{"id":8646,"date":"2021-07-23T11:40:42","date_gmt":"2021-07-23T15:40:42","guid":{"rendered":"https:\/\/morpheustrading.com\/blog\/?p=8646"},"modified":"2022-04-06T15:04:53","modified_gmt":"2022-04-06T19:04:53","slug":"nvda-relative-strength","status":"publish","type":"post","link":"https:\/\/morpheustrading.com\/blog\/nvda-relative-strength\/","title":{"rendered":"20% Gain! How We Used Relative Strength in the Current Market to Trade $NVDA"},"content":{"rendered":"\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><a href=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/210714NVDA3.png\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/210714NVDA3.png\" alt=\"\" title=\"\"><\/a><\/figure><\/div>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">TABLE OF CONTENTS<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/morpheustrading.com\/blog\/nvda-relative-strength\/#After_our_market_timing_model_recently_generated_a_%E2%80%9Cbuy%E2%80%9D_signal_in_the_Nasdaq_relative_strength_in_Nvidia_NVDA_triggered_our_buy_entry_that_led_to_a_20_gain_Here_is_a_simple_mini-lesson_and_trade_review_that_shows_you_exactly_how_we_did_it\" >After our market timing model recently generated a &#8220;buy&#8221; signal in the Nasdaq, relative strength in Nvidia ($NVDA) triggered our buy entry that led to a +20% gain. Here is a simple mini-lesson and trade review that shows you exactly how we did it.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/morpheustrading.com\/blog\/nvda-relative-strength\/#Entry_strategy_Clear_relative_strength_made_NVDA_stand_out\" >Entry strategy: Clear relative strength made $NVDA stand out<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/morpheustrading.com\/blog\/nvda-relative-strength\/#Exit_strategy_The_sell_signals_to_lock_in_profits\" >Exit strategy: The sell signals to lock in profits<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/morpheustrading.com\/blog\/nvda-relative-strength\/#Relative_strength_rocks\" >Relative strength rocks!<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"After_our_market_timing_model_recently_generated_a_%E2%80%9Cbuy%E2%80%9D_signal_in_the_Nasdaq_relative_strength_in_Nvidia_NVDA_triggered_our_buy_entry_that_led_to_a_20_gain_Here_is_a_simple_mini-lesson_and_trade_review_that_shows_you_exactly_how_we_did_it\"><\/span>After our market timing model recently generated a &#8220;buy&#8221; signal in the Nasdaq, relative strength in Nvidia ($NVDA) triggered our buy entry that led to a +20% gain. Here is a simple mini-lesson and trade review that shows you exactly how we did it.<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In late May, our proprietary <a href=\"https:\/\/new.morpheustrading.com\/blog\/market-timing-system\/\" target=\"_blank\" rel=\"noreferrer noopener\">Market Timing Model<\/a> generated a buy signal after the Nasdaq Composite reclaimed support of its 20-day exponential moving average and held above it.  <\/p>\n\n\n\n<p>One of the first stocks to show relative strength at the time was Nvidia ($NVDA), an explosive, leading growth stock.<\/p>\n\n\n\n<p>Nvidia rallied above its downtrend line on May 21, then broke out from a <a href=\"https:\/\/www.investopedia.com\/stock-analysis\/cotd\/answ20090105.aspx\" target=\"_blank\" rel=\"noreferrer noopener\">bull flag pattern<\/a> on May 28.<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"alignleft size-large\"><img decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/NVDA.jpg\" alt=\"\" title=\"\"><\/figure><\/div>\n\n\n\n<p>On June 2, $NVDA was listed in the Watchlist section of our <a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noreferrer noopener\">stock trading report<\/a> as a potential buy setup with two different entry scenarios:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Buy on weakness &#8211; Buy if the price pulled back to support of the 10-day exponential moving average<\/li><li>Buy on strength &#8211; Buy if the price rallied above the June 1 high<\/li><\/ul>\n\n\n\n<p>The latter occurred and we bought $NVDA about 2% above the high of the base&#8211;which is always the last buy point for a stock breaking out from a valid basing pattern.  <\/p>\n\n\n\n<p>In William O&#8217; Neil&#8217;s excellent, <em>must-read<\/em> book, <em><a href=\"https:\/\/www.amazon.com\/How-Make-Money-Stocks-Winning\/dp\/0071614133\" target=\"_blank\" rel=\"noreferrer noopener\">How To Make Money In Stocks<\/a><\/em>, his system allows for buys up to 5% above the base high.<\/p>\n\n\n\n<p>However, we prefer to not buy more than 2-3% above the base high, as 5% makes it difficult to sit through short-term pullbacks without getting shaken out.<\/p>\n\n\n\n<p><em><a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noreferrer noopener\">Wagner Daily<\/a><\/em> and <em><a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts#Wagner-Daily-PRO\" target=\"_blank\" rel=\"noreferrer noopener\">Wagner Daily PRO<\/a><\/em> subscribers were alerted to our buy entry on June 2.   <\/p>\n\n\n\n<p>The following day, we shared the chart of $NVDA below in our June 3 report: <\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><a href=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/210603NVDA.png\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/210603NVDA.png\" alt=\"\" title=\"\"><\/a><figcaption><em>Press the chart to view full-sized image<\/em><\/figcaption><\/figure><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Entry_strategy_Clear_relative_strength_made_NVDA_stand_out\"><\/span>Entry strategy: Clear relative strength made $NVDA stand out<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In addition to impressive quarterly earnings and sales growth, Nvidia was showing clear relative strength by breaking out ahead of the Nasdaq.