just barely drifted down and then, boom, the rest of the day it was up, it was really strong.
From here, I still have a $1,000.00 price target on this. That’s something that I talked with Charles Payne about quite a while ago, on the show. I’m looking at it and I’d said remarkably, “It’s got to cross 500.00 first,” and it did. And then my next one was, and this is simple math, “It has to cross 700.00 before we’ve got $1,000.00 in play.”
Now that it’s up here, it’s run 50 percent of what my estimation is, which is from 500.00 to 1,000.00. So it’s up over 50 percent of that $500.00 amount. I look at the weekly chart and I don’t really see any signs that this thing is stopping. I have more to say about this in our Strategy Session, about believing the trend rather than always predicting that it’s going to end because this is just too good to be true.
It may be too good to be true, but it’s true right now. And so I would suggest staying long this stock. Have some kind of risk management on it here. You could just simply look at the intraweek low here, which is 662.48, and maybe put your stop just a little bit below that level. The only way it’s going to come back and hit your stop is if it does something unusual, which is, it sets a new weekly intraday low, lower low, and so far it’s not doing that.
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