Don't Be Surprised If NVIDIA Closes Higher Today

After hitting a new all-time high of $119.93 on Wednesday, shares of NVIDIA Corporation NVDA began a strong sell-off, closing the day at $109.28.

The reason for Wednesday's sell-off was attributed to a Tweet by Citron Research's Andrew Left, who suggested that the stock's massive run-up is overdone. After some continued selling pressure Thursday morning, the stock has rebounded slightly and is trading closer to Thursday's close. 

PreMarket Prep co-host Dennis Dick thinks the stock has a good chance of closing higher on Thursday. 

Time To Buy?

The reason for that has to do with what Dick refers to as "The 10 a.m. rule." He explained that when a stock suffers a massive sell-off, as was the case with Nvidia on Wednesday, the selling usually carries over into the next day's open.

"When you get a big down day, there's usually follow through the next day at the open as you have the Johnny-come-latelys calling their broker overnight...and say 'Look, I want to book some of these gains. I bought Nvidia at $90 a couple weeks ago, I just watched half my gains go away, get me out.' So that's the follow through."

"If I'm looking to get long Nvidia...if it starts to get down another 5-6 points, I think buyers will emerge in this, and I think this stock can actually close flat."

As of 2 p.m., the stock was trading around $108, up about 5 percent from the low of the day at 9:30 a.m. 

Looking For A Catalyst

Nvidia is certainly up for consideration as one of 2016's hottest stocks, and the question on many investors mind's is whether the run will continue in 2017.

PreMarket Prep co-host Joel Elconin explained that in cases like these, he looks for a catalyst that can move the stock. Usually this is a technical pattern. In Nvidia's case, it was the tweet by left.

For reference, Elconin pointed out another stock with a similar run up that he's watching - Goldman Sachs Group Inc GS.

The stock has soared nearly 50 percent over the past three months, and appears to be on track to close 2016 higher by 30 percent.

Having flirted with the $240 level all week, Elconin is watching whether the stock will breakout and move higher to $260, 

"This is the kind of pattern I like to look at here," he explained. "Huge run-up, yet a similar [to Nvidia] kind of thing here. You had a run-up to consolidation, another move up. Now, is this consolidation going to move another 20 points to $260? If I own some puts then I could live with my loss. But this is the kind of technical pattern that I like to see when you don't have a catalyst like a Tweet from Andrew Left."