Don't Ignore This Chart!

NVDA's Magic Ride Likely Over

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NVIDIA Corp (NVDA) has been one of the best performers of 2016, nearly quadrupling during the year.  Its long-term chart has been phenomenal, but its weekly RSI and stochastic have been overbought since early May.  That's a very long time of outperformance and a rest is not only likely, but also necessary technically.  In a trending stock like NVDA with strong mometum, I look to 20 week EMA for key support.  Because of the parabolic rise in NVDA shares, the 20 week EMA currently resides at 80.92.  But the shorter-term bearish signal was provided on Wednesday.  Take a look:

That heavy volume reversing candle cannot be ignored.  Wednesday's open near 120 now becomes very significant price resistance while the three key support levels will be an upcoming 20 day EMA test just above 100, followed by price support and gap support near 95 and 79, respectively.  I'd expect at least an initial bounce off the rising 20 day EMA.  Volatility is likely to be substantial on NVDA over the next several days as panic sets in from buyers near 120.

Happy trading!

Tom

Tom Bowley
About the author: is the Chief Market Strategist at EarningsBeats.com, where he provides stock market education, guidance, and trading strategies using a unique combination of technical, fundamental, and historical analysis. Tom provides EarningsBeats.com members with four portfolios (Model, Aggressive, Income, and Value), all designed to beat the benchmark S&P 500, and a revolving Watch List of hundreds of companies reporting strong quarterly earnings (must beat both revenue and EPS estimates) and exhibiting technical strength as well. These companies comprise EarningsBeats' annotated Strong Earnings ChartList (SECL), from which Tom trades exclusively. Tom writes a Daily Market Report (DMR) for members to include an executive summary, market outlook, sector/industry watch, and trading ideas. Learn More
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