Jim Cramer told viewers of Mad Money Thursday night that stocks are plunging as investors fear a growing economy will lead to inflation and rising interest rates. High-growth stocks were among the hardest hit groups, Cramer said, with stocks like Nvidia (NVDA) which reported very strong quarterly numbers.
In his first executive interview of the evening, Cramer spoke with Jensen Huang, Nvidia's CEO, to learn more about what's driving the company's growth. Huang touted artificial intelligence as one of the main drivers for Nvidia. He said AI is an amazing invention that's being used in everything from computer vision to robotics to speech recognition in industries from health care to transportation.
Additionally, Huang noted that gaming continues to grow and game platforms like Fortnite are only getting bigger and more immersive.
Let's check out the charts of NVDA again. We looked at NVDA Thursday afternoon but let's see how the close turned out.
In the updated daily Japanese candlestick chart of NVDA, below, we can see that prices closed near the low of the day (large red candle) and below the cresting 50-day moving average line.
The On-Balance-Volume (OBV) line shows weakness this month and tells us that sellers of NVDA are becoming more aggressive. The Moving Average Convergence Divergence (MACD) oscillator has crossed to the downside for a take profit sell signal.
In the weekly Japanese candlestick chart of NVDA, below, we see some technical "problems." Prices have made an evening star top reversal the past three weeks.
The weekly OBV line is showing the start of a decline. The MACD oscillator is still declining and failed to cross to the upside after several weeks of narrowing.
In this daily Point and Figure chart of NVDA, below, we can see a potential downside price target in the $472 area.
Bottom-line strategy: The charts and indicators of NVDA have weakened despite great fundamental numbers. Continued broader market weakness is likely to spill over to NVDA and the $510 area remains the key. A close below $510 on heavy volume is likely to precipitate further declines. Stand aside for now.
(Nvidia is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells NVDA? Learn more now.)
