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-- 119.160 Nvidia dropped 13%! What is the real selling factor? Where is the lower limit?
$NVIDIA (NVDA.US)$set an all-time high on a closing basis on June 18th, then fell, by the 24thdropped by 13%.Does this sudden drop indicate the end of the AI boom, or is it simply a speed adjustment?.To explore the answer, let's consider the real selling factors. I also want to confirm the lower limit.I think so.
The following three factors can be cited as the reasons for selling NVIDIA this time.
1) The upward momentum was too fast.
2) Sector rotation
3) Supply and demand factors
1) The upward momentum was too fast
When you check the stock price of NVIDIA and the 200-day moving average, both have continued to rise. However,The deviation rate from the 200-day moving average has widened due to the rapid pace of the stock price increase.On June 18th, when the stock price reached a high, the deviation rate reached 98%. Based on past cases, when the deviation rate approaches 100%, the stock price tends to either stagnate or adjust.Sector rotation.
When you check the stock price of NVIDIA and the 200-day moving average, both have continued to rise. However,The deviation rate from the 200-day moving average has widened due to the rapid pace of the stock price increase.On June 18th, when the stock price reached a high, the deviation rate reached 98%. Based on past cases, when the deviation rate approaches 100%, the stock price tends to either stagnate or adjust.Sector rotation.
When examining the U.S. market after NVIDIA stock adjusted on June 18th,
it showed signs of sector rotation.In terms of the industry-specific increase/decrease rate of the S&P 500 index,NVIDIA was at the forefront.Information technology composed of semiconductors was sold.On the other hand, Energy and public utilities were bought..
it showed signs of sector rotation.In terms of the industry-specific increase/decrease rate of the S&P 500 index,NVIDIA was at the forefront.Information technology composed of semiconductors was sold.On the other hand, Energy and public utilities were bought..
Background of sector rotation.It is believed that there was an impact from the high price caution towards semiconductor stocks and the reevaluation buying of underperforming stocks, as well as position adjustments in the midst of approaching the end of June.
3) Supply and demand factors
● Position adjustments by institutional investors at the end of June
NVIDIA shares are not only popular among individual investors, but also have a relatively high ownership ratio among institutional investors. Many institutional investors tend to adjust their positions at the end of the quarter. For example, if the ownership ratio of a stock that has significantly increased in price exceeds the fund's upper limit rule, the fund manager needs to reduce the ratio (sell the stock). When checking the trading trends of institutional investors on Bloomberg terminals, it can be seen that there were many funds that reduced their positions after June 18.
● Position adjustments by institutional investors at the end of June
NVIDIA shares are not only popular among individual investors, but also have a relatively high ownership ratio among institutional investors. Many institutional investors tend to adjust their positions at the end of the quarter. For example, if the ownership ratio of a stock that has significantly increased in price exceeds the fund's upper limit rule, the fund manager needs to reduce the ratio (sell the stock). When checking the trading trends of institutional investors on Bloomberg terminals, it can be seen that there were many funds that reduced their positions after June 18.
Triple witching and long squeeze
June 18 is triple witching, the day when individual stock options, stock index futures, and stock index options expire once every quarter. There are also voices pointing out that options trading and long squeezes have influenced stock prices.
June 18th is triple witching, the day when individual stock options, stock index futures, and stock index options expire once every quarter. There are also voices pointing out that options trading and long squeezes have influenced stock prices.
June 18th is triple witching, the day when individual stock options, stock index futures, and stock index options expire once every quarter. There are also voices pointing out that options trading and long squeezes have influenced stock prices.
The decline in expectations of a large inflow of funds through ETFs
On June 11, Bloomberg published an article titled 'NVIDIA ratio rapidly increasing, Apple may be sold - reallocation of large tech ETFs' (Japanese version on June 12). According to Bloomberg Intelligence (BI), as of the 14th, if NVIDIA can maintain an advantage over Apple (in terms of market capitalization), the ownership ratio of NVIDIA through the XLK ETF could have significantly increased with a potential to buy NVIDIA shares worth 10 billion dollars.
However, since June 11th, $The Technology Select Sector SPDR® Fund (XLK.US)$, unexpectedly soared. NVIDIA regained the 2nd place from Apple in terms of market capitalization. In response, BI calculated that if NVIDIA can maintain its advantage over Apple, the operator of XLK would need to buy NVIDIA shares worth 10 billion dollars.
However, since June 11th, $The Technology Select Sector SPDR® Fund (XLK.US)$, unexpectedly soared. NVIDIA regained the 2nd place from Apple in terms of market capitalization. In response, BI calculated that if NVIDIA can maintain its advantage over Apple, the operator of XLK would need to buy NVIDIA shares worth 10 billion dollars.
