Editor's Note:

Shares of Intel (INTC) are very short-term overbought and when this stock corrects it could pull the entire industry lower. However, the recent action has been bullish so we want to be ready to buy the dip. I prefer NVDA instead of INTC as a bullish candidate.

- James


NVIDIA Corp. - NVDA - close: 19.73 change: -0.27

Stop Loss: 18.19
Target(s): 21.85
Current Gain/Loss: unopened
Time Frame: less than two weeks
New Positions: Yes, see trigger

Company Description

Why We Like It:
NVDA has rallied to new multi-week highs thanks to strength in the semiconductor sector. The breakout past its 50 and 100-dma are bullish. However, the stock could see a pull back if the market and tech stocks finally see some profit taking this week. We want to be ready to buy a dip. I am suggesting bullish positions when NVDA dips to $19.05. If triggered we'll use a stop loss at $18.19. Our target is $21.85 but we might have to exit early to avoid holding over earnings.

FYI: NVDA is due to report earnings on May 12th after the closing bell. We do not want to hold over this report so our plan is to exit on May 12th at the close.

buy-the-dip trigger @ 19.05

Suggested Position: buy NVDA stock @ 19.05

- or -

Buy the May $20 call (NVDA1121E20)

Annotated chart:

Entry on May x at $xx.xx
Earnings Date 05/12/11 (confirmed)
Average Daily Volume: 19.0 million
Listed on May 2nd, 2011