How to Trade NVDA Stock and Cash in on Future Consolidation Patterns

 

Since our prior blog post covering the double bottom and saucer with handle breakout on NVDA, the stock soared about 75% within several weeks.  What is really important to understand, is that it also held a very tight stop-loss below the technical entry point in the consolidation pattern.

 

This is what we strive for when swing trading.  A great long-term uptrend, strong fundamental factors (strong growth then accelerating growth and positive estimate revisions), a bullish consolidation pattern and good technical entry point with fresh bullish news.

 

Here is the latest chart showing the entries and most recent exit thusfar:

 

Charts courtesy of StockCharts.com

 

How to Trade NVDA Earnings

 

Normally we get out ahead of earnings.  This would have saved a bundle on great stocks like PANW, MDB, SNOW and others this quarter that dropped significantly after earnings.  One misstep such as an earnings or sales miss, margin miss or reduction in guidance and the stock could gap significantly lower.

 

In the case of NVDA, we kept a good portion through earnings because estimates were still rising and many analysts were raising price targets just ahead of the earnings report.  This worked out in this case as the stock gapped much higher after the earnings report as shown above.

 

Other stocks, such as JAKK, saw estimate cuts ahead of earnings which is often our curtain call on a trade if it occurs.  Commissions are now free and we swing trade instead of buy and hold so it makes no sense to hold through a potential big selloff right after the earnings report.

 

But even if you decided to sell NVDA on a trade before earnings, you also had a strong flag breakout right after the report.  This was a place where we added and featured it again in the daily alert after we had a chance to go through the report and outlook that evening.

 

The price target on the flag breakout was $935 which was reached on Friday at the open for another big trade on NVDA before the stock tumbled on Friday.  These strong flag breakouts are a great way to trade NVDA and other hot AI stocks such as AMD which also soared out of a flag pattern right after appearing in the daily alert service.

 

Other Bullish Chart Patterns for NVDA

 

Geopolitical risks for NVDA increase as we head into the March through May period due to weather conditions near Taiwan.  But we also have the NVDA AI conference which starts next Monday, March 18th.  This runs for a few days.

 

Ahead of this, the stock could form our favorite technical pattern – a high tight flag.  This is the pattern that TSLA formed a few times in 2020 where we scored big swing trades for subscribers of the daily alert.

 

Although the market cap is now massive for NVDA, it can still move quickly as we just witnessed since the latest earnings report.  Since opening after the last earnings report, the stock ran another 25% in just over 2 weeks.

 

SMCI formed a few high tight flags since we featured it in the service in January.  The entry/exit strategy taught in the high tight flag course worked beautifully with a very tight stop-loss and scored big wins on each until we finally saw a breakout fail on Friday where it hit the 4% stop.

 

NVDA could form the same pattern in the days ahead.  Its a good time to use a good entry/exit strategy on a potential breakout over the next couple weeks.  If it does not reach a good technical entry point, we will not be trading it.  The flag portion of the pattern, among other factors, have to meet the standards in the strategy if and when it reaches the technical entry point.

 

After the AI Conference

 

At some point the stock will need to consolidate and we could later see a good symmetrical triangle, double bottom base pattern, flat base or cup with handle pattern develop.  We will be watching how the stock acts in the days and weeks ahead.

 

Continued good price action from the stock will keep us trading bullish consolidation patterns.  Otherwise, we will let it form another base while holding a portion for the longer-term with a stop in place.

 

Its a stock where we want to watch for new significant news, changes in the long-term trend and bullish consolidation patterns in the months and years ahead.

 

Riding NVDA and Other Top Stocks This Year

 

In one of our strategies in our personal accounts, we rank all the top stocks each week to come up with our top 3 list.

 

Factoring in the geopolitical risk, if NVDA remains near the top of the heap, we ride it until another stock is stronger in terms of the factors we we look for.  These factors include estimate revisions, growth, and trends on different timeframes.

 

This is our 3 Stocks to Wealth strategy which has a great long-term track record and is on pace for a record year so far in 2024.

 

We currently have a special opportunity to try out the service for 3 months.  This offer includes 3 months of the daily alert service on tradetobefree.com for technical swing trading and a free video course that normally sells for 100’s of dollars on tradetobefree.com after the first quarterly renewal.

 

It also includes the new weekly videos covering the biggest earnings breakouts such as SMCI, NVDA and numerous other stocks each quarter.  Eventually NVDA and SMCI will enter long consolidations as other top stocks start to trend strongly that we can ride while other stocks turn over or take a rest.

 

 

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