Don’t wait for the Oracle of Omaha to tell you NVDA Stock is a buy
This is the price to pay for excellence. And when it comes to Nvidia (NASDAQ:NVDA) it is rarely cheap. Today, however, the value of an NVDA trade on the Hedged Stock Dynamics looks timely and profitable off and on the price chart. Let me explain.
Locating the next big thing on Wall Street is a never-ending quest. But on occasion, investors are presented with a clear opportunity to buy well-known growth leadership showing little or no sign of slowing down. And currently, NVDA stock meets these criteria.
Certainly, Nvidia retains the appearance of a high-priced stock if asked for advice from a value investor. But NVDA is not here to please Warren Buffet or others following this type of approach to buy successful businesses over time.
And here’s the thing, not only have these investors missed out on NVDA shares, they’re also going to be left out again.
In 2021 alone, Nvidia shares are up almost 60% and more than three times compared to heavy tech Nasdaq Composite. Since the Covid bear market bottom, stocks have risen by around 360%. And over the past five years, NVDA has gained about 1,300%!
A Bear market for all
To at least walk the aisle a bit, there will always be an exception or two to the costly momentum rule in NVDA. And in 2020, Nvidia shareholders exhibited a brief error in judgment.
During the Covid bear market, Nvidia was offered as a ripe handy fruit for value seekers. Still, the multiple squeeze has likely pulled investors back over fears of an optical illusion more ripe for a downward revision.
Need proof? Even the Oracle of Omaha warned the world had changed while going out famous Delta (NYSE:DAL), Southwest Airlines (NYSE:LCV) and other airliners rather than buying more shares at a discount. In the end, the market outwitted even the best of the best.
Today, not much has changed for NVDA stock. A bit like the electric vehicle giant You’re here (NASDAQ:TSLA) or e-commerce juggernaut Shopify (NYSE:STORE), Nvidia is a force to be reckoned with given its dominance in high growth markets.
From AI-enabled chips to self-driving automobiles, games, supercomputers, data centers, cryptocurrencies and more, NVDA’s stubborn business tendrils can be found just about anywhere that involve a computer.
And at the end of the day (again), if you’re waiting for Oracle’s approval to buy NVDA stock, you’re wasting your time and missing out on a very profitable opportunity here and now.
NVDA weekly share price chart
Apparently, investors are also wasting their time if they are waiting for Daily Investor Affairs for an RSVP. The good news is that NVDA stock has gained a ‘Unbeatable’ IBD Composite Rating of 99. However, the outfit observed enough flaws using IBD technical guidelines for labeling NVDA actions “extended” and suspicious for buyers. I respectfully walk away.
Technically, and as the weekly chart provided illustrates, Nvidia shares currently sit in a five-week cup-shaped base. It is a classic platform for high power escapes. But is it perfect? Not by IBD standards.
To begin, IBD cautions against cups less than seven weeks old. Today, Nvidia’s cup is two weeks away from meeting those criteria. Plus, Nvidia’s slightly lagging RS line worries these strategists even more.
But I’m optimistic, Nvidia has done enough work in its favor to bounce back strongly. The point is that other indicators indicate that the momentum can reassert itself in a significant way.
What I’m focusing on is the nice 14% correction in NVDA stock which found support on a 38% retracement level tied to its May pivot low. It is bullish. There is more too.
Combined with the uptrend of Nvidia’s Bollinger Band and the stochastic that just crossed into neutral territory, one man’s imperfect cut has the characteristics of another bull’s profitable long.
With a pattern breakout of around 1% above Thursday’s close, a $ 210 / $ 230 October necklaces combination is a preferred long hedged equity strategy.
Simplistically, this type of position capitalizes on the expected bullish momentum, as the necklace maximizes profits above $ 230 on expiration. But there is more to sticking a stock like NVDA.
As a core portfolio worthy of the name, a necklace on NVDA shares invites investors to adapt favorably under adverse conditions as others apologize and claim that the world has changed, while the value of ‘a name like Nvidia is staring them in the face.
As of the publication date, Chris Tyler does not have (directly or indirectly) any position in any of the stocks mentioned in this article. The opinions expressed in this article are those of the author, subject to the publication guidelines of InvestorPlace.com.
The information provided is based on Christopher Tyler’s observations and is intended for educational purposes only; the use of which is the responsibility of the individual. For additional market information and related thoughts, follow Chris on Twitter. @Options_CATandStockTwits.