( Analysis of Nvidia stock performance and market reaction hey everyone Chris Johnson with Monday morning here to talk about Nvidia it's been a hot minute but the stock is down 10% and that is after last week's better than expected earnings report I'm going to talk about why the stock is moving lower what's different this time around and most importantly this chart real quickly that's going to identify the support and more importantly the long-term buying opportunity for NVIDIA stick with me for 5 or 10 minutes I'm going to help you turn the Market's fear into a buying opportunity on this hot stock [Music] all right like I said it has been a hot minute since we've talked about Nvidia but a lot has happened and the chart that I gave you about a month ago is still in play we're going to go through that in just a couple of minutes and it's going to identify the exact points where you're going to see support come in for NVIDIA I don't want you to get faked out I think we go a lot lower on this move that's why I think you need to let the market fear turn into a buying opportunity on the stock I'll give you the price and an easy way to make sure that you don't let your emotions jump into it let's talk about what happened last week I don't want to go through the numbers because you've already heard them everybody knows that the company came out with better than expected earnings and the revenue was much better than expected I'm going to show you a chart that gives you a little bit of a different light on that in just a second but this is what's really driving the price of Nvidia down right now things have changed and this article that I published last week I talked about the fact that the earnings were not the problem with Nvidia instead the earnings problem with it with investors it's actually their expectations of the stock if you think about it for the last couple of months all we've heard about even when some of the companies like Microsoft Amazon everybody kind of gave us a little bit of a weak Outlook and reason to worry the market still looked at August 28th and said hey Nvidia is going to come out and grab the market by the bootstraps and take us higher and that's just not the case we've seen now that better than expected earnings did not drive the stock higher that's because the stock was priced to Perfection look at this chart this is the emotional roller coaster that we go on with either the stock market or a stock like Nvidia whenever we see everybody crowd into things Warren Buffett had his way of putting it i' like to show you this simple chart whenever we see the market get euphoric they're absolutely crazed over a stock it can't go wrong that's when you need to be worried you Foria or even complacency you here is that emotion that we need to watch out for because in those situations it's easier for investors to kind of turn and start running from a stock short term that's what we're going to see from Nvidia here so everybody was bullish on the stock and even though it says bearish that's how you should be they were euphoric ( Nvidia's earnings performance compared to analyst expectations couple days before earnings we actually saw analyst coming out saying hey this is going to be great raising their price Targets on Nvidia so that Euphoria was out there what happened well Nvidia came out with better than expected earnings per share the revenue the Outlook was good as well maybe not as good as everybody wanted but here is the actual problem that happened with the earnings and what you're looking at is the actual difference between the expectations of analysts in the market and the actual numbers of of the uh earnings per share and revenue from Nvidia so it's call it the surprise margin here the surprise history and you can see the blue line here is the earning per share surprise so as it goes up that means Nvidia is beating earnings per share by a higher margin and notice that you see these declines it's either when Nvidia is falling off in terms of their earnings per share performance or the other thing is that investors are raising their expectations so they create it a harder scenario or environment for NVIDIA to actually beat that's what we've seen here over the last year year and a half or so we have seen investors expectations continue to go higher but the problem is that Invidia is not able to keep that margin keep beating by the same percentage there so as we make our way down to the point where Nvidia is now meeting expectations even though they're high it's just not enough remember the Market's looking for the next six months the next 12 months in terms of where those expectations are going to lead the fact that Nvidia is catching up means that there's a let's call it a dim diminishing return on that margin same thing with the revenue you can see here is where your AI Revenue surprise came that Orange Line in 2023 we started to hear about Nvidia and their AI revenue and they absolutely started the blowing the doors off of earnings and revenue expectations revenue on a large basis there now you're seeing the company catch up that margin if you will between expected revenue and the actual revenue is getting smaller that just means that investors are now again they've raised the bar to high so what happens when that situation happens well you get what we got last week earnings come out the company doesn't surprise and now you get headlines like this Nvidia leads a NASDAQ down in a rough start to September and that's your other Factor