Market News & Analysis
U.S Stock Selection: NVIDIA at risk of another downleg as G20 looms
Kelvin Wong June 24, 2019 5:29 PM
click to enlarge charts
In our previous report dated 02 May 2019, the share price of NVIDIA (NVDA) had tumbled as expected and hit the downside target/support of 153.40 on 20 May 20019, click here for a recap.
It has continued to inch downwards and printed a low of 132.60 on 03 Jun 2019 before it staged a recovery of 18% to print a recent high of 157.33 on 20 Jun 2019 assisted by an increasing dovish monetary policy stance adopted by the Fed. In the coming few weeks, the focus will shift back to the progress on the on-going trade tensions between U.S. and China as NVDA is one of the U.S. key semiconductors firms that its operations will be affected significantly if the trade tensions continue to escalate. Paramount will be this week G20 summit on 28 to 29 Jun where U.S President Trump will meet with China President Xi on the side-lines to discuss about matters related to the U.S-Sino trade relations.
Key technical elements
- The recovery 18% seen in NVDA from its 03 Jun 2019 low of 132.60 has taken on the form of a “bearish flag” configuration coupled with a lower average volume seen in the past 15 days. These observations suggest the recovery is a potential “dead cat bounce” within its medium-term downtrend in place since 10 Apr 2019.
- The daily RSI oscillator has tested and retreated from a significant corresponding resistance at the 55 level.
- The key medium-term resistance stands at 163.90 which is defined by the former ascending support from 24 Dec 2018 low and the 50% Fibonacci retracement of the previous decline from 10 Apr high to 03 Jun 2019 low.
- Relative strength analysis from the ratios of NVDA against its industry sector (PHLX Semiconductor SOXX) and the U.S. benchmark stock index (S&P 500) have continued to exhibit medium-term weakness/underperformance.
Key Levels (1 to 3 weeks)
Intermediate resistance: 157.33
Pivot (key resistance): 163.90
Supports: 147.06, 131.60 & 124.50
Next resistance: 192.83
If the 163.90 key medium-term pivotal resistance is not surpassed and a break below 147.06 (the lower boundary of the “bearish flag”) is likely to reinforce the start of another potential downleg to target 131.60 support with a maximum limit set at 124.50 (the 24 Dec 2018 major swing low).
On the other hand, a clearance with a daily close above 163.90 invalidates the bearish scenario for an extension of the corrective rebound towards the next resistance at 192.83.
Charts are from eSignal
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.
Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.