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Nvidia Stock Rally Likely to Experience Swift Reversal in the Coming Weeks

Nvidia (NASDAQ), a standout in the AI sector, continues to captivate the stock market, propelling broader indices with its exceptional volume. However, according to analysis from BTIG, the fervor surrounding the chipmaker’s stock has escalated to extreme levels, particularly following its announcement of a stock split on June 7.

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BTIG reports that Nvidia’s current trading volume is surging at a rate 90% above the average, putting it on track for approximately 80 million shares, a figure that rivals its volume on the earnings day of May 23. This surge has driven its notional value traded to about $90 billion, the second highest in its history, trailing only behind March 8.

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“The significance of this is noteworthy,” noted BTIG analysts. “It essentially marked the peak for the stock until its earnings last month, and encompassed a 22% drawdown.”

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Furthermore, NVDA stock is presently trading approximately 85% above its 200-day moving average (DMA). BTIG underscores that such an extreme level has been reached only on a few occasions over the past decade: in 2016 when the stock stood at $30, in 2020 at $125, in 2023 at $400, and in March 2024 at $900.

The magnitude of this move for the world’s second-largest company is remarkable, and in our estimation, likely to prompt a rapid reversal in the upcoming weeks,” stated the investment firm.

In contrast, the broader market exhibits differing activity. The SPDR S&P 500 ETF (NYSE) volume is trailing 25% below the average, with a pace of less than 40 million shares.

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