that's going that's why things are a little here we're heading into September it is the worst month of the year period everybody thinks you selling may go away ( Analysis of Nvidia's performance in September compared to historical data no you get out of the market in July right after earnings and you let the summer month sweat it out while you sit on the sidelines September's the most volatile and it is the worst performing for the S&P 500 when you look at the last 20 years it's not May January is not good September is the worst in October which everybody thinks about is the worst it's actually volatile but it's your Comeback Kid month so we start to get headlines like this and when you go back to that chart that I showed you right there the four stages of the rally are declined now we get this situation where there's a lot of disbelief about Nvidia and the market to some degree and we start to move into an acceptance phase where investors start to feel like okay things are selling off now I'm going to jump in and sell off just like people were buying on the way up and that drives the prices lower so we get that headline here's your actual returns for the S&P 500 and this is over the last 20 years notice that negative - 1% and it doesn't seem like a lot negative 1% when the market usually averages about 1% a month historically it's a complete reversal that's your worst month of the year now I know what a lot of people are going to say hey CJ doesn't matter we're talking about Nvidia here Nvidia is gonna perform well guess what there's your performance for NVIDIA and this is since 1999 1999 you still have that sore thumb that sticks out minus 2.3% the stock averages during the month of September that's winners and losing years since 1999 and I know what some people are going to say hey CJ it's not the same company that it was back in 1999 or even 2010 well here's the last five 5 years minus 6.8% in the month of September it averages that's the Last 5 Years guess what there's still some people out there that are going to say hey CJ that's not the AI Nvidia that we know right now today hus 133% and that's since 2021 so that's got your 2022 2021 2023 and obviously we're working on 2024 3 5 25 year I don't care what it is NVIDIA underperforms in September minus 133% during its AI era so we can cut up the timelines and look at it however you like this stock is different right now but it still acts the same way in September so that chart that you want to see and this is what we put out just a week ago that showed you the areas of the market where you're going to see support and accelerating sell selling on Nvidia here it is think of this as a ( Analysis of investor psychology and technical levels driving Nvidia stock price road map and this is based on technicals and it's also based on the psychological levels that are driving Nvidia right now remember investors psychology is very important right now or the sentiment that we're going to see that sentiment swing as it turns a little pessimistic here is going to drive stock prices and Nvidia down I'm going to say it one more time investor sentiment in Psychology and the technicals are the most important thing that are driving Nvidia right now it has has nothing to do with the earnings report with Blackwell with any of this right now psychology and price let's get back to that chart very quickly so I've got a few areas that are leveled here right here at $140 notice that's where we saw the stock top out in June and then try to make its way back up there as we headed into July that's where it was priced for Perfection this is a chart from two weeks ago I believe that I drew up price for Perfection next price down is what I refer to as a pivot price and we've broken through that that's $120 that was your first level you were going to see a support and this is something I identified also about a month and a half ago I got called out pretty good to the mat there and the price is going that exact Direction This is a road map it's a price chart but it's a road map your pivot price was 120 the reason for that is that's that support resistance we saw in July notice the huge support that we saw June July and then we saw a breakout here in June that took us into July 120 has been a key level for the institutions not so much the retail Traders out there we've broken through that and that's also the 50-day moving average I'm going to show you the updated chart in just a second because that 50 days is one of the things that has changed the next level that you've got though and we're right around 110 we broke through that today but your shortterm support and that's going to be at $100 $100 on the button you can also see that we got that support in the beginning of August why is that $100 so supportive there's a couple of reasons number one there's a lot of options activity a lot of put options open at that 100 strike and you tend to see those act as support you've also got the most important thing which is the psychological remember I said psychological and prices $100 is round number anytime I don't care if it's $10 $100 $1,000 anytime you run into a level like that it's going to act as support or resistance we saw Nvidia slash through it after their earnings report back in May and in that particular situation it was gone the market jumped right through that psychological level we're now seeing the reverse if we slice through it people are going to use those ( Analysis of Nvidia stock price movement and potential support