Nvidia entered a pullback after its new king ascended the throne and became the world's largest stock by market value. Since last Thursday, its stock price has fallen continuously, with a cumulative decline of 13% in three trading days, and its market value has shrunk by $430 billion.
Profit taking may be an important factor driving the decline in Nvidia's stock price, and Wall Street remains optimistic about Nvidia's prospects, but what everyone is concerned about now is when the bottom will come?
As of the close of the US stock market on Monday, Nvidia's stock price was at $118.11, with a cumulative increase of 145.19% over the year. However, it has fallen 12.8% from its historical high of $135.58 last Tuesday.
According to Buff Dormeier, Chief Technical Analyst at Kingsview Partners, Nvidia's sudden decline includes some obvious unfavorable signals, and the appearance of a pullback after a series of good news such as stock splits and market capitalization is somewhat worrying.
He believes that the short-term support level for Nvidia's stock price is around $115, and the next important key point is at $100.
Nvidia's stock is close to the key Fibonacci retracement level (0.618) near $115, which is one of the popular tools used by technical analysts to identify support or resistance lines for stocks and other assets.
$100
Since its financial report was released on May 22, Nvidia's stock price has risen by 43%, forcing the market to repeatedly raise the demand outlook for artificial intelligence computing chips. This gap between expectations and reality is also a key factor for Nvidia to surpass Microsoft and become the largest US stock by market value on June 18.
The absolute advantage in business is the reason why many analysts firmly believe in Nvidia. Ari Wald, Head of Technical Analysis at Oppenheimer, stated that long-term trends are more important than any key level, and Nvidia's stock price remains strong, with trading prices still far above the $101 indicated by the 50 day moving average and $92 indicated by the 100 day moving average.
He further pointed out that the formation of the top usually takes several rounds of buying and selling, and then the downward trend of the price gradually strengthens and falls to a certain critical level. But he believes that Nvidia has not yet experienced such a situation.
Wald, like Dormeier, is paying attention to the $100 level, and Bruce Zaro, Chief Technology Strategist at Granite Wealth Management, is also looking at the $100 level.
Zaro believes that for stocks like Nvidia that are on an upward trend, breaking through upwards is not difficult, but if their stock price falls below $100, it may represent some issues.
But he also emphasized that this cannot change Nvidia's long-term trend, it just means that the market needs more patience, especially with the upcoming US election and the Federal Reserve in a phase of monetary policy transition, the market is inevitably fluctuating and showing a downward trend.