Anatomy Of A Trade: NVDA +45% Breakout

Oliver Kell
Oliver Kell

Oliver Kell is a champion trader who achieved an impressive 941% return by winning the 2020 U.S. Investing Championship. With years of active trading experience, Oliver has developed strategies that thrive in both uptrends and downtrends.

September 13, 2024
4 min read
362 views

NVDA was one of the strongest stocks that led the market off the 2022 bear market lows, moving over 350% in under one year. Oliver was focused on NVDA as it continuously made new highs, showed institutional demand, and emerged as the leader in the Artificial Intelligence buildout.

After multiple Exhaustion Extensions into a seasonally weak time, NVDA formed a W-Bottom base with a tight consolidation pivot over the next four months. A breakout into new highs with increased volume provided an ideal entry on one of the best-performing stocks into 2024.

This trade review shares Oliver’s thought process and trade execution within NVDA’s historic move.

NVDA 45 Breakout 1

The Base

NVDA had been on Oliver Kell’s radar as the leading stock in the market. It checked all the boxes of a large institutional quality stock and was in the right sector for the current market theme.

Date: January 5, 2024

Oliver noted the base that only pulled in 20% and began making a series of higher lows. The next pullback was only 10% and the most recent pullback was 5%.

This compression is the type of action we often see before taking out an important level.

NVDA 45 Breakout 2
Chart via Deepvue

Large Position With High Conviction

Date: January 6, 2024

At the beginning of the year the market was pulling in on light volume while NVDA was consolidating near highs. When the price broke out of this structure, Oliver initiated his position.

Having such a high conviction in a name allows for confidence when entering a trade. Oliver was focused on NVDA pre-market and at the open.

The volume was huge confirming the strength of the gap. Oliver put on a big position and added throughout the day keeping his average cost under the breakout level.

NVDA 45 Breakout 3
Chart via Deepvue

The stop was placed at the breakout area, just below the $500 level.

A zoomed-in look at the 65-minute chart shows the massive volume right at the open. NVDA gapped out, and then closed the first hour and finished at the highs.

This is exactly what you want to see when a breakout occurs.

NVDA 45 Breakout 4
Chart via Deepvue

Trim Into The Second Extension

Date: February 14, 2024

NVDA has been trending above the 5 Exponential Moving Average on a closing basis for the past five weeks. There was nothing to do except let the Cycle Of Price Action unfold.

To help retain conviction, on every strong up day there was higher accumulation volume, and on every down day there was a decrease in selling pressure. We continued to see more gaps as NVDA progressed into new highs.

After the first extension, there was a tight Base n’ Break that provided an area to raise stops.

When noticing the second extension, Oliver was prompt in trimming near highs as earnings was closely approaching. NVDA moved over 55% in under six weeks and earnings were under one week away.

NVDA 45 Breakout 5
Chart via Deepvue

Reduce To Earnings Size

Date: February 19, 2024

As earnings are a random market event, Oliver prefers to reduce his positions to smaller sizes to hold through volatile price action, but will sometimes close out the trade.

After seeing other stocks in a similar theme have negative reactions to earnings, Oliver reduced his position to hold through earnings.

The weekly chart showed a doji candlestick, indicating indecision, ending six weeks up in a row.

NVDA 45 Breakout 6
Chart via Deepvue

Heading into the weekend with an excellent trade, Olliver trimmed more to bring his position down to earnings size.

Note the volume on the chart. We are beginning to see distribution volume outpace accumulation.

NVDA 45 Breakout 7
Chart via Deepvue

After the earnings report the trading plan can be reevaluated and a new strategy developed.

Wrapping It Up

NVDA is an institutional quality stock that led the market off the 2022 bear market low.

Oliver remained focused on NVDA as it formed a four-month base, and entered when the price broke out into new all-time highs with increased volume.

As the price trended above the moving averages, Oliver let the cycle unfold while raising his stops.

After the second extension, Oliver reduced his position to withstand volatility heading into earnings.

Holding a piece through earnings allowed Oliver to reestablish a trading plan after earnings.

The trade ultimately resulted in a 45% gain.

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