However, since June 11th, $Apple (AAPL.US)$unexpectedly soared. NVIDIA regained the 2nd place from Apple in terms of market capitalization. In response, BI published an article on June 14th, 'The forced sale of 11 billion dollars of Apple shares and the forced purchase of 10 billion dollars of Nvidia shares, which were expected to be realized on June 10th, may not be realized at the moment.The article on June 11th attracted a lot of attention, so many investors may have expected a large purchase of Nvidia shares from ETFs. However, with the sharp rebound of Apple shares, those expectations have currently been diminished.
BI stated that the final decision would be based on the market capitalization of each company after the floating shares adjustment. At the same time, considering the narrow range of market capitalization for the three stocks, even if the upper limit for Nvidia's weight in XLK is set again in June, there is still a good chance that it will surpass Apple and Microsoft.Furthermore, BI stated that investors should pay attention to the next rebalancing date of XLK on September 13th.In addition,BI mentioned thatinvestors should pay attention.
In addition to the above.Some voices point out that the high valuation and the sale of shares held by management are also factors contributing to the decline.There is.
●NVIDIA's valuation
Before the fallThe estimated PER on June 18th was 48 timesAccording to the quarterly economic outlook released after the September FOMC meeting, a rate hike is expected once more this year. If the rate hike is postponed as expected at this meeting, Slightly higher than the 40 times the SOX index.However,Considering the high profit growth rate of Nvidia among semiconductor stocks,,It is not an abnormally high level.However, the 48 times multiple itself is above the historical average and is in the expensive range, indicating a high level of caution.
Before the fallThe estimated PER on June 18th was 48 timesAccording to the quarterly economic outlook released after the September FOMC meeting, a rate hike is expected once more this year. If the rate hike is postponed as expected at this meeting, Slightly higher than the 40 times the SOX index.However,Considering the high profit growth rate of Nvidia among semiconductor stocks,,It is not an abnormally high level.However, the 48 times multiple itself is above the historical average and is in the expensive range, indicating a high level of caution.
Stock holdings sold by management
According to the filing, CEO Jensen Huang and CFO Colette Kress sold their own shares last week.Although this sale is not necessarily large-scale, it may have served as a trigger for some traders to follow suit, as it is more than in the past.It should be noted that in the United States, stock sales by management are recognized as part of their compensation, and there is no need to overreact to them. Huang's sale is in line with the announced sale plan in March this year. On the other hand, the sale by management may potentially weigh down the stock price in the short term.
According to the filing, CEO Jensen Huang and CFO Colette Kress sold their own shares last week.Although this sale is not necessarily large-scale, it may have served as a trigger for some traders to follow suit, as it is more than in the past.It should be noted that in the United States, stock sales by management are recognized as part of their compensation, and there is no need to overreact to them. Huang's sale is in line with the announced sale plan in March this year. On the other hand, the sale by management may potentially weigh down the stock price in the short term.
On the whole, the true reason for the sell-off of Nvidia shares is believed to be profit-taking selling due to the rapid pace of the price increase.Following the sharp drop in Nvidia shares, there has been an increase in reports and articles comparing the impact on companies that were affected by the dot-com bubble burst in 2000.In general, when compared to the dot-com bubble burst period, there are many views that Nvidia's growth story is not yet over. $Cisco (CSCO.US)$Compared to the dot-com bubble burst period, there are many views that Nvidia's growth story is not yet over..
● past cases of Nvidia
Based on past cases from Nvidia itself, the stock turned into a buy bias when it declined by about 20% (*). If we calculate from the current high (the highest intraday price), the stock price when it falls by 20% would be about $112.61.
(※For details, please refer to the April 23rd issue of "[NVIDIA's 10% decline] What is the real reason? What are the points to watch in the future?Please refer to "
Technical analysis
According to Bloomberg, many technical analysts are looking for support lines based on Fibonacci. Buff Doemayer, Chief Technical Analyst at Kingsview Partners,Short-term support line is around $115,The next milestone is $100.(The 50-day moving average is $101) It seems that these two levels are also levels that many technical analysts are paying attention to.
According to Bloomberg, many technical analysts are looking for support lines based on Fibonacci. Buff Doemayer, Chief Technical Analyst at Kingsview Partners,Short-term support line is around $115,The next milestone is $100.(The 50-day moving average is $101) It seems that these two levels are also levels that many technical analysts are paying attention to.
Overall, $NVIDIA (NVDA.US)$Regarding, For the time being, it seems necessary to watch whether there is support on the downside around $112 to $115.In the medium to long term, it can be said that the benefits of the AI boom can still be expected.
Created on June 25, 2024 by market analyst Amelia.
Source: moomoo Securities created from Bloomberg
Source: moomoo Securities created from Bloomberg
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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181546531 : Speaking of surprise, it was surprising; speaking of course, it was a natural price movement. But when they see that price movement, people who have them get excited, and people who don't have them want to buy it, but when they see that sharp drop, they're too scared to buy it. It's natural as a human mentality.
ミスターボインジャー : It fell to 115 dollars outside of hours, and since there was a rebound from there, it was exactly what Fibonacci thought.
A happy pocket money has been accrued.