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I’m sure by now you’ve seen a headline or two about Nvidia’s latest earnings, and their massive beat. The company reported a 600% profit explosion, largely due to AI-driven segments of their business. In response, the stock gapped up and is now trading at new all-time highs. The company is now worth more than Germany’s entire stock market, and more than Tesla and Amazon combined.

If your first thought in response to these facts is, “this stock’s in a bubble", I would agree with you, and here’s why:

How to Play NVDA Stock

Bubbles get a bad rap in the financial world, mainly because of two reasons. The first is that people that think they are smarter than the market refuse to participate, and the second is because those that actually do participate often end up losing their shirts when the bubble finally bursts. But guess what? Bubbles are actually the best place to make money, assuming you know how to read price and manage risk.

In fact, it’s exactly why I issued a buy alert for NVDA on May 16, 2024. However, if you’re not familiar with my process, it wasn’t a simple, “Go out and buy this stock right now,” type of trade. Periodically, I do issue swing trades of the sort, but for Nvidia, it was one of my go-to setups - a breakout trade. My instructions were as follows:

“Buy NVDA on a close above 950.02 with a stop loss on a close below 887.47. Target 1200.”

(Click on image to enlarge)

This trade triggered on May 21, 2024, just one day before its earnings, and now it’s at a new all-time high.

Remember, markets trend, and as the saying goes, “The trend is your friend”.

I have to be honest with you here though, this stock market is at the mercy of Nvidia at this point. Historically, some of the biggest bull markets in history have featured stocks like NVDA. Not to mention, the stock just issued a 10-for-1 stock split, so I’m going to have to modify my original trade instructions a bit… so stay close to me on this one. 

Nonetheless, I want you to be aware that when this bubble pops, it will probably be time to head for the hills. I’ll be keeping traders posted on this, but for now, this trade will be satisfied if and when it hits my upside price target.

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