Nvidia Looks Increasingly Weak On The Longer-Term Timeframe

(NVDA) Nvidia Corporation is another in the semiconductor sector and one which looks increasingly weak and offers a potential opportunity to short the stock or buy puts, and the reason is the following.

Photo by Christian Wiediger on Unsplash

First and perhaps most clear of all is the widespread up candle of the first week of November. There is nothing wrong with the price action itself, but consider the associated volume which looks to be an anomaly. In other words, if we compare this candle and volume with up candles in August or October where the spread or range is half, yet the volume is double, confirming the volume and price action of three weeks ago is anomalous. It’s also a clear sign buyers are leaving the market as they are not prepared to purchase at higher prices and market makers are now drawing in those ‘Johnny come lately’ investors who are fearful of missing out on the extended rally.

Second, and in the same vein, note the rally of late September and early October which is on falling volume. A further sign the buyers are leaving and preceded by heavy selling volumes on the week before. Finally, the stock is building a strong ceiling of resistance at $580 per share, and should the stock fall as expected there is little in the way of price-based support to act as a platform of consolidation.  And the same is true of the volume histogram which has a low volume region below between $460 per share and $440 per share which should see the stock move through here rapidly in the longer term once clear of the $480 per share area. However, from a volume-based perspective, the daily chart does has the volume point of control in the $500 region which should provide a medium-term cushion of support.

(Click on image to enlarge)

NVDA weekly chart

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