Nvidia (NASDAQ:NVDA) remains one of the hottest stocks in the market. That said, as many investors are well aware, NVDA stock is about 20% below its recent all-time high. Some of this pullback is due to concern around the company’s valuation and its forward growth prospects. However, an analyst from Raymond James just put forward another reason for caution around the mega-cap chip giant.
Raymond James’ Javed Mirza said in a note to clients that he believes a “mechanical sell signal” has been breached for NVDA stock. This signal is based on the moving average convergence/divergence (MACD) indicator, that uses price trends to suggest entry and exit points.
Concerns Swirl Around NVDA Stock Technical Indicators
Now, many buy-and-hold investors may not be familiar with technical indicators, as they often choose to focus on fundamentals and current events.
For traders, signals such as the MACD can impact short-term moves in a stock price. Mirza also told clients that the NVDA stock price had broken below its 50-day moving average and that trading volume suggested selling pressure. He wrote:
“…. these three early technical negatives suggest an intermediate-term (1-3 month) corrective phase is attempting to take hold.”
While I am by no means an expert in technical analysis myself, I think most investors can certainly see that Nvidia’s momentum has slowed. If that’s the case, perhaps buying shares now below their highs is the right move.
More broadly, until something breaks in the world of high-performance computing and artificial intelligence, this is a stock to own for the long term. Whether that’s at better prices or not depends upon one’s investing time horizon.
On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
