Nvidia stock approaching a 'death cross': What that means

00:00 Speaker A

First up, a name we can’t get enough of is GTC conference wrapping up today. That is Nvidia stock is up about 9/10 of 1%, floating around that $116, $115 per share level. It announced partnerships this week with GM, T-Mobile, quantum computing companies, really failed to rally on on the news, and the stock is on paces or is on pace, excuse me, for losses this week. But let’s take a look, Jay, at the technical setup for Nvidia and bring in one of my favorite terms in the investing world, which is death cross.

00:34 Jay

Yeah, we’re hearing a lot about the death cross this week. Uh, that is when the 50-day moving average crosses below the 200-day moving average. So a fast moving average goes below that, and that is usually a sell signal. Now, the important thing, as I teach my kids in technical analysis 101 at Fordham University, shout out to them, uh, is that is a lagging indicator. We’ve seen the death cross before in Nvidia, and it happened in 2022, and what happened? The stock did sell off 45%. Split adjusted went from 20 to 11 didn’t change. Uh, if you can pick the bottom on this, great. But it’s already down 24% from its peak, so that’s what caused the weakness in the 50-day to cross below the 200 day. So to me, it looks like, all right, now we look for the opportunity to buy it. So you want to look for levels of support. The stock is in a near-term downtrend. Uh, when you get that buy signal, which is the opposite of the death cross, the golden cross, with the 50 they goes above the 200 day, uh, that is your buy signal. When that happens, uh, that’s probably when you want to buy because we’ve seen historically in this stock shares do trend and rally for a significant period of time. Uh, that is if we continue to trend. If this stock goes sideways for a little while, you can throw out your crosses because you’re going to get negative buy and sell signals continually. But over the last several years, this stock, these signals have said you want to stay away until you get an all clear. So to me, I would look for a deeper sell off, maybe to the upper 90s if things decelerate. And then you look at the fundamentals. They’ve been great. This conference went well. Their numbers were solid. So, uh, we got to just wait and see how we do with this uh sell signal.

03:23 Speaker A

And I think right now the 200 day is still slightly ascending for Nvidia. So the overall trend is still kind of up, but we were chatting in the last hour, it’s it’s been nine months basically that the stock has kind of gone nowhere, which is not really how the stock has behaved over its its long history of booms and busts.

03:52 Jay

Yeah, we’ve seen. Well, talking about drawdowns, it had 320% corrections last year. It was up 140% for the year. So

04:03 Speaker A

Didn’t they just year

04:04 Jay

Yeah, I mean, it’s it it is historically known to have corrections, but in the sideways action that we’re seeing uh is not as constructive as it once was. It does have a little toppiness to it. You want to see it get back above. To me, parameters of health parameters of health are that average, the 200 day moving average. 45% of the S&P 500 is below the 200 day moving average right now. Not historical lows, but not necessarily healthy. I’d like to see this stock break its near-term downtrend. We didn’t get the catalyst this week we were hoping for. So right now the the bull the bears are winning out in this stock. It’s uh going to take some time for it to get back above that average for now.

04:56 Speaker A

Stock up a little bit today.