Now is the Time to Jump On Nvidia

NVDA shares could be flirting with new highs again soon

Jul 24, 2018 at 2:50 PM
facebook twitter linkedin


The shares of Nvidia Corporation (NASDAQ:NVDA) have been in a steady uptrend for years, adding roughly 50% just in the past 12 months. However, since notching a record high of $269.20 over a month ago, the stock-market standout has pulled back amid tariff concerns, finding support atop a line connecting higher lows over the past year. Nevertheless, now could be an opportune time to jump in on NVDA stock's long-term rally, if recent history is any indicator.

Specifically, Nvidia shares are now within one standard deviation of their 80-day moving average, after a lengthy stretch above this trendline. There have been seven prior signals of this kind, after which NVDA shares were higher one month later two-thirds of the time, with an average gain of 8.37%, per data from Schaeffer's Senior Quantitative Analyst Rocky White. From the GPU concern's current price of $248.24, a similar surge would put the shares around $269 -- back around new-high territory.

NVDA stock chart july 24

Despite the equity's stellar long-term run up the charts, many analysts remain wary of Nvidia. In fact, 10 of 27 brokerage firms maintain icy "hold" or "strong sell" recommendations. Should this technical signal once again precede bullish price action, a round of analyst upgrades could lure more buyers to the table.

Meanwhile, in light of NVDA's recent pullback from new highs, options traders have moved to the bearish camp. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Nvidia stock has racked up a 10-day put/call volume ratio of 0.85 -- in the 98th percentile of its annual range. While the ratio indicates that long calls have outnumbered puts on an absolute basis in the past two weeks, the percentile tells us that options buyers have initiated bearish bets over bullish at a rapid-fire rate lately. What's more, just about a month ago, NVDA call options were being bought at an accelerated pace. An exodus of option bears could also propel the stock higher.

Winning With Weekly Options

1606854690

  


 
Special Offers from Schaeffer's Trading Partners