Nvidia (NVDA) – Get NVIDIA Corporation Report stock has been on a horrid skid, racking up a near-20% decline over the last five days.
At one point, Nvidia stock was up more than 3% on April 12, but those gains have since faded. It follows five straight daily losses and a stretch where Nvidia stock declined in nine out of 10 sessions.
It’s been an ugly run in semiconductor stocks though, not just Nvidia.
Earlier this month, I asked how many times Advanced Micro Devices (AMD) – Get Advanced Micro Devices, Inc. Report could bounce off $100 before that support finally gave way. That finally happened on Monday.
In that same session, the Nasdaq fell 2.2%, the VanEck Semiconductor ETF (SMH) – Get VanEck Semiconductor ETF Report fell 2.25% and AMD and Nvidia fell 3.6% and 5.2%, respectively.
For Nvidia, a downgrade didn’t help matters, but the damage started two weeks ago.
At yesterday’s low, Nvidia stock was down 25% from its high on March 29. It’s been hitting a skid like it hasn’t seen since March 2020 — and that’s saying something.
We’ve already seen AMD break its key support level near $100 and fail to reclaim it. Will Nvidia be the next big stock to test its key support zone?
Trading Nvidia Stock
Daily chart of Nvidia stock.
Chart courtesy of TrendSpider.com
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From the March low to the March high, Nvidia stock rallied 40%. It was a leader off the low, and joined Tesla (TSLA) – Get Tesla Inc Report and Apple (AAPL) – Get Apple Inc. Report as the tech leaders.
However, Nvidia has now broken down below far too many key support levels to be considered a current leader.
If Nvidia catches a bid, it could open the door to a gap-fill back to $230.62. Above that could put the declining 10-day and still-rising 200-day moving averages in play.
If the stock really takes off, bulls can look for the second of two gap-fills near $258, followed by the 61.8% retracement of the current range near $261.
But what is the buy trigger?
I think that’s the problem with Nvidia right now and semi stocks in general. Getting long is akin to catching a falling knife, even as Nvidia is one of the best companies in the market — again, in my opinion.
Some investors may find value with the stock near current levels and I won’t argue with their thesis. However, I would kindly point out that larger support sits down at on the $206 to $210 area.
Like $100 was for AMD, the $206 to $210 area has been support for Nvidia throughout 2022. If it tests it again, bulls will likely look to buy the dip and at least they will have a technical reason for doing so. But again like AMD, there will be questions as to how far it can bounce.
On a break of $200, look for a test of the 21-month moving average, currently near $193. This measure was previous support in March 2020 and could play that role again on a further decline.