$NVDA, Nividia Corp.

Trade Date: 11/16/16 – 2/9/17

            On Thursday November 10, 2016, Nividia Corporation reported record breaking earnings for the third quarter of 2016. Revenue of $2.0 billion and an EPS of $0.83 was posted, up 54% and 89%. Semiconductors were all the rage last winter but when your friend's mom starts talking about it, its probably time to get out. 

Position Bias: Bullish

Trade Style: Long Term Swing Trade

Technical Criteria

  • Breakout Volume (Volume on Earnings Day): 54.4 million shares
  • Daily Average Volume: 21.5 million shares
  • Relative Volume: 2.54
  • Swing Setup: Bull Flag
  • Average True Range: $0.62
  • Breakout Price: $88.77

Entry Price & Time

            On the daily chart, I was looking for a bullish flag setup to enter for a long term swing trade. If a bull flag setup did not materialize, I had no intention of entering this trade. The initial push on November 11th was triggered by something real, its quarterly earnings results, not rumors. Nividia soared 29.8% by the end of the day allowing it to enter All-Time-High territory. After entering $NVDA to my watchlist, a flag setup began to develop. Once the high of $88.77 was pierced, I entered for a Long Term Swing Trade.

            Entry Price: $88.72

            Entry Date: 11/16/16

            Stop Price: $78.13

            Risk: $10.64

$NVDA  LTST Entry on Daily chart

Trade Management and Psychology

            Once I entered this trade, I was immediately profitable. As long as I am in profit, it indicates that I am correct about the trade and can relax. 

            December 1, 2016: NVDA fell by about $4.56. This definitely rattled my nerves when it dipped below my entry. But the price was above my stop and the 20 SMA wasn’t too far below. Hopefully it will give it a bounce, otherwise time to close for a loss.

            December 12: The price dipped again! But it's still trending higher with higher lows.

            December 28: After a monster run, NVDA fell hard. But to be honest, I wasn’t surprised. After going up that much, I was expected a big crash. Fortunately, it still closed above the 9 EMA. My only concerned was the volume. This was a ‘pay attention, wait and see’ moment.

            December 29: NVDA recovered! Well, not the entire drop but the volume was just as strong. This means buyers are still very much interested.

            February 9: I closed my entire position because NVDA will be releasing its earnings statement today after the market closes. 

Exit Price & Date

            One of my cardinal rules is to never hold a position into its earnings announcement. This one action is what transforms risk conscious traders into gamblers.

            Exit Price: $117.11

            Exit Date: 2/9/17

$NVDA Long Term Swing Trade Exit

$NVDA Trade Executions


Results and Evaluation

            At one point around late December, the hype about semiconductors began to spread. Even non-traders were gossiping about it! Fortunately, I was already in this trade because I based my decision on technical analysis and not on the word on the street. Despite many scary moments, I’m glad I was able to stick to my rules and hold my position

            This was a great trade, but I am concerned that I didn’t make as much as I should have. The loose stop caused me to enter with a small share size. In the future I'm moving my stop up to below the consolidation.

Risk: $10.64

Reward: $28.39

R Multiple: +2.67 R