Time to Test Some Lower Levels for Support

JerryManders Updated   
Back in December when NVDA was trading in the 490s I posted an idea (linked) predicting it would make a run to 660. It went above and beyond that, and now its at a point where I'm exiting long positions and watching it closely for a chance to short.

At this point, I think it is still risky to short, but staying long is foolish. NVDA has started a distribution phase and has earnings as a catalyst this week. What remains to be seen is if this distribution phase will have an upthrust (UTAD) to achieve one more higher high, or if it will get its sign of strength to the downside. Bulls might ask why would it reverse now? - because increasing demand has become unsustainable with out making a pullback to establish some significant support below.


Near Term expectations for price action:

- I'm looking to enter some near-term puts on other names next week, but I'm not playing NVDA until after earnings (there are better plays)
- But I think NVDA (and semis group) is arguably most important driver of overall market currently

*** 715 is the most important level

- If 715 holds as support NVDA will see a higher high in the coming weeks
- If it sees a sustained break below 715 then it will become bearish near-term and will need to test some lower levels for support before attempting new high

Chart - important areas explained:

** If NVDA is trading inside the shaded green diamond going into earnings then I'm expecting a gap up following the report to breakout above 742

3 most likely paths:

GREEN arrow (bullish): drop to test 715 going into the earnings report and then breakout above 742 - if this occurs my upside targets will be 777, 792 and 816 by end of March 2024

RED Arrow (near-term bearish, but will provide buying opportunity): break below 715 to around 697-707 and then test 715 for resistance but get rejected (if this occurs I will buy Mar 1 puts, and my downside target will be 661-683 by 2/28-3/1)

black arrow ("worst case" scenario bearish): I don't think NVDA will crash but its setup does actually allow that as a possibility if 661 fails as support)... in this scenario we will get the same price action as the RED path, but 661 would fail as support. If this occurs there is downside risk to 560 and my targets will become 619, 585, 560.. This would actually be the best case scenario for traders ha $$$$ - not enough evidence yet to expect this but I am watching close.

See linked ideas of my previous NVDA long ideas if you need validation that I'm not just some doomsday preacher, I'm looking at it unbiased as possible.
2/28-3/1 will be a major turning point for the market. At this point I'm expecting SPY to complete a smaller degree wave c of 4. I could see NVDA earnings initiating ii of c of 4 bounce after getting hit earlier in the week. Then iii of c of 4 would begin after NVDA report.. this aligns closest with my RED path on the chart, which is my primary expectation.

We should see bullish reversal starting around Feb 28th
Taking the black path.
If you think its coincidence we're trading exactly at my 715 level (most critical level) after hours ((4:44pm 2/21), think again. This is the ultimate test.

- rejection here (i.e. sell off tomo) then I'm bearish on the market as a whole
- sustained break above (preferably run higher tomorrow and then come back to test 715 for support) then I'm bullish on market as a whole
Refer to this as updated Market forecast:

This is like May 2023 all over again - with a gap this big, don't short NVDA or the market from here for the time being.

In my post I said a break above 742 will send this to 816. Already in the 760s pre-market. Should continue higher through Feb 23 and then consolidate early next week before attempting a break above 816. It will test 816 minimum.
As predicted, it ran to 816 after breaking 742.
Next upside target will be (at least) 837-853. I'll run an updated analysis to get precise target and time to target and post update before the bell Monday 2/26.
After running updated analysis, point target by end of day Tuesday 2/27 = 838.

- could run as high as 896
- run will last through Tuesday 2/27, and then it will pullback starting Wednesday 2/28

~the pullback will be a test of 816 for support - if that doesn't hold it will continue down to test 742 (that will likely hold, and then it will continue back up)
Heavier re-accumulation than I expected here, this is priming for a direct breakout above 816 from here to the 838 target minimum (probably a lot higher).

- unless 742 fails as support I'm bullish here, doesn't have to test 742 for support before breaking out

- A break sustained below 715 would be a bearish signal, not likely
Looking to enter Mar 22 840 calls once I get confirmation that its ready to bounce (expecting confirmation either today 2/29 or tomorrow 3/1).

The calls are currently 14.00, but should get discounted slightly depending on how far this last pullback is. Point estimate is 763-769 - in that scenario I will enter the Mar 22 840 strikes.

If it pulls back all the way to test 740-742 then I will become more aggressively bullish and enter Mar 22 810 calls.

-initial target 815 by 3/8
- target 1 = 840 by 3/15
- target 2 = 870-900 (that will be the top of this wave).
Time to take profits if you're long.
This doesn't have the setup to crash or get hit too hard directly from here. It will find support in the 850-870 region going into FOMC and then begin run to 1000+.

If it gets back above 900 today or tomorrow 3/20 before making a lower low then it will go directly to new highs.

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