NVDA Stock - Bullish Re-Test?

Summary

In today's Nvidia daily update, the stock saw a 3% drop but still holds above critical support levels. Despite some bearish market signals, the drop is seen as a potential 'retest' rather than a cause for concern. Key levels like $176 and $174 need to be watched for potential downside risks, with the possibility of a double-top formation. However, bullish sentiment remains, with options activity reflecting confidence in a rebound. The market will need to be monitored closely, but the overall outlook remains cautiously optimistic for Nvidia, with a higher likelihood of a bullish continuation.

Takeaways

• 😀 Nvidia had a down day, closing just above $178 per share, but it wasn't surprising given market conditions.
• 😀 The market is showing signs of potential weakness, with increased volume and some 'sussy' behavior, but Nvidia is holding up relatively well.
• 😀 Despite a 3% drop, Nvidia's chart suggests a bullish outlook, with a retest of previous resistance levels now turning into support.
• 😀 Nvidia is currently consolidating, which could lead to a bullish pennant pattern, but no outcomes are guaranteed.
• 😀 If Nvidia drops below $177, it could trigger a bearish reversal, with significant risks if it falls to $174 or lower.
• 😀 There's a potential double top forming in Nvidia's chart, but it wouldn't be confirmed unless the price breaks below key support levels around $164–$165.
• 😀 If Nvidia loses the $174–$176 range, it would be a major red flag, signaling potential for a broader market correction.
• 😀 From a bullish perspective, breaking above all-time highs would invalidate the double top pattern and signal continued upward momentum.
• 😀 The ideal scenario for bulls is that Nvidia is setting up for a breakout above the bullish pennant, leading to higher prices.
• 😀 Despite some bearish signals, the bullish case still holds stronger due to the chart's current setup, including bullish EMAs and a potential MACD crossover.
• 😀 Options data suggests some bullish sentiment with call options being placed for higher strikes, indicating optimism for a price increase.

Q & A

What is the overall sentiment towards Nvidia’s performance in today’s market update?

The sentiment is somewhat neutral to slightly bullish. The presenter doesn't think Nvidia looks too bad yet, although it depends on broader market conditions. Despite a drop of almost 3%, Nvidia is holding up well, and there are signs of a potential bullish setup if certain levels hold.

What is the significance of the 'inside day' mentioned in the analysis of Nvidia’s stock?

The 'inside day' refers to the price action where today's trading stayed within the range of yesterday's large candle, which means the market is consolidating. This isn’t necessarily bearish, as the stock is holding key levels and still showing bullish potential despite the drop.

How does the volume on the selling pressure impact the analysis of Nvidia's stock?

The volume on the selling pressure was described as average, which is considered positive. It suggests that the decline is not being driven by panic or excessive selling, indicating that the move down may not be as concerning as it could be.

What key levels are critical to watch for Nvidia's price movement?

The critical levels to watch are the 177-176 range and the 174 range. Losing these levels would signal a more bearish scenario. A drop below 174 would be a significant red flag, indicating potential for a deeper pullback, possibly even down to 150 or lower.

What is the potential bearish scenario discussed in the video?

The bearish scenario includes Nvidia losing key support levels, such as 176 and 174. A further drop could lead to a double top pattern, which is typically a bearish formation. If the price breaks below these levels, it could signal a larger correction, with targets around 150 or 140.

How does the concept of a bullish pennant factor into the analysis?

The presenter suggests that Nvidia could be forming a bullish pennant pattern, where the stock consolidates in a narrow range before breaking out to the upside. This would be considered a positive setup, indicating further potential gains, provided the price breaks above key resistance levels.

What would invalidate the potential bearish double top scenario?

The bullish case would be validated if Nvidia breaks past its all-time highs and holds above them. A breakout past these levels would invalidate the bearish double top pattern and suggest that the bulls have control, leading to further upside.

What was mentioned about Nvidia’s options activity?

Options activity shows some bullish sentiment, with calls being bought for October expiration (17th), including strikes at 197, 195, and 192. This suggests that investors are anticipating a price increase, possibly due to the expectation of a bullish pennant breakout.

What does the presenter think about the likelihood of Nvidia's stock moving higher?

The presenter leans slightly bullish, acknowledging that the stock has shown a bullish breakout and is holding key support levels. While nothing is guaranteed, the technical setup suggests a higher probability of Nvidia moving higher rather than breaking down.

Why is it important to monitor Nvidia’s price action day-by-day?

Monitoring Nvidia’s price action on a daily basis is essential because the market can change quickly. The presenter emphasizes that any sudden movements, especially breaking key levels, could shift the sentiment from bullish to bearish, and continuous monitoring helps stay updated on potential risks and opportunities.