Tuesday, May 30, 2017

Stocks to Watch: Nvidia Corp. $NVDA

Nvidia Corp. ($NVDA), $149.60.



Today on Wall Street the issue was none other than the fall of Nvidia Corporation, NVDA. The continuous and spectacular growth of its stock (45% YTD), and that comes from the beginning of 2016, forces us to think if this company, previously dedicated solely to manufacture microprocessors, is really worth it, or maybe much more (as estimated by Citibank which projects it to the superbullish $ 300) or is simply the 'fashionable' stock, or more seriously, a 'casino-stock' as Citron Research recently named it. Today at the beginning of the session he reached his all-time-high $168.50, to fall below $150, following the brutal (and healthy!) tech sell off that occurred Friday, and we do not suspect if he will continue in the following days, although the correction of prices in this sector already falls of mature ...


Bret Kenwell makes an interesting analysis of this company in Investor Place, which I recommend reading before investing. While Wall Street has stopped seeing NVDA only as a manufacturer of graphics chips and now covers sectors such as artificial intelligence and autonomous vehicle driving, it is important that it does not rest on its laurels and that it is attentive to competition.


And from the technical point of view, I see that the stock is going to be exhausted, oversold since May and with the MACD close to a reversal cross. The correction becomes necessary and would be healthy, as Citron says. Today, the stock was quite erratic (as the whole Nasdaq -0.52%) to close in slight rise +0.25%. The following days will define it, checking if it approaches and breaks important average levels like the SMA20, today at $141.


The engulfing signal (red arrow below, today) is usually quite accurate to indicate reversals. On Monday we will see if the tech sell-off today was only momentary or has sustenance, as I estimate.

.