2020-03-13 • Updated
NVIDIA is definitely a good choice for a long-term portfolio. Why? Because the fundamentals indicate that this company’s spheres of activity are highly potential markets, whose true horizons we are yet to see. Driverless vehicles, face recognition video systems, graphic drivers and all related software and hardware, not to mention cloud technologies – what may be stronger in terms of future perspectives and hence demand than the mentioned sphere of activity? For this reason, investing long-term seems to pose little doubt about NVIDIA. But wait, what happened there a year ago?
The human mind likes attributing any observation to one reason. That’s natural because it makes it easy to draw one-sided conclusions. A led to B, that’s it. But many things – including those which happen in the stock market – often result from a range of factors that collide in such a way that makes it look like one unique impulse. NVIDIA’s performance in the last quarter of 2018 is a perfect example.
At the end of 2018, the US-China relationship was at the peak of the tension in the context of the trade war. Hence, noting the geographical complexity of the IT hardware supply chains and production sites (specifically, those in China) that was not the best time for NVIDIA. Another particular factor, which partly resulted from that and partly emerged on its own, was a drop in demand for semiconductors – what can strike more precisely right at NVIDIA’s business? In addition to that, the company’s Q3-2018 results were less than expected, and that also results from various reasons. First, observers were used to seeing NVIDIA as a never-setting sun of the stock market hence any step away from that stardom was perceived as a big disappointment and mishap (imagine you get only A-grades in school, and then suddenly a B comes – would parents would be extremely surprised to see that, while if you were an unstable A-to-C-getter, a B would be a pretty nice result). Second, there was a crypto-currency related factor: by Autumn 2018, NVIDIA had an oversupply in its inventories while resulted from overly optimistic projections for demand specifically from cryptocurrency miners. That demand eventually dropped, but the production – as it usually does – was late to react. Hence, a drop in sales and quarterly results.
Currently, the stock trades at $267 where it got after bouncing down from the resistance of $290. That means, the potential for a rise is there, but the price does not yet have the full power to establish itself at that level. We can say that it is now in an intermediary period: it is unlikely to fluctuate down to the support of $125 because the fundamentals are pushing it higher, but the gravity still may drag it down to the area of $220. The Moving Averages are another indication to stay alert. The 50-MA is still below the 100-MA but points upwards. When the 50-week Moving Average crosses the 100-week – that should be approximately at the mentioned support of $220, that will be a stronger indication that the price is gaining the full capacity to rise back to $320. Once that happens, it may be a good moment to enter the market.
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Brent oil is currently on a bullish trend, facing resistance near $84 and supported by the 200-day EMA. Breaking above this level could lead to a climb towards $90. Short-term support is observed around $80, backed by the 50-day EMA. As summer approaches and travel increases, crude oil tends to benefit from seasonal patterns. Despite temporary setbacks, buying...
Bearish Scenario: Sales below 80.00 with TP1: 79.34, TP2: 78.94, TP3: 78.55, and 78.00 Bullish Scenario: Buys above 78.00 (wait for a retracement to the zone) with TP: 79.34 TP2: 80.00, and TP3: 81.00
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Hello again my friends, it’s time for another episode of “What to Trade,” this time, for the month of April. As usual, I present to you some of my most anticipated trade ideas for the month of April, according to my technical analysis style. I therefore encourage you to do your due diligence, as always, and manage your risks appropriately.
Bearish scenario: Sell below 1.0820 / 1.0841... Bullish scenario: Buy above 1.0827...
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