Don’t Let NVDA Bears Lure You In

Decline could be coming. Important News: We’ve just released the latest update of the True Market Insiders website, and we want to make sure you are getting all of the new benefits! The version of your web browser may no longer support our new website. But not to worry, you just need to follow these simple steps here. [Click here for the simple steps to take to get all the new benefits!]( Hi Reader, Everyone wants to know: “What’s Nvidia gonna do tomorrow?” I don’t know. Maybe they’ll crush it and maybe they’ll disappoint. But I want to say more about NVDA today, because no matter what they announce tomorrow, if you’re not careful, you could find yourself caught in a trap if the stock moves higher. In a video I sent two weeks ago, I told you that the pink horizontal line on the chart, below, was an area to watch for the start of a short squeeze. I said that, over the long haul, NVDA trades higher. Short term? It looked like it wanted to trade lower and then bear trap up higher. That’s exactly what happened. Today I’m saying the exact opposite of that. We’re saying that, one, the stock looks like it wants to pull back. And two, maybe it’ll first jump higher, above that downtrend line, to lure in some buyers, and then get knocked down. Probably it’s a trap and the institutions will knock it down. Look at that price chart of NVDA. It shows you what the stock is actually doing right now. And what it’s doing is moving up on light volume and down on heavy volume. Recall that last week I told you this was a red flag. And I flashed this image. I said… “The fact that the stock has risen on such low volume indicates it's not rising because of some sort of overwhelming buying pressure. It's not like prices had to adjust higher because the sellers were cleared out by anxious buyers. It typically is what happens when sellers just aren't selling as aggressively. They are seeing how high the stock will go before they start selling again.” “The high volume on the way down shows what investors are really feeling.” “Volume equals validity. Whatever the stock does is basically the stock telling you: this is what it wants to do. But is what the stock is telling you valid?” “A stock moving higher on light volume means the stock is saying it wants to go up, but… It's not a valid message. I hope that is not too confusing.” “The valid message here is when the stock declines. Because it does so on heavy volume. Volume equals validity.” Let’s follow up on that insight. Here’s a newer chart on Nvidia. I’ve zoomed in to the most recent action so you can see what I mean. You can see that the stock continuously bumps its head against that red down-sloping downtrend line. (Again, the down days have heavy volume and the up days have light volume.) So if you’re a trader… think about getting out. If you’re an investor, and you’re looking to ride the long-term trend, and looking to take advantage of THIS trend… Then you stay in. Am I saying Nvidia will definitely decline? No. But it looks likely given that price-volume action. Ways to profit from declines are: to buy Put options… Or short it… But the problem then is you lose money if it goes higher. In my CheckPoint Trader service we get around that problem. We have a long-term NVDA position in CheckPoint Trader, and it’s gained a lot of value. The risk management strategy that’s built into a “checkpoint” trade (it’s an options trade) can help us profit even from declines. So the question for me is not “Is Nvidia going to go into a bear market of its own?” (I don’t even think the stock market goes into a bear market of its own before breaking new highs and trading much higher.) But, I think a correction is on the horizon. It could even be led by Nvidia. I don’t know what Jensen Huang is going to say tomorrow. But I bet someone does. You can see it in the price action. So the best we can do (And the best is very good) is to bank on what “The Street” is telling us, and most (not all) of the time being right. Sure, there could be some big earnings surprise to the upside and the stock breaks out. Who knows? But going by technical analysis, which is pretty darn solid, the chart we just looked at does not look like something that’s going to be very bullish. And even if NVDA trades higher, it looks like something where they’ll lure you in on the upside and then knock it down! Again, this is from a trader’s standpoint. From a short-term standpoint. Long term? All these minor ups and downs don’t really matter. I say that based on the last two or three months of activity. It comes back to: Are you a trader? Or an investor when it comes to Nvidia. Read Next: Our Resident Digital Currency Expert – Marco Wutzer is issuing a critical market update and you're invited. 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