NVDA NVIDIA Weekly Chart; Overbot; Rising Wedge; Negative Divergence Developing; Upper Band Violation; Rampant AI Euphoria

NVIDIA CEO Jensen is a rockstar throwing out the first pitch at a baseball game, appearing on news and variety shows and a keynote speaker at conferences. Why? What silliness. When your toilet is overflowing with sh*t running onto your new Walmart throw rugs, are you expecting Artificial Intelligence to fix that? Of course not. You are expecting Art Ificial, the local plumber, to do the job.

America goes from one hyped-up story to the next. Hey, where are the autonomous vehicles that were supposed to drive us everywhere including on the snowy and icy roads at midnight?  The list is long but now AI is going to revolutionize the world. Maybe it will, and maybe not so much. AI will be another production tool but the law of diminishing returns is occurring.

Keystone remembers the rows and rows of draftsmen in engineering offices in the 1980's. Engineering drawings needed updated constantly so draftsmen, laying down lead, made a good living participating in the so-called American dream. Enter technology and AutoCAD systems. Within a few short years, during the 1990's, an entire skyscraper's floor that had wall to wall draftsmen was replaced with a dozen CAD operators. In the 2000's, technology then pushed forward forcing the engineers to do direct editing on drawings phasing out some of the work done by CAD operators. However, an end point approaches where one person can only do so much work no matter how many production tools are available.

Thus, in the 1980's, an engineering project may have required 200 men including draftsmen, engineers and management. In the late 80's this was down to 150. Then AutoCAD in the 1990's drops the head count required to about 40 or 50. Then in the 2000's, further production efficiencies drop the manpower requirements down to a dozen folks working their arses off telling their children that they will not be at the soccer game today but they will be at the next one. .Harry wrote a song about that.

Over a 30-year period and more, from the 80's to present day, the manpower requirements for an engineering project drops from 200 people to a dozen. Considering the power requirements AI will demand, is it really worth it to try and whittle down to 10 or 11 people instead of a dozen doing the work?

The big production achievements were in the 1980's and 1990's due to technology arriving on the scene as well as President Ronnie Ray-gun busting the unions and starting the destruction of America's middle class (sending jobs overseas to take advantage of slave labor that rewarded Reagan and his wealthy cronies with stock market riches; one-half of Americans do not own a single share of stock and they are the ones that lost their jobs). 

Anyhoo, as explained in the previous NVDA chart, there was no reason to play NVDA before the earnings. The chart was setting up with neggie d but you had to wait for the earnings report. If the earnings would have disappointed, NVDA likely would have retraced to 700 already. Instead, Jensen the rockstar proclaims vast riches for everyone involved in AI from this point forward. The AI fever launches NVDA  after the earnings into the stratosphere.

As previously mentioned, if the earnings did create a pop higher, the chart would simply set up again with neggie d where a top can be called, so let's take a look. Look at that launch. NVIDIA must have taken some Viagra. Price makes the new high but the red lines show negative divergence remaining in play. The MACD line wants to break-out higher which will cause price to jog (down-up) before she tops. The weekly chart is likely a couple weeks away from topping out. Simply watch for the universal neggie d to reestablish itself and call the top yourself.

This week's candlestick remains in progress and the new candle that begins next week will provide much more insight as to when she tops. Price is favoring the red rising wedge a bearish pattern. Price has violated the upper standard deviation band so the middle band at 842, and rising, the same as the 20 MA, is on the table.

The Aroon is a hoot. It proves unequivocally that every single NVDA bull is 100% guaranteeing that NVDA price will go up forever while comically, the bears (at 0%) are also 100% convinced that NVDA stock will go up without interruption. Pause for laughter. The US Titantic ship has every single NVIDIA bull, and every single bear, all partying together on one side of the boat, 100% convinced that NVDA will go up forever. That is funny stuff.

The ADX pink box shows that the rally was confirmed as a strong trend higher in March 2023 and this strong trend remains. The strong trend will be lost when the ADX goes below 30. Interestingly, within the strong trend higher, it has been weakening since the 2023 top. The price highs are occurring with a slightly lower ADX each time. If a bull, this is not what you want to see. The rally higher remains in a strong trend but within the strong trend it is weakening for the last 10 months.

The blue circles show volume behavior. Price is joyously at record highs but volume is nowhere near the prior levels. Distribution was occurring in April with the smart money cashing-out and taking profits and most of them likely reentered the stock. Price will need to come down to within that blue channel to test the prior volume levels. If NVDA is to move higher, it needs a lot more volume. Most of the folks buying are likely Joe Sixpack, Jane Winedrinker, Sam Sucka and Bobby Bagholder.

So the weekly chart is still setting up with neggie d so give it a couple weeks before the top call is likely in the weekly timeframe. On the monthly chart, the indicators are all neggie d except for the MACD line. Therefore, the monthly neggie d will conspire with the developing universal neggie on the weekly chart to create the multi-week downside that will begin.

However, the MACD line on the monthly chart must be respected and it may require a jog move that will bring it back up to matching and new price highs on the monthly basis going forward lining up the bigtime long-term top for NVDA in the July-August time frame. No need to guess at anything. The charts will set up and tell you the answers.

In a nutshell, the weekly chart will likely set up with neggie d so a top can be called in a couple weeks or so. This will begin a multi-week decline in NVDA stock. June should be a soggy month with Jensen spending time hiding under his desk. Then, price will likely recover due to the MACD line on the monthly coming back up to the current price highs, say, out in July or August. At that time, the monthly chart may be set up with universal neggie d and a long-term top for NVDA could be called. Simply watch the charts develop.

Keystone continues to not hold a position in NVDA long or short but will likely play it short as it sets up on the weekly chart with neggie d. Once this occurs, the daily and 2-hour charts can be used to time the entry on the short side and take advantage of the coming multi-week pullback. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added Sunday, 6/9/24; NVIDIA earnings create an upside orgy that is why it was prudent to sit back and wait; that release was a coin-flip. The NVDA weekly chart is in negative divergence except the MACD line so she is not topped-out yet on the weekly basis. It should only take 2 weeks, a down-up jog move, for the MACD to go neggie d and then the top can be called. Keep an eye on it and you can call the top in NVDA.