Just Two Days From All-Time Highs, Big Concerns Emerge for Nvidia
Nvidia shares have plunged since hitting an all-time high price and the technicals have become bearish.
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It might be time to order an Uber UBER. Excuse the pun. It’s been a rough two months for shares, as the stock has given back its big early October move and then some. The good news for technical traders is that the $68 level has become an obvious stop. That level has established itself as support. It marked the August breakout above the 10-day and 21-day exponential moving averages (EMAs), the September dip, and the November pullback.
The recent higher lows, even if only by dimes, have allowed the 10-day EMA to begin curling higher while the 21-day EMA has flattened. Price closed above both EMAs yesterday for the first time this month. Additionally, shares gapped and closed above the October-November downtrend line.
I anticipate some resistance from the traders who bought the recent push to $76; however, the volume shouldn’t cause much more than a short pause. My eyes are fixated on the open gap left from late October. That would put shares around $79. If the stock closed below $70, it would be a yellow flag. Any close below $68 would likely trigger additional selling, possibly pushing shares below $60.
On a separate note, is it time to be worried about Nvidia NVDA?
It’s difficult to even ask if we should be worried about a stock two days off its all-time highs, but shares have reversed over 10% since hitting those highs, and that’s in less than three trading sessions.
My bigger concern is the close below the 10-day and 21-day EMAs, with both moving averages turning lower. Additionally, we closed at the lows in the past two trading sessions, and the longer-term Full Stochastics crossed bearish. We last saw that at the start of July before a major pullback. My preference in the mega-cap AI space is Microsoft MSFT until the Nvidia technical picture improves.
At the time of publication, Byrne had no positions in any securities mentioned.
