Nvidia on Wednesday became the first company in history to reach an astounding $4 trillion stock market value. What do we do now? As headline-grabbing as that milestone may be, it is just a nice round number. If anything, human emotion might dictate some profit-taking when these types of levels are reached. Nvidia stock is currently reading as overbought, according to the relative strength indicator, a tool used by technical analysts. The RSI is kind of like the S & P Short Range Oscillator , which we use to gauge overbought and oversold conditions in the overall stock market. Jim Cramer has for years thought Nvidia should be part of investors’ portfolios, and he continues to feel that way. Nvidia remains one of the largest weighted stocks in the Investing Club portfolio. There is still some room in our price target of $170, and we’re actively considering whether we need to raise it. But, we are reiterating our hold-equivalent 2 rating — out of respect for Nvidia’s huge comeback from its April lows, when concerns about President Donald Trump ‘s tariffs crushed the stock market. There have been many twists and turns in tariffs, with near-daily trade chatter starting back up again. So far, though, Nvidia and the overall market have been able to take the current barrage of tariff news in stride. While it’s not our style to chase all-time highs — you know, buy low and sell high — Nvidia is not that straightforward. The stock has been an absolute juggernaut. It closed above a $1 trillion market cap on June 13, 2023, and rode the artificial intelligence boom to $2 trillion, just over eight months later. Three months after that, on June 5, 2024, it closed above $3 trillion. Wednesday’s intraday $4 trillion milestone, when shares topped $163.93 each, took 13 months. So, where does that leave investors who don’t own any Nvidia shares or own small positions that they want to bulk up? We’re not here to tell you not to buy Nvidia. We, obviously, love the company and think that it is critical to the future that most of us likely envision, now that the age of AI is upon us. We also see the stock going higher still in the long term, given the strength of the business fundamentals — otherwise, we wouldn’t be holding on to our position. While we can’t recommend an Nvidia buy at Wednesday’s levels, let’s instead take a look at its stock chart for some possible entry points should shares pull back. In a commentary on Tuesday , we detailed a similar analysis on three other stocks that have soared since their April lows. Methodology Two key levels to watch are the 50-day moving average (green line) and 200-day moving average (maroon line), which tend to serve as support when the stock is trading above them and as a resistance level when the stock is trading below them. By their name, moving averages are moving all the time. There are also long-term horizontal support/resistance lines (straight black lines) that technical analysts focus on. Those are static. So, more than the exact prices, we want to show investors how to spot the moving averages and long-term trend lines. Taking a look at a one-year chart of Nvidia, the first two levels to note are $137, the 50-day moving average, and $130, the 200-day moving average. Members don’t necessarily need to wait for pullbacks to those levels. Declines of 3% to 5% from here start to get interesting. More precisely, at the end of 2024 and into the beginning of 2025, shares came up against strong resistance at around $150. However, after a wildly volatile first half, shares finally rallied back and blew through that level in late June. The polarity principle in technical analysis dictates that prior resistance, once broken, should then be looked to for support (and vice versa). Working off that notion, we would look to $150 as an area of support and a decent level to start a position. This would represent a pullback of just over 8% from the intraday all-time high reached on July 9). If you want to play it a bit safer, it might be best to wait to see if the stock bounces off $150, confirming the support, and pick shares on the bounce, slightly above the $150 level. However, for those looking to start a position, you can always step in with your first buy at $150 and then wait to see if we get to the 50-day moving average of $137. If the 200-day moving average level of $130 is breached, however, we would want to widen the scales a bit on subsequent buys. A break below the 200-day is quite bearish from a technical perspective as it means that a key area of long-term support has been broken. We would also have to ask ourselves if anything in the Nvidia story has changed. If not, then we would advise investors to average down but only make buys that meaningfully lower their overall cost basis. In early April, just after Trump’s “Liberation Day” of so-called reciprocal tariffs, Nvidia traded down to its lowest valuation, on an earnings-per-share basis, in five years — about 20 times forward estimates. That valuation level has also only been seen about three or four times in Nvidia stock over the past decade. If we apply a 20 times multiple to fiscal year 2027 (similar to calendar year 2026) EPS estimates of $5.73, we would get to about a $115 stock price. Below that, and we’re pretty much looking at the April lows, somewhere around $95 to $100. While we certainly don’t expect that, we wanted to call it out, given the inherently volatile nature of the semiconductor industry, not to mention the dynamic nature of trade negotiations. Bottom line For those looking to start and build a position, we think a good plan of attack is target $150 per share, the 50-day moving average (currently $137), the 200-day (currently $130), the 20 times forward trough valuation on fiscal 2027 EPS estimates (about $115), and the April lows in the $95 to $100 region. How much to put on at each level depends on how aggressive you want to be and your risk tolerance. But the most helpful thing you can do is watch for these levels — and if reached, consider the fundamentals and potential catalysts ahead. (Jim Cramer’s Charitable Trust is long NVDA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
