Recent indicators suggest that Nvidia (NVDA) stock might be entering a consolidation phase, losing some of its recent momentum, according to John Bollinger, President at Bollinger Capital Management. Analyzing Nvidia’s weekly price chart with Bollinger Bands, a tool measuring price volatility, Bollinger notes the possibility of the stock having moved too rapidly and being due for a period of consolidation. He suggests that Nvidia’s era of substantial gains might be waning.
Bollinger Bands, represented by upper and lower trend lines around price bars, are employed by technical traders to assess whether a stock is overbought or oversold. In this context, Bollinger’s analysis leads him to consider Intel (INTC), a Dow Jones Industrial Average component, as an underdog chipmaker that could present more immediate returns. Drawing parallels with blue-chip stocks like IBM (IBM), Bollinger sees both Intel and IBM transitioning from income generators to potential vehicles for capital gains in the current market environment.
While acknowledging macro pitfalls such as the ongoing chip wars and trade tensions between the U.S. and China affecting both Intel and Nvidia stocks, Bollinger emphasizes the potential for substantial upside for both companies. Despite the volatility in the tech sector, he doesn’t observe signs of technology deterioration yet.
In terms of Intel’s fundamentals, Bollinger expresses optimism, anticipating that investors will recognize Intel’s capabilities. Noting Intel’s efficient and rapid construction of fabrication facilities, he sees it as a positive factor for the long-term prospects of the Dow Jones chip stock.
However, Bollinger acknowledges Intel’s extended position from a proper buy point based on IBD’s stock analysis approach. Intel shares broke out of a base with a 40.07 buy point on Nov. 15, trading 12% above that point in the following 11 days. Investors are advised to remain vigilant about potential market developments and the evolving dynamics in the semiconductor sector.
