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Asset Watch

Is NVIDIA close to a reversal?

 

Tuesday, September 6 2022

Risk assets have suffered mightily in recent days thanks to pessimism reigning across the financial markets. Plus, with Russia cutting off gas flows to Europe on Sep. 2, fears of a cold winter helped upend the S&P 500.
NVIDIA disclosed that U.S. regulators now require the firm to limit its exports to China. The news sent the stock tumbling to a 52-week low on Sep. 1, bringing the pandemic winner down by more than 54% year-to-date (YTD).
However, Cathie Wood’s ARK Invest purchased $40 million worth of the embattled stock on Sep. 2. With a familiar friend returning after a long absence, could technical support help NVIDIA stage a comeback?

For context, NVIDIA’s 900-day moving average doesn’t appear very often. But when it does, investors are often keen to buy the dip. In 2018, 2019 and during the March 2020 lows, the 900-day MA is where the crowd turned bullish. Likewise, the stock rallied off the 900-day MA intraday on Sep. 1. Therefore, with the key level only 3% below the Sep. 2 close, the stock’s short-term fate should be decided soon.

 

NVIDIA’s daily RSI also ended the Sep. 2 session slightly below 29, and readings of 30 or less mark oversold conditions. To that point, historical readings near or below 30 have often marked short-term bottoms.

 

So, will macroeconomic risks overwhelm NVIDIA, or will the tide turn for the troubled chipmaker?


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