Another look a NVDA

 I've looked at NVDA a couple times, in August 2023 and January 2024. On Saturday 8/26/23 I said the action in NVDA stock looked like it was topping. It had closed the day before at 460.18. It topped out at 493.55 on 8/31, then fell. Less than a month later, on 9/21/23 it bottomed out at 410.17, a loss of 16.89%. From there it bounced up to close at 469.45 on 10/12/23, still 4.88% under the 8/31 hi. It quickly dropped again to 405.00 on 10/17/23, 17.94% under the 8/31 hi. But that became the launching pad for a soaring flight to record new highs. For visuals, see the graphs at the earlier posts.

So I was kind of right in the very short term, but very wrong from a longer perspective. The price reached over 1200 before the 10-for-1 split on June 7, 2024, closing post-split on that date at 120.89. It then chopped around between about 100 and 135 until 10/14/24. It climbed to a new high at 148.88 on 11/07/24, and has not yet reached that level again. It closed at 117.70 on Friday, 3/21/25.

A March 19^th article by Danil Sereda, who leads Beyond the Wall Investing, rates NVDA a buy based on the following criteria [paraphrased from the article, which is partly behind a pay wall.]

Expansion into AI robotics will diversify the business, reducing semiconductor cyclicality.

Recent market underperformance make it a buy, anticipating new developments. In other words, buy the dip.

The new Blackwell Ultra chip is expected to drive demand from mega-cap tech firms.

The open source Isaac GROOT model offers to give them a substantial share of the growing humanoid robot market.

Opening a new revenue stream expected that is expected soon confirms the buy recommendation.

This all sounds good, on a fundamental basis. But I believe that stock prices are determined by market emotions, not fundamentals; and that price movements reveal the current emotional climate.

Let's have a look. Graph 1 shows closing prices since the beginning of 2024.

Graph 1

The large purple dot indicates the split date, and previous values are back calculated. The data is from Yahoo Finance. You can see the prices have been erratically falling since November. Periods like this are not unusual in NVDA's history, typically leading to new highs. 

Graph 2 shows the slide from September to November, 2023, prior to the steep rise in the first half of 2024, using exponential moving averages [EMAs], based on 5 to 233 day ranges. 

Graph 2

Note that the EMAs at 89 day [dark red] and longer maintained positive slopes throughout this period. The shorter period lines show that momentum was tepid, but the longer period lines show that it was still alive.

Now let's look at the current EMAs. Graph 3 shows all EMAs through 144 day [blue] slipping down, and even leveling off at 233 days [dark green.]

Graph 3

Of course, nothing in the real world is certain - things can turn on a dime. But momentum in NVDA price movement has, at best, stalled, and might be ready to plunge.

This analysis is, admittedly, simple minded. But I believe the sequence of lower highs and lower lows in the 5 day EMA line [thin blue,] coupled with the faltering momentum, signals that putting money into NVDA stock now would be at greater than normal risk. A much lower risk time to buy will probably come in a few weeks or months, and a similar analysis can help to identify that time.  

Disclaimer - I am not a financial or investment advisor.  I do these mental speculations for my own amusement and edification.  Make your own decisions and chose wisely.  Which is pretty damned difficult.

Graphs are from my own files.