Nvidia Consolidates In Bull Flag Pattern As Market Rips Higher: This ETF (SPRX) Offers Diversification On A Move Higher

NVIDIA Corporation NVDA held steady Wednesday, despite the S&P 500 starting to climb after the Federal Reserve held rates steady at its March policy meeting while indicating the potential for three rate cuts this year.

Nvidia has been consolidating recently after skyrocketing 148% between Oct. 31 and March 8, propelled by strong bullish sentiment in the artificial intelligence market.

On Tuesday, Nvidia’s executives detailed plans at its GTC Conference for various initiatives spanning the company's hardware and software products, unveiling its latest GPU architecture, Blackwell, as a successor to the Hopper architecture. The news caused Nvidia to trade back up into Monday’s trading range after gapping down to start Tuesday’s trading session.

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From a technical analysis perspective, Nivida’s recent consolidation is needed, and the mostly sideways trading has helped to lower the stock’s relative strength index (RSI), which had been measuring in overbought territory between Jan. 9 and March 8.

Nvidia’s surge, paired with its consolidation pattern, has caused the stock to form a possible bull flag pattern on the daily chart. If the pattern is recognized, and Nvidia flies into blue skies over the coming weeks, traders and investors could choose to play the move higher, with diversification, through the Spear Alpha ETF SPRX.

SPRX is an actively managed fund offering investors the opportunity to achieve more than passive tracking of the broader market. Some of the fund's most popular holdings include Nvidia, weighted at 10.59% and Advanced Micro Devices, Inc AMD weighted at 8.06%.

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The Nvidia Chart: Nvidia has made a series of bull flags during its month-long ascent, with the most recent formation created between Feb. 28 and Wednesday. The measured move, if Nvidia eventually breaks up from the triangular-shaped flag on higher-than-average volume is about 26%, suggesting the stock could soar toward about the $1,072 mark.

• Momentum has been steadily decreasing into Nvidia, which has allowed its RSI to drop to about the 65% level. If Nvidia continues to trade mostly sideways within the flag for a longer period of time, it would give the stock more room to climb upward before its RSI becomes overextended again.
• Bullish traders want to see Nvidia break up from the upper descending trend line of the flag and break above the March 8 all-time high of $974. Bearish traders want to see selling accelerate and for Nvidia to close a trading day below the 21-day exponential moving average, which would negate the bull flag.
• Nvidia has resistance above at $919,13 and at the all-time high and support below at $870.85 and at $794.80.

Featured image sourced from Shutterstock