Nvidia Has Triggered Our Buy-On-Weakness Signal (Technical Analysis)

Summary:

• Nvidia Corporation stock has triggered our buy-on-weakness signal, indicating potential buying opportunities for portfolio managers.
• The company’s strong ratings for growth, revisions, profitability, and momentum suggest that portfolio managers will likely buy on weakness.
• Nvidia is in a trading range between $400 and $500, with buyers coming in around $400 and sellers around $500.

Nvidia Corporation (NASDAQ:NVDA) just triggered our buy-on-weakness signal in the Timing (“Tmg”) column of the report shown below. It already has our most important Buy Signal shown in the SID column. This SID signal uses both fundamentals and technicals. NVDA is already in our 2024 Model Portfolio.

Why is our Timing signal so important? It alerts us to see if portfolio managers will come back into NVDA and once again start buying on weakness. We know that portfolio managers do not like to chase price, and because they are buying in size, they have to wait for a pullback to start buying. This happens consistently with NVDA. The only thing we don’t know is how low the price has to go before they start buying. But we don’t have to know that because our Confirm, or Cfrm, signal in the Cfrm column of the report below will tell us when they start buying NVDA again.

Since Nvidia stock is already in our Model Portfolio, we could Sell calls to make some money as NVDA price drops to support. Then we could buy calls when we see the Cfrm signal is triggered as the price lifts off from support and moves back up to test the recent high.

We, of course, do our due diligence by going to all the resources Seeking Alpha supplies. We read the articles to see the pros and cons. SA tells us that the SA Quant System gives it a Hold rating. NVDA gets top ratings for Growth, Revisions, Profitability, and Momentum, but the lowest possible grade for Valuation. That explains why it is in a trading range and cannot break out. Seeking Alpha also tells us that SA analysts rate NVDA with a Buy rating, while Wall Street analysts have it as a strong Buy. That tells us that portfolio managers will once again come in and buy NVDA on weakness.

Below is our Watchlist, and you can see NVDA is on the list. You can also see it has our most important Buy Signal, color-coded green, in the SID column. NVDA is the only stock on this list that has triggered our buy-on-weakness signal shown in the Tmg column.

Here is our weekly chart for NVDA. At the top of the chart is our most important SID Buy Signal that uses both fundamentals and technicals:

NOTE: The trading range is between $400 and $500. Buyers come in at ~$400 and sellers at ~$500. We expect this pattern to repeat based on ratings by Seeking Alpha, Wall Street, and our own SID Buy Signal.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in NVDA over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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