Expect a rush of investors to jump on Nvidia as its shares are down 16%. They could fall another 8%. Bets are mounting for a sharp recovery
Nvidia $NVIDIA(NVDA.US$ shares have pulled back 16% and I think it could maybe pull back further if you look at the next level of support and the Fibo retracement levels. This doesn't mean Nvidia has changed, it's fundamentals are still sound and strong. Nvidia is rated a buy by 89% of sell-side analysts with its revenue expected to grow 98% next year.
But its pull back is just an example of what can happen toward the end of half year, and end of financial year where investment managers look to take profits and bring portfolio back into alignment. These opportunities don't last long. Remember back in March? Nvidia $NVIDIA(NVDA.US$ shares fell 20% before then rising 82%+ to a new high. I covered this, this morning on Ausbiz TV and Ticker TV.
Last week, we saw Nvida $NVIDIA(NVDA.US$ briefly become the world's biggest company, amassing a market cap of US$3.34 trillion, overtaking Microsoft $Microsoft(MSFT.US$ , before succumbing to profit taking and now trades 16% down from its record high at $118.11. So while dip buyers will be swirling around Nvidia, and others may trim profits ahead of end of June 30.
- I am watching the next level of support at around $115.
- If end of half year rebalancing is stronger, and selling is greater than expected, then the next level of support is around perhaps $105. But if Nvidia falls below these, it could go to the next level of support, around perhaps $94. if any of these levels are tested, I doubt Nvidia would stay there for long. As I wrote above and mentioned on TV. Nvidia is the only mega-cap backed by the world's biggest companies, it's going into new industries and has the strongest forward earnings growth estimates.
- The option market for Nvidia, also validates this. Yes the option market is not gospel, but we can see there are the most calls for NVDA to get back to $120. But we can see calls are reducing. Which suggests options traders are a little cautious ahead of end of half year. So weigh up if you are trading or investing and consider the time frame you want to be invested for.
Be wary of share market volatility this week (its end of half year in US and EOFY in Australia), when portfolios are being rebalanced. Also consider some will see pull backs this week, as an opportunity- remembering that July is historically one of the strongest months for the equity market. .
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
Read more
Comment
Sign in to post a comment
Moomoo Official Market Strategist
Investment strategist, featured on TV, radio, newspapers.
Follow on Twitter @JessicaDAmir
4391Followers
11Following
12KVisitors
Follow