Shares of NVIDIA (NVDA) may finally be making the move that investors were hoping would happen.
The AI chip giant’s stock moved higher Tuesday on speculation that SEO CEO Jensen Huang finished selling company stock under a trading plan adopted earlier this year.
Huang’s sale of six million shares worth around $713 million is finished for the time being, according to published reports from Barron’s.
Headlines having been thin on NVIDIA for the last few weeks, any sign of optimism has been taken as a green light for faithful NVIDIA bulls.
Today’s rally moves the stock above the $120 price mark and the stock’s 20- and 50-day moving averages.
Those trendlines have been providing stubborn resistance for the company’s stock since the end of August. Both trendlines are trading in short-term bearish conditions, suggesting that NVIDIA may still threaten a move lower.
The stock’s close above $120 marks its first close above the critical price since August 29. Shares have been sparring with this round-numbered price level since mid-June when the stock found support after its decline from the stock’s all-time highs at $140.75.
Options investors have turned the $120 price into a battleground for both the bulls and bears.
Last Friday, more than 220,000 options contracts expired at the $120 put and call strikes. The $120 strike price held by far the most open interest for both puts and calls.
Options traders are drawing the same battle line in the October expiration options on NVIDIA.
The October puts and calls – which expire on Friday October 18 – currently have more than 115,000 contracts between them, far more than any other strike price in the October expiration series.
This suggests that options traders are speculating that the stock will make an aggressive move above or below $120 before that date.
Investors will want to pay close attention to the stock’s movement around $120 over the next few days. A move back below this sensitive price may cause short-term traders to accelerate their selling as they fear that the stock’s bearish trendline are dominating the daily price movements lower.
Shares of NVIDIA remain in a long-term bullish trend with a target price of $150.
Shares of Costco (COST) are at the top of the most-watched list today as the stock dropped almost 2% the day before the company’s earnings report.
Shares got off to a weak start after analysts from Truist downgraded the retail warehouse chain.
Among the reasons cited were “some changes like the shift towards scanning IDs on entry and packaging changes to their chickens could add some headwinds”. I’ve seen much better reasons during my career than that.
Sentiment towards Costco ahead of earnings appears more optimistic.
Tuesday’s options activity on Costco showed a focus on the October $900 calls with more than 1,000 contracts trading on that strike. By comparison, puts at the same strike saw 83 contracts pass hands.
The stock’s chart supports that sentiment with support building at $900.
This price not only represents round-numbered support but is also the location of the stock’s bullish 20-day moving average.
This trendline is often referred to as the “Trader’s Trendline” as short-term stock traders will buy a stock when it dips to its 20-day moving average.
Investors should expect that stock to troll between $900 and $920 ahead of the company’s earnings report. That report will be released after the close on Wednesday.
A positive report and a break above $925 will spark an aggressive move towards $1,000 for Costco shares over the next 1-2 weeks.
Shares of Costco hold a bullish outlook with a price target of $1,200.
Shares of electric vehicle manufacturer NIO (NIO) jumped more than 11% on news that China’s central bank is moving to stimulate its economy.
Early news that China's central bank on Tuesday unveiled its biggest stimulus since the pandemic set a bullish tone for Chinese stocks.
It had been rumored that the central bank would act aggressively to curb the decline of China’s economy and housing market. While the moves from the central bank were aggressive, analysts are warning that more fiscal help was vital to hit these goals.
The stimulus package is offering more funding and interest rate cuts marks to help restore confidence in the world's second-largest economy.
The move follows a stream of disappointing data that has increased speculation that China’s economy is suffering a prolonged structural slowdown.
Shares of NIO surged above their 200-day moving average. That long-term trendline has been in a bearish trend since this time last year. The trendline has accompanied a dramatic 75% decline in NIO shares to its current price below $6.
Short-term investors may find some room for NIO shares to rally towards $7.00 as shares have been dramatically oversold.
From a longer-term perspective, the central bank’s stimulus should not be seen as a long-term catalyst for the stock as shares face staunch long-term resistance.
Shares of NIO remain in a bear market trend with a price target of $4.00.
