Don't Ignore This Chart!

More Chip Stocks Break Out


Semiconductors as a group have been performing well. I recently heard some analyst coverage suggesting that companies were ordering stockpiles of chips before the tariffs kicked in, which is driving up the "sales levels" before the tariff dates. With the round of tariffs for mid-October coming off before implementation, this could create an odd situation where they stockpile but there are no new tariffs. So temper the nice chart of Nvidia (NVDA) with this backdrop.

There have already been 11 semiconductor companies hitting new 6-month highs in October. Nvidia broke out of a long trading range on Tuesday to add to the strength in semiconductors. Now, the SCTR ranking has shown Nvidia to be a top-performing stock again after spending a year out of the top quartile.

The relative strength has been trending up since January, showing NVDA outperforming against the $SPX. Price surged above the previous high in April and closed above that level as well.

From a volume perspective, we want to see the volume increase as we breakout, which is what happened. NVDA had triple Monday's volume and almost 50% more than Friday. Lastly, the momentum is just turning up around zero on the PPO, so there is some room to run on this one.

The indexes are testing the 3000 level again. It will be important that we push through during the earnings period as that can be a good catalyst for the breakout. Watch closely to see if we can break out and hold that level into next week.

Good trading,
Greg Schnell, CMT, MFTA
Senior Technical Analyst,
Author, Stock Charts For Dummies

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Greg Schnell
About the author: , CMT, is a Senior Technical Analyst at specializing in intermarket and commodities analysis. He is also the co-author of Stock Charts For Dummies (Wiley, 2018). Based in Calgary, Greg is a board member of the Canadian Society of Technical Analysts (CSTA) and the chairman of the CSTA Calgary chapter. He is an active member of both the CMT Association and the International Federation of Technical Analysts (IFTA). Learn More
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