NVIDIA is the hot big cap tech stock making the artificial intelligence chips that Microsoft and other companies buy to pursue development of AI products. The company is a heavily weighted component of both the S&P 500 and the Nasdaq 100, helping lately to propel both indexes to higher highs.
On Friday, the stock finally found sellers after days and weeks of almost endless rallying. Whether the unloading of shares continues is open to question as speculation mounts that with the price approaching $1000, a stock split may be imminent.
The word “bubble” is being used to describe the phenomenon as a recent published report noted that only about 1% of money managers hold short positions. From a contrarian viewpoint, that might be considered bearish, although few state that explicitly.
NVIDIA Price Charts.
Here is how NVIDIA looks on a 10-minute time frame:
Friday’s trading shows that the price gapped up at the beginning of the session and then found sellers at just above $975 — quite a few sellers. The gap was filled before noon and the stock continued down until it hit the daily low of $865 during the 1 pm hour. NVIDIA closed below the 50-period and the 200-period line on this 10-minute chart.
Here is the hourly price chart for NVIDIA:
It still trades above both up trending 50-hour and 200-hour moving averages even with Friday’s dumping. The stock partially filled the 3/6 gap up from the $820 level. The red arrow indicates the extraordinary amount of selling that took place in the 3rd hour on Friday. It’s the most for the past 30 days.
The daily price chart for NVIDIA looks like this:
That big red candlestick is known among price chart analysts as a “bearish engulfing,” a term which indicates how the price headed to above the previous day’s high and then headed down to below the previous day’s low. The red circles indicate unfilled gap ups. Note the relentless up trends in the 50-day and 200-day moving averages.
NVIDIA’s weekly price chart is here:
The red circled candlestick is known as a “shooting star” and it’s considered as a bearish indicator among those technical analysts who use the Japanese-originated charting techniques. The stock is far above both up trending 50-week and 200-week moving averages. The relative strength index is overbought but it’s been in this condition before.
Here’s how the NVIDIA point-and-figure chart looks:
The old-school look offers a different perspective: it’s another way of seeing just how far up the stock traded on Friday, to $970, and just how much it backed away and closed at $875, a one-day drop of almost 10%.