Nvidia Corporation (NASDAQ: NVDA) opened slightly lower on Wednesday but began to move higher intraday. The move is continues a bullish trading session on Tuesday that saw the chip-maker rally over 5%.
Although the global semiconductor shortage, which brought many chip makers to all-time highs last year, is far from over, Nvidia and other companies like Advanced Micro Devices, Inc (NASDAQ: NASDAQ:AMD) that manufacture chips through third-parties aren’t set to benefit from the CHIPS Act, which passed its first hurdle on Tuesday.
While Nvidia and AMD design chips in-house, they rely on foreign companies to produce the technology, such as Taiwan Semiconductor Mfg. Co. Ltd (NYSE: TSM). The CHIPS Act, which is intended to benefit domestic semiconductor manufacturers by providing them with benefits such as tax incentives, heavily favors companies such as Intel Corporation (NASDAQ: NASDAQ:INTC) but could eventually force companies like Nvidia to find ways to bring manufacturing operations to the U.S.
Despite the news, Nvidia was behaving more bullish than Intel on Wednesday, as the former continued north in its uptrend. For comparison, Nvidia is up 23% over the last 12 trading days, while Intel has risen 12% over the same time period.
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The Nvidia Chart: Nvidia reversed course into an uptrend on July 5 after bouncing up off the $140.55 mark. The most recent higher high within the trend was printed on July 8 and $160.37 and the most recent higher low was formed at the $144.65 level on July 13. On Wednesday, Nvidia was charging higher and not showing any signals its next higher high may be in.
- For technical traders, the move higher was the most likely scenario because on Tuesday Nvidia printed a bullish candlestick and closed near its high-of-day. If Nvidia closes Wednesday’s session at the high-of-day, higher prices are likely to come again on Thursday, although an eventual pullback, at least to form another higher low, will be necessary.
- As the stock moves higher, Nvidia may find resistance at the top descending trendline of a falling channel, which the stock started trading in on May 4. If that happens, Nvidia may need to consolidate for a period of time under the trendline before possibly breaking up above it, which could signal a larger reversal to the upside.
- Bears will want to see Nvidia reject the upper trendline and then for big bearish volume to come in and push the stock back down below the eight-day and 21-day exponential moving averages, which could indicate a longer bearish period is on the horizon.
- Nvidia has resistance above at $180.73 and $187.80 and support below at $161.37 and $145.75.
Photo courtesy of Nvidia.
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