Stock Trends

Nvidia disappoints (the speculators)

Good morning,

Nvidia is down 4% in the pre-market and while we’ll call that a disappointment from a price perspective, perhaps the people that are most disappointed are the speculators who were just looking for fireworks.

The trading and close today are what matter but assuming the pre-market action is roughly right, the decline will do little to change the chart or break the range we’ve been highlighting.

However, it does mean that many of the other semiconductors, which have been acting much worse, don’t have a knight in shining armor to come to their rescue.

You could try and write off SMCI, which I highlighted as a key potential tell on Nvidia earnings, as a one-off thanks to the Hindenburg short report and announcement of a delayed annual filing.

But plenty of other key stocks in the space stalled at resistance last week and were underperforming ahead of Nvidia’s report.

It doesn’t mean there has to be significant downside from here, but semis largely remain guilty until proven innocent.

This week, we’ll review:

• Key levels to watch on Nvidia

• Resistance on other notable semis

• 4 stocks that have bottomed

• Excesses in consumer staples

• Hot List updates

• and more!

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Reaction to Nvidia

Trading down by about 4% pre-market

As of 7:30 am ET, Nvidia was down 4%, putting it just above $120 and right on the 50-DMA. The close is what matters but assuming that holds, it would keep the stock above key support at $116. If we hold that level today and in the coming weeks, it bodes well for Nvidia to work higher and test $140. If $116 breaks, that would be a notable difference from the spring correction and increase the chances of a move back to $100. I’ll provide an update on Monday in the MMP.

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Other semiconductors still aren’t fixed

As discussed in the intro, it doesn’t mean there has to be significant downside, but the following stocks have all recently failed at key resistance levels. Until those levels are overcome or bottoming patterns have formed, these stocks are not fit for new buys.

Super Micro was the tell

You can blame it on the Hindenburg short report (Tuesday) or the announcement of a delayed annual report (Wednesday), but the chart gets the news first and SMCI had already rolled over hard with an 8% loss on Monday. Upside is capped if we’re below the 200-DMA but the stock saw some intraday buying at $360 support yesterday.

Avoiding ARM has been the right call

SMCI and ARM were both called out as stocks to avoid in last week’s report and ARM looks to be rolling over as expected. The stock fell 4.5% yesterday and is likely set for more today in sympathy with NVDA.

$144 and the 200-DMA key levels to watch on Broadcom

AVGO has held up better than most over the past two months but action today is likely to lead to another test of $144. The 200-DMA held as support earlier this month but repeated and more frequent tests of that metric would be a sign that it is likely to break.

AMD fails again at the 200-DMA

Last month, I called AMD a potential canary in the coal mine and unfortunately, the rest of the space has been catching down to its weakness since. The stock failed at the underside of its 200-DMA again this week and now looks to have another date with support at $132.

The 200-day also turning into resistance for Lam Research

Nvidia’s report likely won’t help pressure to the downside here. The best-case scenario for LRCX now looks to be some sort of bullish divergence/successful retest of $731.

AMAT rolling over at resistance

Finally, Applied Materials where $214 has turned back into resistance. The big base breakout point at $167 held once for the stock, semiconductors bulls will need to see it happen again.

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The bottom is in

MDT: Medtronic