Wondering what to do with Nvidia (NVDA)? Here’s your plan for the week! (November 06, 2017)NVDA
I want to look at NVIDIA ( NASDAQ:NVDA ). Basically what I am saying is this is actually pretty simple. They don’t all have to be hard; trading doesn’t have to be hard; it just sometimes is because we make it that way. These guys report earnings on Thursday after the close. That means we have three more trading days before NVIDIA ( NASDAQ:NVDA ) reports.
My suggestion is, if you are buying this stock now you are kind of late. You shouldn’t be doing it because let’s just face it, you missed the party. That is okay, there will be other parties. You missed it. Don’t be eager to get in on the good stuff. The good stuff has already taken place. The most recent one started here and now the stock is up. Not a lot, well I guess I would say 20 percent is a lot, but we like to see them up more than that. You buy this on the breakout, you are up 20 percent.
Let’s look at the volume. Heavy volume right here, so let’s just assume that a lot of folks did buy here so they are sitting nice. They are fat and happy up here. Up even 15 percent, whatever, you figure it out, they are up a lot. This company reports earnings on Thursday; I expect the earnings to be awesome. I expect the guidance to be really strong. What could they possibly have to guide lower about or to issue tepid guidance? “Golly gee, we heard on Monday that Intel ( NASDAQ:INTC ) and Advanced Micro Devices ( NASDAQ:AMD ) are entering into an agreement to make semiconductors, to make chips for PCs. Well, shut my mouth! Oh my gosh! That is just a horrible thing. Wow! Competition!”
The bottom line is, nobody really seemed to care much about it. The stock was down a little bit. Look at this: Big, massive dump. Wow! The stock falls down here. It doesn’t take too long before the buyers come in. The stock is basically strong all day long. Nobody cares about Intel ( NASDAQ:INTC ) and Advanced Micro Devices ( NASDAQ:AMD ). NVIDIA ( NASDAQ:NVDA ),very, very strong company, AI, self driving, all of that good stuff. You want to be long this stock.
However, you can see what has happened here. Massive volume for quite a while. The secret is out, NVIDIA ( NASDAQ:NVDA ) is a stock that you want to own. So, do you want to hang on to this over earnings? This is what I am going to do because I have got NVIDIA ( NASDAQ:NVDA ), though I will be the first to admit, dang it, I should have but that is what happens. I am selling half, I am going to hang on to it. I don’t expect the stock to sell between now and Thursday; too many people want to own this stock. I think this stock is going to be strong all the way up into earnings. Shoot, we could even see an acceleration of the uptrend as more and more folks try to rush in to get the stock before the good news happens and we go up to $300.00. I am taking half off the table, not a quarter, not 30 percent, not 60 percent, not 45 percent. I am selling half and then I am holding the other half until after earnings.
What am I going to do with that other half? I don’t know, I will tell you after earnings. This is why I am doing this:. Because if I take half off the table and the stock tanks then I am happy that I that I took profits on half. I have got a cushion. It is easier for me to hold the remaining half, that is it. On the other hand, if the stock rallies I am happy that I hung on to some. Let’s say it gaps up a lot. Great! I have half a position. Yippee! I sold the other half before earnings for a really nice profit. Now, I have a really nice profit on half. I have got the kind of profit that as a Catholic I would feel very guilty about making this money. So what I would probably wind up doing is unloading the rest of that position or maybe half of the remaining, meaning a quarter, to see what happens.
The bottom line is if you are selling half of your highly profitable position prior to earnings you are locking in a happy experience. You win, if the stock falls, you win stock. You win if the stock rallies. That is what I think you want to do with NVIDIA ( NASDAQ:NVDA ). I will see you on the other side on Thursday evening.