The Saturday Spread: Here’s How to Properly Trade the Nvidia (NVDA) Stock Discount

While it doesn’t necessarily look like it on surface level, Nvidia (NVDA) just flashed a rare quantitative signal. In the last 10 weeks, there were only three instances of up weeks, with the rest being down weeks (defined as the negative return from Monday’s open to Friday’s close). But because the actual loss during this period was just under 3%, it doesn’t necessarily register as a big deal.

Historically, it’s actually a huge deal. Let’s just hold that thought for now.

Even though the net loss in the past two months hasn’t been significant, it’s also fair to point out that a pensive cloud currently hangs over NVDA stock. In the trailing month, the security has slipped more than 6%. Since the close of Halloween, NVDA is down roughly 14%. Thanks to market reflexivity — a phenomenon where perception, aided by feedback loops, alters reality — it’s possible (perhaps likely) that investors view Nvidia as being discounted.

Naturally, contrarian speculators have basic, common questions: when will NVDA stock bounce higher and how much will it rise?

Here, it may be instinctive to consider analysts’ opinions, where expert consensus pegs NVDA stock to hit around $253 over the next 12 months. While the average ratings provide a baseline expectation, it’s also important to note that stock prices are functions of state and not necessarily a function of consensus. Unfortunately, because the true causal…