Nvidia Corporation NVDA
shares are starting to challenge investors’ confidence as recent bouts of high volatility have clouded its immediate future.
Friday witnessed a whirlwind of emotions for shareholders. The stock surged 2.7% at the opening bell, escalating to a remarkable 5.1% peak above the opening price, hitting a record high of $974.
However, the narrative took a sharp turn later in the day. A sudden reversal in momentum saw the stock plummet to a daily low of $865.06, marking an intense 11.2% swing from peak to trough.
Closing the session at $875.28, Nvidia shares posted a 5.6% decline from the preceding day’s close.
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Challenges Faced by Key Indicators
The swift ascent of the stock has left vital indicators like the 50-day moving average trailing behind. The last time the share price retested the 50-day moving average (DMA) was on Feb. 16. Following a $726.58 close in the previous session, the stock endured a 7.1% plunge over the next three sessions, resting at $674.72, still a significant distance from the 50 DMA.
Presently, the 50 DMA stands around $661, marking a considerable retrace for the stock if a pullback ensues.
Could Nvidia, and potentially the broader market, be on the cusp of a correction? Historical data indicates that market corrections, defined by a minimum 10% decline from peak levels, typically occur roughly once every 16 months.
While the last market correction unfolded between July and October 2023, the broader market, represented by the S&P 500, has surged by 25% since then. In contrast, Nvidia stock has significantly outshined the market index, doubling in value over the same period as reported by Benzinga recently.