Nvidia (NVDA) Stock Bearish, Likely Poised to Drop
Nvidia Corporation (NVDA) has been entrenched in an extended freefall since hitting its all-time high of $292.76 in early October 2018. This 3+ month plunge has been especially brutal for NVDA investors because it’s been accentuated by several large gaps to the downside.
But it hasn’t just been Nvidia that has suffered in the past few months, of course. The entire semiconductor industry, as represented by the SMH ETF, has also fallen sharply since early October. Nvidia, though, has taken a particularly hard fall. The stock is down more than 30% over the course of the past year. From its early October high, the drop has been nearly a whopping -50%. And there may be more pain to come.
The opposite of this doom and gloom outlook for Nvidia’s stock could very well occur if the U.S. and China are able to strike a solid and mutually beneficial trade deal. Besides lifting the entire market, this scenario would especially affect companies like Nvidia, which has significant revenue exposure to China.
Nvidia Company Earnings
The company’s last earnings release in mid-November revealed third-quarter revenues that fell short of expectations, despite having risen significantly from the prior period. Its revenue outlook for Q4 was also a substantial disappointment. A large part of this shortfall has been due to declining demand from the cryptocurrency mining industry.
The next earnings release is tentatively scheduled for February 14, and the consensus forecast for earnings per share (EPS) is around $1.19. But the earnings schedule and estimates are likely to change as we approach the tentative date. Be sure to check our Market Events & Earnings Calendar frequently for the latest information.
Since its latest long-term low was hit on December 24, 2018, much like the broader market, NVDA stock has been on a relief rebound that has just reached the top of a steeply declining trend channel (100-day linear regression). The stock price also recently hit the upper border of the Bollinger Bands, which is also just below the key 50-day moving average. Momentum indicators like Stochastics are turning down from well overbought, indicating that upside momentum is starting to wane. Overall, the stock’s trends on multiple time frames are bearish, hinting that the path of least resistance is likely to the downside.
The Technicals Rating
The Technicals gives NVDA a bearish rating of 3 (on a scale of 1-10, with ’10’ being the most bullish and ‘1’ being the most bearish). Below are some of the key technicals for NVDA, as well as other relevant information, that help paint a bearish picture of the stock:
- Price Position vs 200-Day SMA: -33.08% (below) – BEARISH
- Position vs 50-Day SMA: -3.81% (below) – BEARISH
- Position vs 20-Day SMA: +9.23% (above) – BULLISH
- 200-Day Trend Slope (Linear Regression): BEARISH
- 100-Day Trend Slope (Linear Regression): BEARISH
- Stochastics (14,3,3) Level: Overbought, Turning Down – BEARISH
- RSI (14) Level: In the Middle – NEUTRAL
- Position in Bollinger Bands: Near Upper Band – BEARISH
- Sector (ETF: SMH) Long-Term 200-Day Trend: BEARISH
- Sector (ETF: SMH) Medium-Term 100-Day Trend: BEARISH
- Market (S&P 500) Long-Term 200-Day Trend: BEARISH
- Market (S&P 500) Medium-Term 100-Day Trend: BEARISH
- Short Interest Ratio: 1.06% – BULLISH
- Analysts’ Mean Target Price: $227.56 (way above current price) – BULLISH
- Last Earnings Reaction: Massive Gap Down – BEARISH
Overall The Technicals Rating for NVDA: TTTTTTTTTT (3 out of 10) – BEARISH
IMPORTANT: The information above should not be construed as investment advice and should not be considered as a solicitation to buy or sell securities. Trading and investing in the financial markets involves substantial risk of loss, and may not be suitable for all investors.
Disclosure: At the time of this article’s publication, we have no position in any security or trade/investment mentioned, nor do we have any business relationship with any company whose stock may be mentioned.
Chief Market Strategist at The Technicals
With more than two decades of experience as an equity analyst for several major research firms, Don has covered individual stocks (both technically and fundamentally) across a wide variety of sectors and industries, including tech, financial, and retail. He has been quoted regularly in key financial media like Bloomberg and Reuters. Contact Don