This Semiconductor Play Is Looking At A Serious Pullback

Published 06/03/2016, 03:16 PM
Updated 05/14/2017, 06:45 AM

NVIDIA Corporation (NASDAQ:NVDA) has been roaring higher. In 2016 it went from $24.75 to a high this week of $47.50. That's a monster gain of 92%, prompted by good news from the company mixed with massive short covering, all of which add up to one insane pop. But because pops of this magnitude aren't sustainable, the stock will need to retrace before it can possibly think about going higher.

The pull back may be at hand with the weekly chart showing a topping tail, which is a very bearish signal. It essentially tells you that the amount of sellers are now bigger than buyers. With so many buyers still holding the bag, many will get scared and sell, creating more downside. This is a healthy pull back that can be profited from via shorting or put options. Note the chart below.

Nvidia Corp.

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