Nvidia Shares Signal Potential Downtrend with “Death Cross”
Nvidia Corporation, the tech giant known for its graphics processing units, experienced a “death cross” in its stock performance on Thursday, potentially signaling a downtrend after a significant rally. This technical indicator occurred as the company’s 50-day moving average fell below its 200-day moving average.
The death cross, a term used in technical analysis, is typically viewed as a bearish signal. For Nvidia, the 50-day moving average dropped to $127.39, falling below the 200-day moving average of $127.73, before slightly recovering. This crossover suggests a possible reversal of the prior upward trend, following Nvidia’s impressive 948% rally since October 2022.
However, analyst Ari Wald from Oppenheimer & Co. cautions against overreacting to this signal. “Not every death cross results in a major decline,” Wald stated, suggesting that this could be a false signal reflecting the stock’s range-bound behavior over the past year.
Historically, Nvidia’s last death cross occurred in April 2022 during a broader bear market, leading to a 47% decline before the stock bottomed out in October 2022. The current situation, however, may be different.
Wald notes that Nvidia’s stock has shown a loss of momentum, with little progress over the last 6-9 months. He advises investors to exercise caution and potentially stay on the sidelines until broader market conditions improve.
This development comes as the S&P 500 recently entered correction territory, dropping 10% from its February peak. Wald emphasizes the importance of respecting the deterioration in Nvidia’s trend, including the recent death cross.
For investors watching Nvidia closely, Wald identifies key levels to monitor: $128 for resistance and $100 for support.
As the tech sector continues to face challenges, Nvidia’s performance will be closely watched by investors and analysts alike, potentially providing insights into broader market trends.
