Nvidia plummets to pre-AI boom prices — contrarian bounce setup
Thesis
Barron's highlights that Nvidia's stock has been pummeled by mounting fears of AI chip competition from other players entering the market. However, Yahoo Finance reports that despite this $1 trillion rout, the company's valuation is now at a multiyear low while its actual revenue continues to set records. The disconnect between the collapsing stock price and the booming fundamental business creates a classic oversold condition where any positive catalyst could trigger a sharp relief rally.
Strategy approach
Build a mean-reversion strategy on NVDA using the H4 timeframe. Enter long when NVDA's price is >15% below its 50-day moving average and RSI(14) drops below 35. Exit when price crosses back above the 20-day moving average. Enforce a 10% hard stop loss and a max hold of 15 days.