Asset Watch
Thursday, May 11, 2023
While his endorsement was music to the bulls’ ears, should you tread carefully in the short term?
The momentum play is to own the stock if it holds above its 20-day moving average. Since the New Year, higher highs and higher lows have made the strategy immensely profitable. On the other hand, NVIDIA is diverging on the daily chart, as its RSI has made lower highs. The last two times this happened, it preceded drawdowns of 26% and 11%.
So, should you stick to the 20-day MA strategy, or is weakening momentum enough of a reason to stay on the side lines?