Nvidia's stock: Here are the key technical levels to watch

The tech sector is under pressure as nearly $300 billion was wiped from Nvidia's (NVDA) market capitalization in Tuesday's trading session. Now, investors are questioning whether a pullback away from tech dominance is in store. Harvest Portfolio Management CIO and Wall Street Beats partner Paul Meeks joins Catalysts to discuss the state of the tech industry as the market braces for a tumultuous month.

Meeks encourages investors to "hold through" this sell-off in tech until the next signs of a trough, where they should buy the dip. He specifically will be looking for a break below $100 a share in Nvidia's stock, since the last time that occurred, the stock bounced back to around $130 a share.

He explains the next big catalyst to warrant that action in Nvidia would come down to technicals. "Maybe we see the trading volume dry up a little bit. So it looks like we have an exhaustion of selling because right now, I'm spending more time as a technical analyst than a fundamental analyst, not my choice. But that's where the market is driving me," he adds.

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Melanie Riehl

Video Transcript

Tuesday's market sell off wiping 300 million billion rather dollars from Nvidia's market cap.

The semi conductor sector as a whole was down, including Broadcom, which will report its earnings on Thursday are the signs of broader plateauing in the check check the tech sector and which companies could be vulnerable to a wider broadening of the market.

For more on this.

Let's bring me harvest for management.

Cio and Wall Street beats partner, Paul.

It's great to speak with you.

Listen, I mean my main question for tech investors, should they hold through this or should they be worried bottom line there is they should hold through this.

And actually when we get the next uh signs of a trough in some of these stocks, I think you should probably buy them.

And a couple of my select names aggressively.

What what are those signs to the trough?

What are, what are the keys to that that you would be tracking?

Yeah.

So right now because I believe so strongly in the fundamentals of companies like NVIDIA, then select others in the semiconductor food chain.

Uh Remember we had a pretty nasty spill in these stocks only about a month ago.

So I wanna see a retest specifically for NVIDIA of a break below $100 a share because the last time that happened, the stock, uh, found some support and very quickly bounced back to 130.

So it was threatening a uh all time high.

So I'd like to see a successful retest of those lows that were sent just a month ago.

What is it going to take for a successful retest of that to happen?

Paul, what's going to be the next big catalyst for that action?

Well, the next big catalyst is technicals.

I mean, I feel strongly in the fundamentals.

The only thing that's changed today and you had the prior guest is the subpoena that the Department of Justice has sent to NVIDIA.

I mean, that's obviously an incremental negative, but I don't think it's that big of a deal at the end of the day and I don't think it's going to be resolved for months if not years.

So I think it's technical or technical is just when we see the stock trough, I think it's going to test that sub $100 price.

Maybe we see the uh trading volume dry up a little bit.

So it looks like we have an exhaustion of selling because right now I'm spending more time as a technical analyst than a fundamental analyst, not my choice, but that's where the market is driving me, Paul with that in mind.

What are some of the most vulnerable tech stocks to a broadening out in this market?

I think the ones that are uh particularly expensive.

Uh, but I wouldn't put NVIDIA in that camp because believe it or not, NVIDIA today is only trading at 29 times next year's earnings.

It's not that many notches above the S and P 500 for a lot better growth.

So some of the, uh I call them A I pretenders companies that talk about A I apps that won't really become mainstream for way too long.

I worry about those.

But the A I infrastructure builders, which are primarily the GP U vendors and also the data server vendors and also maybe a couple of data networking vendors I think will continue to do quite well and should be the focus area within the tech sector.