levels double zeros of the $100 to be a trigger to get out of the stock back to that chart so your short-term support here and I expect to see it Poss before that jobs report on Friday is going to be at that $100 level next level of support and this is where you want to start looking to be a long-term buyer we could go lower than this but believe me people got really angry when I said we might hit it about a month and a half ago it's right there at 80 bucks $80 is your next Target down that's another 20% obviously from $100 a lot of people will say well Nvidia can't go down 20% remember this is a stock that just moved 10% in one day that's less than a week's move away if we get some real volatility and remember that S&P 500 seasonality is right now blowing as a headwind for NVIDIA so $80 is as far as it seems away at 20% little more than that obviously now is still very much Within Reach here that's the price where you want to start looking and it's for a couple of reasons look at let's look at the current chart for NVIDIA there you have it I'm going to point one other thing out and when we go to these charts I always like to tell you what the numbers are what the lines are that green is a 50-day moving average whenever you see that that is the indicator or the trend line that tells you whether a Stock's trend is it is its friend notice how bullish this has been it's been a great time to hold Nvidia when it turns over like that that's when you need to start being cautious the momentum has moved away from the stock and it's switched into the sell's control now there's the 110 level that I mentioned that's a little bit of support here but $100 is that next level we're going to watch very very closely very closely and I think you could see that as early as Wednesday this week tomorrow today if you're watching it today the next level look at that 200 day moving average the 200 day moving average is the other trend line that Wall Street watches they watch the 50 and the 200 day moving average that 200 day moving average if we pierce it in the 90 you're going to start looking at going back to those April lows at $80 and that's where I'm setting my price targets right now that's where I'm saying as a long-term Bull and I am on Nvidia I want to be a buyer of the stock at that point knowing that it could go down to $75 remember when Amazon hit 100 and you still got an opportunity to buy it down in the80s you could look at another situation like that where you can reach down and pick up a stock remember longterm here you're not looking to invest or trade in the noise get the emotions out of the trade you set some limit orders to buy at that $80 ( Analyzing the market sentiment and key indicators for NVIDIA stock maybe at 85 or so and take a little bit of a taste knowing that the long term you're going to run higher that's as easy as it gets right now now keep in mind over the next couple of days you are going to see a lot of headlines coming across just like the one we saw with the worried Trader and that's going to drive more those emotions when you go back to the chart that I showed you where the emotions guide Nvidia lower and lower you want to wait until we feel that point where oh my gosh this is the end for NVIDIA despair is what we call it fear remember it's always the best time to buy a stock whenever fear is driving the market or a stock and September is notorious for doing that so wrap it up here for you and I put a little slide together just so you could have maybe not a rule but at least a guide here watch that $100 Mark here over the next few days that is the key psychological selling point for the stock you're going to watch that over the next 5 to 10 trading days I do think we could hit that within two trading days remember there's a huge report coming up here at the end of the week with the jobs report and that's going to give investors a little confirmation in terms of whether what the economy is doing also we've got that September 18th fed announcement watch the sentiment around that keep in mind of how optimistic investors are that the fed's going to come in and maybe not do 25 but 50 basis points I'm going to tell you the fed's going to try to play a short hand here and maybe let them do 25 basis points but the market wants more just like they wanted more from Nvidia so watch that $100 level that's psychologically important a break below 100 opens up the pathway to an $80 Target that's been my short-term downside Target on Nvidia for about two months here uh and that's below the next trend line support of 200 but I think that round number and those bottoms that we saw early in the spring kick in and like I said take the emotion out of the situation right now look up how to trade using limit orders to buy stocks and sell stocks that's usually how you get away from letting this volatility drive you crazy and remember you want to stay away from emotionally driven emotionally charged markets that's it I'm going to remind you go ahead and hit the link down below or we'll get that QR code Cod up if you want to use that go ahead and sign up for that five stock report every week like I said it's a large cap Tech a growth stock a dividend yielder a stock below $10 and one stock to consider as a short airbnb's been on that list there have been a few really good shorts on that list and it's something you can get for free I'm going to sign off for now Chris Johnson from Monday morning wishing you the best trading success have a great day [Music] h