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NVDA Swing Trade Setup & Entry

NVDA (NVIDIA Corp) offers an objective short entry on today's gap down as that has the potential to form an Island Cluster Reversal topping pattern. NVDA will be added as an Active Short Trade here on today's gap down with price targets at 160.35 (T1) and 142.10 (T2). The suggested stop is any move above 191.00 with a suggested beta-adjustment of 0.90.

NVDA daily Sept 21st

NVDA daily Sept 21st

The potential for an Island Cluster Reversal topping pattern on NVIDIA was mentioned in the trading room yesterday if the stock were to gap down & remain below the "cluster" of candlesticks that were formed following Monday's gap up. I am still using the operative word "potential" Island Cluster top because the day is still young & should NVDA move back above the bottom of the cluster then the pattern will be foiled. As such, an entry here should be considered somewhat aggressive or anticipatory, with a more conventional entry just before the close today or sometime tomorrow, should the stock fail to fully backfill (and then some) the gap just overhead.

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2017-10-19T14:02:28+00:00Sep 21, 2017 9:56am|Categories: Completed Trades - Short|Tags: |11 Comments

11 Comments

  1. oxienergie September 21, 2017 10:31 am at 10:31 am

    If this sticks, it might finally drag down the whole semmi sector with it.

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    • rsotc September 21, 2017 11:02 am at 11:02 am

      Most likely. I was going to short GBTC today & add it as an official trade idea but Interactive Brokers doesn’t have any shares available to short. As IB has the best availability of HTB (hard-to-borrow) shares, if they don’t have any, chances are that most if not all other brokers don’t have any shares available to short either.

      GBTC just backtested the bearish rising wedge that I posted a few times recently (daily time frame). Price are now moving lower following that backtest & I suspect they will continue to fall from here. My point being that if Bitcoin prices fall, so will the GPU makers (NVDA & AMD) as the demand for graphics cards to mine Bitcoin & other cybercurrencies will fall as well.

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  2. dpatel September 21, 2017 11:36 am at 11:36 am

    @rsotc-Hello Mr Phinney- do you have any downside targets on GBTU at this time? Thanks

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  3. dpatel September 21, 2017 11:36 am at 11:36 am

    @rsotc-Sorry I meant GBTC not GBTU !

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    • rsotc September 21, 2017 11:44 am at 11:44 am

      Yes. At minimum, I expect another move back down to my first target on GBTC around 514 & still think there is a good chance that it will continue down to the second target around 301. If/when that bubble finally bursts, there will likely be much more downside so if you were or are able to find some shares to short & want to tuck them away with the appropriate stops in place, the 150 area looks like a nice longer-term downside target (about a 77% drop from current levels).

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  4. malejandro1972 September 22, 2017 5:34 pm at 5:34 pm

    Randy,
    could you please explain your suggested beta-adjustment of 0.90.

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    • rsotc September 22, 2017 8:48 pm at 8:48 pm

      A beta-adjustment of 0.90 would mean 90% of a typical position size, i.e- a downward adjustment of 10% in order to account for the elevated volatility expected in NVDA.

      Using a computer (instead of a mobile device), if you hover your cursor over the phrase ‘suggest beta-adjustment’, or any term on the site with a dotted line below it, the definition of that term should pop up. A more detailed explanation of beta adjusted position sizing can be found on the FAQ page under the Trading Related Questions sub-category.

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  5. malejandro1972 September 22, 2017 11:51 pm at 11:51 pm

    Thanks Randy! Funny, i had never noticed the dotted lines. Thanks for all your great analysis.

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  6. raider74 October 10, 2017 7:50 pm at 7:50 pm

    Hi Randy, can we assume that this position is closed since the price exceeded 191 today? TIA.

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    • rsotc October 11, 2017 10:38 am at 10:38 am

      Yes, NVDA is stopped out & will be removed from the Active Trades category as soon as I post an update on the front page. I just wrapped up a video in which I covered NVDA along with the semiconductor sector. Video is processing & uploading now.

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  7. raider74 October 11, 2017 12:44 pm at 12:44 pm

    Thanks.

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