Technicians on Tuesday kept a careful eye on Nvidia for indications on whether the sell-off is over, or if there’s further downside looming. Nvidia rose 7% a day after it posted the worst market value loss of any U.S.-publicly traded company in history. On Monday, the graphics processing unit maker dropped nearly 17%, wiping out more than $595 billion from its market cap. Despite the sell-off, Nvidia is still worth $2.9 trillion, behind only Apple and Microsoft in terms of size. On a 12-month basis, the stock has roughly doubled. But after Monday’s stunning drop, in which Nvidia dipped below its 200-day moving average for the first time in two years, some market observers are worried the AI darling’s technical backdrop could be deteriorating. “NVIDIA Corporation (NVDA) is showing signs of technical weakness consistent with a new intermediate-term (1-3 month) corrective phase attempting to take hold,” Raymond James’ Javed Mirza wrote on Tuesday. NVDA 5D mountain Nvidia, over five days Mirza said a multiweek close below a key technical level in the 40-week moving average, around $124.81, would confirm a corrective phase was underway. After a break below that level, he would next look at a retest of support at $94.27, which is more than 20% below current levels. Nvidia was traded around $127 on Tuesday afternoon. Wolfe Research’s Rob Ginsberg also noted that Nvidia is not yet oversold even after Monday’s sell-off, saying an eventual test of support at $100 is “looking more and more likely.” That’s a more than 15% drop from Monday’s close for the stock. Market implications Any weakness in Nvidia has ramifications far beyond the one stock, as the broader market’s gains in 2024 and 2023 were in large part due to the AI chipmaker’s outsized influence in the index. The S & P 500 sold off Monday, closing down 1.5%, even with the broader market outside of tech holding up. “An intermediate-term correction in NVDA would reinforce our broader market view that equity markets are at risk of a 4-Year Cycle reset developing in 2025 (cyclical bear market),” Raymond James’ Mirza wrote. Other technicians think the downside risk for the S & P 500 is not yet over. BTIG’s Jonathan Krinsky and Fairlead Strategies’ Katie Stockton each think the benchmark could retest its 200-day moving average. “Given the weight of tech in the S & P 500, we think it likely remains under pressure and still expect a test of the 200 DMA later this quarter,” BTIG’s Krinsky wrote on Tuesday. “If the recent rotation continues, however, that could occur even as overall breadth actually improves.” Technical, not fundamental To be sure, many investors remain firm believers in the future of AI, with Nvidia playing a key role in that digital revolution with its GPUs — whether that be at the Magnificent Seven companies or smaller cybersecurity firms, or automation and robotics companies. They think Monday’s plundering of Nvidia has more to do with the technical excesses in the stock, rather than the fundamental story, and say they will hold onto the stock. By the same token, however, they said they will not add to the stock for now, waiting to see how the ramifications of DeepSeek will play out in the stock moves. “There’s no reason to sell Nvidia,” said Louis Navellier, founder of Navellier & Associates. “But as far as adding more, it would take a lot of guts.” Navellier said Nvidia is the top holding in his portfolio, with a 15% allocation. During Monday’s trading session, he expected to end the day with a more than 3% loss in his portfolio, just from the AI chipmaker. However, Navellier — who said he’s been an investor in the company for more than four years — said he will hold onto the name. “I’ll wait for the bounce and then the retest,” Navellier said. “That’s what I would normally do.”
