Closed with Stop-Loss, loss is about 8,5%
Take profit: $195
March 16, 2019 conference GTC19 took place, where Nvidia introduced its innovative solutions.
First of all, in April, a driver for the GeForce 10 family will appear, allowing the use of ray tracing technology previously available only to Turing RTX cards. The new release should show the technology advantages in games and stimulate the demand for more expensive video accelerators.
Secondly, a public release of Clara AI took place. Clara AI is a platform for radiology that helps diagnose diseases based on labeled data sets without the need to share patient images.
Thirdly, Nvidia announced Jetson Nano, a miniature computer for AI with 472 GFLOPS power and 5W power consumption. The assembly kit costs $ 99, with it you can create autonomous robots and drones.
Financial performance and prospects for 2019In 2018, the revenue growth was 20.6%. In our opinion, it is an excellent indicator after 2 years of colossal growth of 40.6% and 37.6% in 2017 and 2016, respectively.
The deterioration in annual revenue growth occurred primarily due to a sales decline of 30.7% in 4Q2018, due to a demand collapse of GPUs for games by 46%, low demand for Turing models (RTX 2070, RTX 2080) and negative macroeconomic situation.
Nevertheless, we are looking forward to the recovery and growth in demand for GPUs in 2019 thanks to the gaming industry development, the growth of products based on artificial intelligence technologies and the improvement of self-piloted cars. In particular, the company Alphabet (Nasdaq:GOOG) announced a budget of $ 13 billion for the data centers construction in 2019. In the gaming field, Nvidia has announced the release of the Nvidia 1660 card with Tuting's graphics architecture, which justifies the invested money by impressive performance results.
Nvidia bought the Israeli company Mellanox (Nasdaq: MLNX), known for producing high-speed networks for supercomputers.
Acquisition of Mellanox (revenue for 2018 was $ 1088 million) will allow Nvidia to make up for lost revenue by the sale of GPU to miners. In the 2Q2018, the decline in sales of GPU for mining was more than 90 percent. ($ 18 million versus $ 289 for Q1 2018), and in Q4, Nvidia suspended the shipment of GPU for mining.
In other words, NVDA loses about $ 1 billion a year due to stagnation on the cryptocurrency market.
The acquisition of MLNX will also provide Nvidia by an additional increase in the sales of data center solutions, which amounted to 52% in 2018.
Weekly scheduleAfter a strong fall, the asset is trying to recover. Unlike many sector mates, NVDA lost more than half of the total value within two impulses. On weekly candles, it is very difficult to distinguish them. Only RSI and other “sharp” indicators can demonstrate a small double bottom.
On the one hand, this is positive – the asset is bought off in the form of the letter "V" - in the form of a spike. "Spike turns" are the strongest. As a rule, they mark a cardinal change in market sentiment or force majeure situations.
On the other hand, 80% of global trend reversals occur through the normal “double or triple bottom” distribution, which is clearly visible in the histogram and in the MACD lines.
NVDA weekly trend is trying to grow. But it is worse repeating that normal reversals occur either through the strongest weekly divergences (which do not exist now) or through reversal patterns. "Spikes" are extremely rare on the market. Based on this, the asset is able to “draw” the second bottom on the weekly TF, which means that the price may return to $ 130-140. Confirmation of this factor is an attempt to achieve a semi-annual moving average. Most likely, NVIDIA will succeed and should meet at ~ $ 180-185. Taking into account the momentum conservation, the price can get up to $ 190-200. After that, a regular correction should occur.
The figure above shows schematically the closest growth limit, where you can fix most of the long positions with the expectation of a deep correction (indicated by arrows). But, as a result, the price should still come to a normal Fibonacci distribution and make up 50-61.8% from the whole fall correction. This will be the final goal of the investment. The target zone passes in the range of $ 210-230.
Daily scheduleThis is a medium-term trend. There is exactly what we mentioned in the first part. Reversal pattern "inverted head with shoulders" with an (unsuccessful) attempt to cancel and further shot at good volumes.
The purpose of the reversal figure price movement is always the height of this figure itself. In this case, the height is from the top (head) to the neckline (from $ 125 to $ 160). We add the difference to the figure exit point ($ 160) and get the target mark of $ 195. It turns out just the figure was discussed in the first part. $ 195 with an error will be the closest resistance interval, where the asset will be met by an army of bears with fairly large capital.
SummaryWe buy an asset at market value, fix at $ 195. Next, we are waiting for script development. If we break through $ 200 and fix there for 1-2 weeks, then we can collect longs with targets for $ 230 again. If the asset price cannot consolidate above $ 200 and begins to be adjusted - wait for closing at $ 140 and recruit a position for a long time again.
The asset going down from current prices and fixing below $ 160 per share will provoke the cancellation of the whole scenario.
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