NVIDIA (NVDA)
Volume selling finally came in heavy on NVIDIA this afternoon, but likely not enough to signal a short-term bottom.
Shares of NVIDIA are trading 16% lower than Thursday’s highs – say that twice to let it sink in - as the Nasdaq 100’s leading performer has entered a technical correction.
NVIDIA headlines were light for the day, signaling that the selloff can be contributed to two things.
First, the overly abundant optimistic sentiment.
Last week, the Technology Select Sector SPDR Fund completed its rebalance, essentially flipping NVIDIA for Apple as the second largest holding (only behind Microsoft) in the popular technology ETF.
Second, NVIDIA’s price chart became technically overbought in early June.
While overbought conditions can persist, they often lead to deeper pullbacks in heavily traded stocks like NVIDIA.
These “healthy corrections” often lead to a short-term buying opportunity for stocks.
Last week, I identified $120 as the first level of support for NVIDIA when the correction came.
Shares dipped below that price in the last hour of trading today, resulting in a must-win situation tomorrow for NVIDIA.
Watch for traders and algorithms to support the stock in early trading tomorrow, likely buoying the stock back above $120.
The afternoon trading will be more critical for the stock.
A move back below $120 will signal that the next level of technical support will take focus.
Currently, that price target is $110.
Investors looking for a deeper correction in the stock should consider the $100 price target as an ideal price for longer-term support for NVIDIA shares.
Bitcoin (BTC)
Bitcoin value dropped by almost 6% as the cryptocurrency broke through the critical $60,000 price mark.
$60,000 served as a bottom for Bitcoin in both April and May, however a look at the price chart shows what could be a troubling pattern.
Since March, Bitcoin has turned in a series of lower highs and lower lows as the trendlines for the cryptocurrency have slowly rolled over.
This pattern is almost always associated with stocks that are turning bearish for a 4-6 week outlook.
The pattern of lower lows would lead to a price below $57,500, which is the price where Bitcoin’s 200-day moving average currently sits to support the cryptocurrency.
A break below that 200-day moving average would be the first time bitcoin has traded below the trendline since October 2023.
One last technical point on bitcoin’s chart.
Bitcoin’s 20-day moving average is preparing to cross below its 50-day moving average.
We saw the same pattern form in April as Bitcoin moved below $60,000, so the charts have uncanny similarities.
That bearish cross preceded another 9% decline in Bitcoin.
Investors need to focus on the $57,500 level as critical support for Bitcoin.
A break below this price will increase selling pressure targeting $50,000 as support.
Bottom line, Bitcoin, while bullish for the long-term, has entered an intermediate-term bearish trend.
Nano Nuclear Energy (NNE)
Nano Nuclear Energy shares were on the move yet again today as the stock closed more than 30% higher for the day.
The microreactor and advanced nuclear technology company announced the acquisition of NANO proprietary technology that can be utilized to cool and transfer heat in small reactors.
The technology was acquired from Dr. Carlos O. Maidana who will collaborate with Nano Nuclear as a consultant to further implement the technology.
Nano Nuclear shares are now nearly 200% higher than just seven trading days ago as the stock has quickly grabbed the attention of micro-cap investors.
The timing of the company’s recent IPO in the small nuclear industry couldn’t be better as several industries search for solutions to increasing demand for power from Artificial Intelligence to Electric Vehicles.
The continued surge of Nano Nuclear Energy’s stock has put it well into overbought territory, suggesting that short-term traders should expect to see an increase in profit taking to begin to pressure the stock lower.
That said, the low number of outstanding shares means that it is easier for the shares to change hands from sellers to buyers while maintaining higher prices as demand for the stock is high.
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.