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4 hours ago
Nvidia Breaks the 50-day SMA: Is This a Threat or an Opportunity?
By: Arthur Hill | July 26, 2024
• The long-term trend provides perspective and sets the trading bias.
• The bias is bullish during long-term uptrends.
• Breaks below the 50-day SMA are viewed a opportunities, not threats.
After a big run this year, Nvidia (NVDA) fell over 15% from its high and broke its 50-day simple moving average (SMA). On the face of it, a break below this "key" moving average seems like a short-term bearish signal. Such a view, however, would ignore the long-term trend, which is the dominant force at work.
The first job is to define the long-term trend because this provides perspective and sets the trading bias. Nvidia is clearly in a long-term uptrend because it is well above the rising 200-day SMA, and recorded a new high a month ago. During a long-term uptrend, declines are viewed as corrections that provide opportunities. Therefore, the break below the 50-day SMA is more of an opportunity than a threat. Our reports and videos this week suggest the same for QQQ.
Corrections come in all shapes and sizes. We could get a short pullback, an extended pullback, or a trading range. Nobody really knows. The decline into April broke the 50-day SMA, but this correction was short-lived as the stock broke out in early May. The decline in September-October 2023 was longer because NVDA broke the 50-day SMA twice. These breaks did not lead to a bigger trend reversal.
Looking at the current break, the decline over the last four weeks looks like a normal correction after a big advance. NVDA was up 78% from mid-April to mid-June. A correction that retraces a portion of this advance is perfectly normal. The long-term trend is still up, and I view this correction as an opportunity, not a threat.
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Jetmek_03052
8 hours ago
Really.
the overall stock market is putting in a MAJOR TOP
The overall stock market has actually decreased from highs seen in early July.
Nasdaq high 20,140, down to 18,390. A decrease of 1,750 (8.5%)
S&P high of 5,669, down to 5,464. A decrease of 205 (about 3.6%)
Dow high of 41,315, down to 40,650. A decrease of 695 (almost 2%)
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1 day ago
Nvidia's Stock Correction Will Lead to Outsized Gains in the Second Half of 2024
By: The Motley Fool | July 24, 2024
Beginning in January 2023, it seemed like Nvidia (NVDA -0.25%) stock went straight up for almost 18 months. There was good reason for that as investors piled in to the company that has become the face of a dramatically increasing artificial intelligence (AI) sector.
But no stock goes straight up forever, and valuation still matters. A correction in the stock was inevitable and finally occurred over the last month. Nvidia shares recently traded as much as 13% below the closing record high set on June 18. And buying quality stocks in periods of corrections or bear markets is one of the best ways to generate market-beating returns.
Invest when others are fearful
The recent pullback isn't the first time Nvidia investors dragged the stock lower by taking profits. In the second half of 2022, Nvidia's sales plunged nearly 20% compared to the prior-year period as chip demand from gaming and cryptocurrency-mining users crashed. That helped lead to a sell-off that knocked Nvidia shares down by more than half in 2022.
Those sellers missed out on what would become an epic stock price run with gains of nearly 750% since the start of 2023. That's because Nvidia kept innovating. Sales to its data-center customers exploded as generative AI gained prominence, and the company's gaming sales rebounded.
A more recent hiccup for Nvidia's sales has been government restrictions applied to advanced chips being sold to China. But recent reports say that Nvidia is getting ready to offer a new chip for sale to China that conforms to current trading rules.
A new AI chip for the Chinese market that adheres to U.S. export controls would be just one more catalyst for Nvidia's sales, and potentially share price, to rise. That's why it's a good idea to take advantage of the recent price drop. As Warren Buffett famously said of his investing philosophy, "we simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." The recent correction shows that some Nvidia investors are fearful right now.
Reasons to be greedy with Nvidia
In addition to the anticipated rebound in Nvidia's China sales, its domestic data center sales should also provide future catalysts. The main driver to boost sales will be its next-generation Blackwell platform for the growing data center market. Nvidia has said it will introduce new chips on an annual cadence. But the newest technology chips should actually be incremental income, rather than a replacement of existing income.
