Momentum, Growth and Innovation: NVDA

We have just added a new position (NVDA) to our 'Growth, Momentum and Innovation' portfolio with 11% of total equity.

Here is the link to our updated portfolio, which is up > 20% in the last month:

Here is a more detailed analysis of this trade:

Technical Analysis

Trend: NVDA has been in a general uptrend, as indicated by the price being above the major moving averages (50-day, 100-day, 200-day), which are also sloping upwards.

Moving Averages: The stock is currently trading above its short-term moving average (50-day) but there appears to be a slight pullback, which could be seen as a buying opportunity in an uptrend, as per Minervini's trend following strategies.

Volume: There's been increased trading volume on up days, suggesting strong buying interest. According to Minervini, higher volume accompanying price advances is a positive sign.

Relative Strength Index (RSI): The RSI is not in an overbought territory (below 70), which could indicate that there is still room for upside before the stock becomes overextended.

Moving Average Convergence Divergence (MACD): The MACD line is above the signal line but starting to converge, indicating potential for a change in momentum. However, as long as the MACD remains above the signal line, it is typically considered bullish.

Support/Resistance: The stock has recently bounced off a support level and is making its way towards a potential resistance area. The pullback to the support could be part of a "high tight flag" pattern, which Minervini finds favorable.

Price Action: The recent price action has formed what appears to be a consolidation pattern after a strong uptrend, which may be indicative of a pause before a continuation of the trend.

Background Analysis

Market Conditions: Mark Minervini advocates trading in sync with the overall market. If the market indices are in a confirmed uptrend, individual stock trades like NVDA are more likely to succeed.

Earnings and Fundamentals: NVDA is known for its strong market position in graphics processing units (GPUs) and its expansion into areas like artificial intelligence, autonomous driving, and data centers.

Sector Performance: NVDA is part of the technology sector, and its performance is often tied to the tech industry's overall health. A bullish sentiment in the tech sector can contribute to individual stock success.

Risk Management: Following Minervini's risk management rules, it's essential to have a predetermined stop loss to protect capital. The trade should also be sized appropriately, not risking more than a small percentage of the trading capital on any single trade.

Entry Point: According to Minervini's strategy, this entry is considered a pullback entry which further reduces the risk of this trade.

Combing the BEST of two WORLD's: Cathie Wood & Mark Minervini

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