The Market's Strongest Stock: NVDA
A deep dive into the winning characteristics of a TML
Today at a glance:
1 annotated chart
Multiple actionable takeaways
Areas to focus on NVDA going forwards
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Let’s dive in ↓
Key Takeaways:
1) Trends can last longer than you think
I'm sure many outsiders have thought that NVDA’s run was absurd as it gapped into the 400s after already rallying over 200% from its lows. I'm sure many technical traders (myself included) questioned how much higher it could have gone into that EPS report in May. And, again today, there were a ton of questions surrounding the reaction to the number after the bell.
It’s been a hard earnings season for many of the strongest names in the market, seeing stocks like PLTR or SMCI get decimated after their reports. It really only made sense for NVDA to sell off today as well, as this was how the rest of the market had been acting aside from a few.
But, of course, price > opinion as this name posted incredible numbers after hours and has eclipsed the $500 whole number (a key area going forward).
If step back to the lows, and take away all of the opinions, the negativity, and the reasons why NVDA’s price should or should not be going in some direction, we’re able to see the very simple picture price paints: The trend is fine above rising 10/20EMAs.
So, as long as NVDA remains above these moving averages, the trend is up & will continue to be. Don’t let sentiment fool you…trends can last longer than you think.
2) Some of the best buys are the scariest
The more I study charts from this bottom, the more I realize how some of the best buys occurred as price gapped up through the MAs after consolidating just below them. Coincidentally, this is the exact setup we’re going to witness tomorrow in many of the market’s liquid stocks (thanks to NVDA). Whether it works out or not is anyone’s best guess, but the setup is there.
But let’s say you don’t want to buy strength, it’s not your style. With the strongest stocks, that’s okay! Learning how to buy pullbacks to rising moving averages (namely the 10+20EMAs for my system) will get you in these names at some point during their trends, which is the name of the game.
If you want to learn how to do this, I highly recommend going back and looking at all of the charts that are up most YTD, and you’ll find this exact phenomenon to study and create an edge around.
3) To make life-changing money, you have to have a process, rules, and the discipline to sit through multiple raise and beat quarters.
Jim Roppel is notorious for pounding the table on how if you want to go from first class to private, you need to have a system to sit through multiple raise and beat quarters in the market’s leading stocks. We’ve seen a couple of these so far this year (NVDA, ELF, ANF*), and if this market can continue to mature + move higher, I’m sure we’ll see many more.
So, over the next couple of weeks, I will continue to study and come prepared to take advantage of any opportunities thrown my way by Mr. Market. Running through deep dives like these will allow me to do so with confidence, and hopefully, you feel the same way too.
Other resources to study:
2020 Best Charts: https://gregduncan.gumroad.com/l/wmfsd
2021 Best Charts: https://gregduncan.gumroad.com/l/2021
2022 Best Charts: https://gregduncan.gumroad.com/l/2022
Earnings Gap Up Mastery Free Email Course: https://upsideunlimited.com/earnings-gap-course
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