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Technical Analysis of NVIDIA Corp. (NVDA): Consolidation Period Near Highs Sparks Interest.

StockInvest.us, 2 months ago

NVIDIA Technical Analysis of NVIDIA Corporation (NVDA)

NVIDIA Corporation closed the trading session on December 26, 2023, at $492.79, registering a modest gain of 0.92%. This movement is reflected within the upper end of the day's trading range between $489.60 and $496.00, indicating a consolidation period close to the day's high. This consolidation occurs after a significant uptrend from the year's low of $138.84, showcasing substantial gains. The market capitalization of NVIDIA stands at a robust figure of approximately $1.22 trillion, supported by a daily volume of around 24.26 million shares, which is lower than the average volume of 43.30 million shares. The reduced volume suggests that investor interest on this particular day might have been somewhat tepid.

The Relative Strength Index (RSI14) at 63 suggests a somewhat overbought condition, but not at an extreme level that necessitates an immediate reversal. A reading just above 60 indicates strong bullish momentum without immediate concerns of over-extension. The 50-day moving average is currently at $462.84 and the 200-day moving average is at $400.80, both well below the current price, supporting a strong upward trend in the medium to longer term.

The Moving Average Convergence Divergence (MACD) for the last three months is negative at -4.09, which may indicate a bearish momentum in the short term or a potential consolidation phase following the recent rally. The Average True Range (ATR) sits at approximately 2.64, pointing to a relatively stable volatility level for a stock in the tech sector.

Support is identified near $487.16, which held during the recent trading session, while resistance is nearby at $496.04, aligning near the day's high. A break past this resistance could signal a continuation of the current uptrend. The next dividends are scheduled for December 28, 2023, with a low yield of 0.01%, suggesting that dividend income is not the primary incentive for investors in NVIDIA.

Fundamental Analysis of NVIDIA Corporation (NVDA)

From a fundamentals perspective, NVIDIA shows robustness with an EPS of $7.57 against a relatively high P/E ratio of 65.1, indicating that market participants might be pricing in expectations of continued growth and expansion, particularly in the fields where NVIDIA has strong market positioning, such as AI, gaming, and data centers. The number of shares outstanding totals roughly 2.47 billion.

NVIDIA Regarding the stock's future outlook, analysts provided a wide range of target prices, with the high estimate at $800 and the low at $133; the consensus target stands at $435.17, with a median target of $457.50. It's important to note that the consensus among analysts leans towards a "Buy" rating, with 35 analysts recommending a buy, three holding, and one suggesting a sell. No strong buy or strong sell recommendations are reported.

The news concerning technology stocks hints at a positive investor sentiment as heavyweight tech companies, including NVIDIA, have staged strong recoveries through 2023. NVIDIA chips are currently described as superior to competitors, granting pricing power and maintaining a competitive edge. Additionally, Gen Z's rising attention to growth stocks could favor NVIDIA, considering their strong foothold in industries attractive to this demographic, like AI and gaming.

However, some caution is suggested considering the potential for corrections, as the market remains vigilant about macroeconomic factors and sector-specific developments that could influence NVIDIA's stock price.

Overall Stock Evaluation

Considering the above factors and after a comprehensive analysis of both technical and fundamental data, NVIDIA Corporation could be categorized as a "Hold." The company exhibits strong fundamentals with an exciting growth narrative, particularly within the AI space, and solid technical indicators that reinforce an ongoing bullish trend. Nevertheless, the moderately high RSI and the slight divergence seen in the MACD advise caution for immediate entry.

Predictions for the next trading day on December 27, 2023, must consider the pending distribution of dividends, which might inspire some volatility or increased volume as investors position themselves to capture this event. For the upcoming week, if NVIDIA can maintain its momentum and break above the resistance at $496.04, the uptrend may continue with the potential of testing the year's high. However, in the event of a broader market pullback or correction, having a stop-loss around the $475.94 level could protect investments from significant downside risk.

Investors currently holding NVDA shares may prefer to maintain their position to capitalize on the potential continuation of the growth trajectory, keeping an eye on market trends, the broader tech sector performance, and any company-specific news that may impact stock price. Those considering entry may want to watch for a more definitive move past current resistance levels or potential price dips offering a more attractive entry point

Check full NVIDIA forecast and analysis here.