Reddit (RDDT) shares are taking a well-deserved break today. The stock is trading 12% lower, as sellers appear to be profit-taking on post-IPO gains of more than 100%.
As I always say, there’s nothing wrong with taking profits, especially on gains like that in less than a week.
Literally, we should expect to see this type of trading.
There are no headlines on the stock today except for the “first brokerage initiation” from a boutique research firm in London named “New Street”.
The company initiated coverage of Reddit with a “hold” recommendation and target price of $54. That’s 7% lower than today’s trading price.
You should expect to see lighter trading volume on this stock, which should translate to lower prices over the next few days.
Watch for round-numbered support at $50, as this is a great psychological level that a lot of investors have probably considered a good price to have a limit order to buy the stock.
Gamestop
Oh man, shares of the “O.G. Meme Stock” are trading $15 lower and from the looks of the chart, this may be the beginning of a free-fall.
Shares of Gamestop (GME) were on a great two-day run as trader’s “bought the rumor” ahead of earnings. The stock was making a promising move to break above its recent range. That rally was reversed quickly by the company’s latest earnings report.
Fourth quarter results fell short of expectations missing the earnings per share (EPS) target by $0.08. Revenue for the quarter missed more poorly with year-over-year growth of -20%.
The company offers no conference call or guidance, meaning it’s the market’s job to put these numbers in context to determine the next quarter’s performance.
That’s bad for the stock.
What was a potential breakout has now shifted to a breakdown that targets a price of $10 over the next three to six months.
Shares should find some support at $12, where they traded as early as this past December, before declining further to $10.
Nvidia
Nvidia (NVDA) shares are trading at what is turning out to be a critical level.
Shares of the AI Superstar have spent the past three weeks trading between $850 and $950, a 13% range from low to high.
Of course, the middle of that range is $900. 68% of the closing prices for Nvidia in March have been within 3% of that $900 price tag. That’s incredibly tight for this stock and makes the $900 level that much more important.
Obviously, the $900 level also represents a psychologically important price. Investors love to buy and sell stocks at $100 increments.
Additionally, Nvidia’s 20-day moving average wits just below $900 at $888.
We’ve not seen a close blow the company’s 20-day moving average since January 4, 2024.
A true break below this trendline – I always consider two closes below a trendline as a break, not one – is likely to put some technical pressure on the stock.
We should expect a “buy the rumor” rally ahead of the company’s earnings on May 22, but remember there is plenty of time between then and now for a healthy correction.
Intermediate-term support for NVIDIA sits at round-numbered $800 and $765-$770 with its 50-day moving.
About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.