Carter Worth Thinks That NVIDIA Is Too Expensive

Carter Worth shared with the audience of CNBC's Fast Money his analysis of NVIDIA Corporation NVDA. He analyzed the stock from a technical standpoint and he concluded that it's overvalued.

Worth said the stock is the best performing stock in the S&P 500 in the last three years and he is wondering if it can continue with the strong performance. He showed on a daily chart that a distance between its 2007 highs and 2008 lows is around $30 and he noticed that a recent move higher is also $30 of NVIDIA's breakout line, which means that the stock has made its measured move. Worth thinks the stock is ahead of itself because it is trading a lot above its 150-day moving average and it has sharply outperformed stocks like Amazon.com, Inc. AMZN, Facebook Inc FB and SPDR S&P 500 ETF Trust SPY.

Wall Street analysts have an average price target of $67.34 for NVIDIA and the stock is already trading above that price. Worth believes that investors should react to these signs and sell call options against a long position in the name or trade out of the stock.

Pete Najarian commented on Worth's analysis and he said that the best way to trade NVIDIA at the moment is to do the stock replacement strategy. He wants to sell the stock and buy call options in case the stock continues to move higher.