One bit of evidence was the recent second-quarter report from Taiwan Semiconductor. The manufacturer of high-end AI chips for Nvidia said that demand remains strong and supply continues to be tight. That bodes well for continued growth in Nvidia's sales.
Nvidia's business plan is also helping to increase demand. The company has already built a dominant position supplying chips to train AI models. It has also begun an annual cadence of new, higher-perfomance offerings beginning with next year's Blackwell graphics processing units (GPUs) and AI server-infrastructure systems. Its biggest customers will likely continue to upgrade with Nvidia's newest products.
But don't forget that smaller companies still struggling to obtain Nvidia's existing H100 GPUs remain in the queue. KeyBanc Capital Markets analyst John Vinh summed it up well in a recent research note, stating: "Despite the impending launch of Blackwell in 2H24 [second half of 2024], we are not seeing any signs of a demand pause as demand for H100 remains robust, as we continue to see rush orders."
What to watch for next
Nvidia is expected to update investors with its next quarterly financial report on Aug. 28. If it confirms the continued strong-demand picture by outpacing expectations yet again, it would likely boost the share price.
But Nvidia's stellar results have continued to build investor expectations, some of which are already priced into the stock. Nvidia's forward price-to-earnings (P/E) ratio is hovering above an already high five-year average. That high valuation will likely continue if the company's sales continue to soar. But investors should be prepared for another correction if the company reports any stumbles to that growth.
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Nebuchadnezzar
1 day ago
NVDA w/in Ichimoku cloud but tough overhead resistance, the next downdraft is likely a $10-20 drop
ER will be a sell the news event
NVDA struggling to stay green even with 360,000,000 volume
probably closer to 400M buy close with options expiration tomorrow,
this is an EASY SELL, fade, short etc
looks like a bear market rally, mini B wave up sucking in new money before real pain begins
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1 day ago
Nvidia Leads Chip Stocks in Staging a Comeback. Why the Pain Could be Short-Lived
By: Barron's | July 25, 2024
Chip stocks were trying to stage a comeback on Thursday after heavy losses the day before, when the tech-heavy Nasdaq saw its worst day since 2022 amid fears that the recent frenzy for artificial intelligence could fizzle out.
Some analysts are still bullish on the group, claiming this is just a bump in the road for AI.
Shares of chip makers started out Thursday extending their losses. Advanced Micro Devices, Qualcomm, Broadcom, and Super Micro Computer joined Nvidia fell as much as 5% early on Thursday, while the Nasdaq fell 1.2%. Out of the big losers among chip makers on Wednesday, only KLA Corporation was in the green and rose 0.2% early Thursday.
Tech has since rebounded, with the Nasdaq climbing into positive territory as of mid-morning. The index was struggling to hold those gains. As of mid-day, chip stocks were still in the red, but had narrowed losses.
Wednesday's sharp pullback knocked some of the wind out of tech's recent rally. Nvidia stock closed down 6.8% on Wednesday, KLA shares fell 6.4%, and Qualcomm shares fell 6.4%. Shares of AMD, Broadcom, and Super Micro fell 6.1%, 7.6%, and 9.2%, respectively, for the day.
Analysts are looking beyond the temporary blips. Susquehanna Financial Group analyst Christopher Rolland reiterated his positive rating on AMD on Thursday with a price target of $200, which is 45% above its current stock price of $137.5. It will report second-quarter earnings on July 30, and Rolland expects results largely in line with expectations
On rival chip maker KLA, Morningstar analyst William Kerwin wrote in a Thursday note: "We expect a chip market upcycle to drive strong short-term growth, with some additional upside from artificial intelligence chip development."
Stifel analyst Brian Chin reiterated his Buy rating on KLA on Thursday with a price target of $875.
Others think the tech sector more generally will bounce back fast.
"This is the start...not the end of this tech bull run in our view fueled by this AI tidal wave of spending on the doorstep," Wedbush analyst Daniel Ives said in a note on Thursday. He sees companies, utilities, and governments spending over $1 trillion combined in AI capital expenditure over the coming years fueling an "AI Revolution."
"Alphabet is accelerating its spending on the AI cycle as seen this week and we expect similar comments from the rest of the Big Tech stalwarts over the coming weeks during earnings," Ives said.
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