<\/p>\n\n\n\n<p>Stocks that show such early relative strength typically become the biggest winners when the broad market follows through to the upside as well.  <\/p>\n\n\n\n<p>Specifically, $NVDA had already rallied 20% off its lows, versus just a 6% gain in the Nasdaq during the same period:<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><a href=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/210714NVDA2.png\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/210714NVDA2.png\" alt=\"\" title=\"\"><\/a><figcaption><em>Press the chart to view full-sized image<\/em><\/figcaption><\/figure><\/div>\n\n\n\n<p>$NVDA immediately blasted higher away after our buy entry, which is what most good trades do, with the price action riding the 10-day EMA and through the $700 and $800 levels.   <\/p>\n\n\n\n<p>In terms of trade management, there isn&#8217;t much to do when a trade swiftly follows through to the upside&#8211;just sit back and enjoy the profitable ride!<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Exit_strategy_The_sell_signals_to_lock_in_profits\"><\/span>Exit strategy: The sell signals to lock in profits<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>After two days of stalling on July 6 and 7, we placed a stop on <em>partial position<\/em> beneath support of the three-day low to protect profits in case of a substantial correction.<\/p>\n\n\n\n<p>The stop assured a +20% gain on one-third of the position, with the plan to let profits run on the remaining two-thirds of the position&#8211;as long as the price held above the 10-day EMA (on a closing basis).  <\/p>\n\n\n\n<p>$NVDA gapped down below our stop the next day, which triggered our partial sell order on the open, but still resulted in a +19% gain.   <\/p>\n\n\n\n<p>Since the price subsequently closed below the 10-day EMA, we next raised the stop (on the remaining two-thirds position) to just below the July 8 low (plus some wiggle room).<\/p>\n\n\n\n<p>Nvidia bounced in the next session and reclaimed its 10-day EMA. <\/p>\n\n\n\n<p>With $NVDA back above its 10-day EMA, we definitely wanted to exit and take profits if the stock slipped back down below that pivotal level.<\/p>\n\n\n\n<p>On July 14, $NVDA broke below its 10-day EMA and triggered the stop on the remaining two-thirds position for a +20% gain.<\/p>\n\n\n\n<p>Both exit points are annotated on the daily chart below:<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><a href=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/210714NVDA3.png\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/210714NVDA3.png\" alt=\"\" title=\"\"><\/a><figcaption><em>Press the chart to view full-sized image<\/em><\/figcaption><\/figure><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Relative_strength_rocks\"><\/span>Relative strength rocks!<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Relative strength, as shown on the second chart above, is a fantastic way to identify leading stocks that can turn into massive winners!<\/p>\n\n\n\n<p>The premise is simple:<\/p>\n\n\n\n<p><em>If a stock is so strong that it rallies ahead of and outperforms the gains of the Nasdaq\/S&amp;P 500 early on, then it is typically the first to rocket higher when the broad market bounces and\/or starts a new uptrend.<\/em><\/p>\n\n\n\n<p>This can not be emphasized enough!<\/p>\n\n\n\n<p>Note that relative strength in this regard should not be confused with the RSI (relative strength index) indicator.<\/p>\n\n\n\n<p>Another takeaway from this article is that the biggest <a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noreferrer noopener\">winning stock picks<\/a> tend to work out right away.<\/p>\n\n\n\n<p>If your stock&#8217;s trend is strong and the price rides the 10-day EMA, then just sit back and let the bullish chart pattern do its work until the price action gives you an objective reason to sell.<\/p>\n\n\n\n<p><a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Start my subscription<\/strong><\/a> to <em>The Wagner Daily<\/em> now to immediately be alerted to the next explosive winner on our radar screen. Complete with pre-set entry, exit, and target prices, our flagship swing trading report is your perfect side hustle!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>After our market timing model recently generated a &#8220;buy&#8221; signal in the Nasdaq, relative strength in Nvidia ($NVDA) triggered our buy entry that led to a +20% gain. Here is a simple mini-lesson and trade review that shows you exactly how we did it. In late May, our proprietary Market Timing Model generated a buy [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[3],"tags":[],"class_list":["post-8646","post","type-post","status-publish","format-standard","hentry","category-stock-trading-strategy"],"_links":{"self":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/8646","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/comments?post=8646"}],"version-history":[{"count":14,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/8646\/revisions"}],"predecessor-version":[{"id":8720,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/8646\/revisions\/8720"}],"wp:attachment":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/media?parent=8646"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/categories?post=8646"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/tags?post=8646"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}