$NVDA downside gap-fill potential!

2023年8月27日

NVDA,1D: Price dipped just below the 50% line and popped back up over the line after coming off the local lows at 403. Given the 'uncertainty' around the level and duration of a 'higher for longer' rate environment along with the market's general preference for 'clarity' over 'uncertainty', it would not be unreasonable to expect the 'increased volatility' that comes with 'uncertainty' until some level of 'clarity' can be established around the duration of the current 'higher rate environment'.

Further adding to the potential for 'market uncertainty' and 'lack of clarity' are the tenuous and ongoing negotiations between the U.S. and China around access to semi-conductor IP. NVDA utilizes the cost benefits provided to its model from the 'cost efficiency' of both Chinese and greater Asia's manufacturing and production capacities. Were trade relations around semi-conductor IP between China and the U.S. to become 'less amenable', the deterioration of that relationship could adversely impact NVDA's margins.

If NVDA had to re-establish production/manufacturing supply chain relationships elsewhere this could inject 'uncertainty' into the price discovery process. These are 'unknown unknowns' at this point and hard to factor into analysis, but at a minimum, they would increase the potential for 'market uncertainty' and the subsequent 'lack of clarity', which often leads to 'price volatility' until some level of 'certainty' could be re-established.

Looking at our 1 day RSI against price I am seeing a 'bearish divergence' whereby price makes 'higher-highs' and 'higher-lows' while the RSI prints 'lower-highs' and 'lower-lows'. This can be taken as a 'leveling off' of momentum that often precedes a change in price direction or, at a minimum, a significant pull back within a constructive trend. (see light violet curves)

I would expect that a downside 'gap fill' could be a 'necessary evil' at some point in time across the next 6 weeks or so, and before further gains to the upside could probabilistically be portended from a structural standpoint. The bottom of the gap fill is roughly in confluence with the YTD VWAP (peach).

NOT FINANCIAL ADVICE. ALL STOCKS CAN GO TO ZERO.

2023年11月16日

手動結束交易

Direction was correct as price fell down to the low 400's, but the extent of the downside move was not enough to fulfill the parameters of my trade idea. We did not fill the gap to the downside in the time allotted.