NVDA Building a Healthy Pullback Pattern

NVDA is most likely going to run into some significant resistance around the $112 area. After experiencing such a strong reversal off the highs, some sideways consolidation would be welcome. Remember, lots of longs are still trapped above this area and it makes sense to expect more of a base to further flesh itself out before this name can rip higher. We'd ideally like to see more of a pull back to help it cultivate an ascending / or darvas box pattern of some kind. Once we see some healthy exchange of sideways trading here this thing will be setting up to take out the all time highs.

Notice currently that we have what may develop into a triangle of some kind. Either way, you can be sure that the $112 area will be difficult to deal with.

Stocks don't go straight up. Inevitably the big boys will take profits after monster runs, & when they do it usually causes a domino of limit/stop orders to get hit. Mix that with capitulation and you have a epic reversal. We often see this kind of aggression after extreme bottoms or extreme high points in tops.

Back on December 28, NVDA hit a high of $119.93 & then reversed all of that & closed near the lows of the day @ $109.25 for a -10% drop. When you see a reversal of this magnitude, it's best to step aside. Take a look at the daily chart on NVDA. You'll notice that the daily time frame still shows that NVDA is still in Sell territory.

In fact we were able to advance this sell signal by using the hourly time frame to help guide for an optimal exit right on the very day NVDA was reversing where we issued the sell alert at $115.20. Take a look at the hourly time frame where the sell signal came in.

Now it's important to distinguish that although the daily shows a sell signal, the weekly is still showing a buy signal. So long as NVDA holds within the pattern that we've outlined above in the first image...then the trend is still in buy (green line) territory. But we may actively trade out of this name this week if we get bearish signals on the near term time frames. Why? Because the market has had a huge run up and it only makes sense that inevitably this post Trump rally will start to ease off. Our goal right now is to raise some cash so that we can in a more abundant position to buy some discounted names. Remember, pullbacks are NORMAL. They are a healthy function of trending markets. Welcome a pullback.

[Updated January 30th]

Effective this Monday, January 30th, we've went ahead and issued a sell alert on NVDA. See below:

BotTrigger Trade Alert: $NVDA sold rest of entire position @ $109.85. NVDA is behaving well but we may be see the beginning of a base-building stage here as NVDA works out it's blow-off top from late December. As noted last night, we should see resistance around the $112 area. Our goal is to pick this back up lower somewhere along the bottom triangle or buy higher upon. Sell signal occured on the daily but the weekly still shows a buy signal. So we have no break of the primary term trend as NVDA is still a buy the dip candidate.

Now this could be a fakeout before it makes a move to retest $120. With earnings on February 9, this is likely to wait for the announcement before making a firm move. We also have a sell signal that developed on the hourly time frame. With both the daily & hourly showing a sell signal (red line), we can expect the near term trajectory to be under pressure.

Take a look @ the hourly time frame below.

So we now have both the daily & hourly conferring the move. The weekly is still green which suggest that this pullback would be bought.

Here is a view on the weekly. Notice how strong of a trend this is. So in all the pullbacks that have occurred, not one of them dismantled the primary term trend that has been chugging along here. For long term holders this is still a fine position to hold onto. As of now, there is no top. Just a near term pullback and a healthy consolidation pattern is what we're expecting

Some of the greatest pearls shared by Jesse Livermore:

“Money is made by sitting, not trading.”

“The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals, who feel that they must take home some money everyday, as though they were working for regular wages.”

“Buy right, sit tight.”

“Nobody can catch all the fluctuations.”

“There is a time for all things, but I didn’t know it. And that is precisely what beats so many men in Wall Street who are very far from being in the main sucker class. There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. Not many can always have adequate reasons for buying and selling stocks daily – or sufficient knowledge to make his play an intelligent play.”

“It takes time to make money.”

“Don’t give me timing, give me time.”

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