After a flat open, sellers have crept into the stock market, particularly in the Nasdaq, which is now down 0.4%.
The high-flying shares of Nvidia are under pressure after the announcement of a new chip yesterday failed to spark a rally. The company trades at extreme multiples upwards of 40x trailing price-to-sales.
Technically, there are growing warnings signs as a series of lower highs and lower lows have appeared on the daily chart. In addition, today’s low breaks support from last week’s bottom.
NVDA stock daily
Technically, there are no signs yet of a big correction but a fall to $400 might be in the cards.
What could be the catalyst? A hot CPI report on Thursday would be one, and a fresh push by Fed members towards even higher rates. Given that Harker yesterday talked about holding rates at current levels, I’m not sure that’s realistic but an alternative scenario would be economic worries and a re-evaluation of valuations.
Seasonally, I highlighted at the start of the month how August is a poor period for stocks and that September is the worst month on the calendar. The seasonals have played out strongly in stocks this year.
For NVDA stock, the main event is the Q2 earnings report on August 23. Last quarter, a blowout from NVDA led to the gap higher on the chart above and the further rally. That has surely put high expectations into the stock price, though if any company can beat them again, it’s Nvidia.