nvidia, (NVDA) The graphics chip specialist, who changed the rules of the game, struggled this year.
The stock hit new 52-week lows on Friday, down 64% from a 52-week high hit in November.
To put it mildly, this was not a good extension of the stock. Santa Clara, California is certainly not alone.
Taiwan Semiconductor (TSM) and Advanced Micro Devices (AMD) is just a hair above 52-week lows, while Intel (INTC) It also recorded new lows last week.
Last quarter, AMD reported solid results and mostly direct guidance. Nvidia previously announced a significant revenue loss, then followed up with a tepid quarter and disappointing guidance.
Nvidia will be hosting its own GTC event this week, which could serve as a catalyst. But it has a lot of fundamental and technical momentum working against it.
After all, Nvidia has an excellent long-term outlook and the stock has taken a hit. For this reason, I want to take another look at the stock.
Nvidia stock trading
The weekly chart above shows a brutal Nvidia correction, as stocks fell more than 63%, then rebounded on Friday after marking the 200-week moving average. We’ve been watching for a sign of this sign for nearly a month now.
Now, that might be enough to get some bears off the train and some bulls on board.
After all, if you’re short on Nvidia, trend has been your friend. But many of these short shows also consider that Nvidia’s 200-week period can be a notable support, and the stock will only fall so far.
Over the years, Nvidia’s stock has been no stranger to big dips. In the past 12 years, the stock has suffered three major declines of more than 50%, but – and that’s a big percentage but – only 57.5%.
The stock struggled in 2008 and 2002, dropping 85% and 90% from its peak, respectively. But the company is in a much different place now than it was then and I wouldn’t compare those times with today.
After such a big drop and a lot of bad news pricing, this area may not be a bad place for long-term investors to start hoarding stocks. But if the overall market continues to roll, Nvidia’s stock could continue to fall as well.
If the $125-$127 area fails as support, that could open the door down to the $110-115 area. There we find the 78.6% retracement from the all-time high to the lowest. In this area, we also find the 2021 low.
Below $110 opens the door to the psychologically relevant $100 level, which is also where the monthly VWAP metric is currently running.
As for the upside, watch $145. This support level from July was the most recent resistance level. Over $150 is putting the 10-week and 21-week moving averages into play, with the latter recently acting as active resistance.
Bottom line: Nvidia stock has maintained maximum declines of 54% to 57.5% over the past 12 years. The recent decline of 63.5% from its highs to a major support area may act as a retracement area.
For long-term investors, the accumulation strategy may not be the worst idea.