From a psychological standpoint, the hottest stock in the market, Nvidia NVDA, is hovering around two key levels heading into Wednesday’s trading session. Shares closed on Tuesday just above the $400.00 level at $401.11 after hitting an all-time high above $415.00 earlier in the day.
From a trading perspective, it is quite likely that near-term momentum will build on either side of the $400 level on a clean break to the upside or downside.
Valuation is extremely stretched here as NVDA is trading at more than 200x earnings and 25x sales, but this is a stock that most market participants are keen to own as the company appears incredibly well-positioned to capitalize on the boom in artificial intelligence.
This thesis was proven out last week when NVDA reported a blowout quarter and guidance, sending the stock into the stratosphere.
The second psychological level that the chip-maker is flirting with is the unicorn status of a $1 trillion market capitalization. On Tuesday, the company’s equity closed the trading day with a value of $992.00 billion. Whether Nvidia is a $980 billion company or a $1.01 trillion company is essentially irrelevant in terms of the fundamentals or its long-term prospects.
Nevertheless, the combination of overtaking the $400 psychological level, the $1 trillion hurdle, along with the clamor and momentum surrounding the stock, could push NVDA up to $450 by the end of the week – even if on its face that would appear to be unlikely.
Bullish momentum above $400.00 is a buy signal for traders this week, whereas below $400.00, this stock should probably be avoided on the long side for the time being.
Featured photo by Resul Kaya on Unsplash.
Image and article originally from www.benzinga.com. Read the original article here.