Stock of the Day: Where is the Bottom for NVIDIA?

NVIDIA Corporation (NASDAQ:NVDA) is trading lower on Monday. A major scandal involving CEO Jensen Huang has made investors nervous. The shares may be nearing a bottom. This is why NVIDIA is the Stock of the Day.

As you can see on the chart, Nvidia has found support around the $167.00 level.

This price has been important for this stock. It was first support in September of last year.

Support is a price level where there is a large amount of demand, or buy orders, for a stock.

Downtrends occur when there are more shares for sale than there are buyers. Sellers are forced to undercut each other to attract buyers, which can push the shares into a downtrend.

These trends end when they reach support.

When Nvidia rallied off this support, many of the people who sold at it, came to regret their decisions to do so. Some decided that, if they ever could, they would repurchase their shares at the same price they sold them for.

When the stock fell back to $167 in April, these regretful sellers placed buy orders. The large quantity of these orders created support at the level again.

Then the shares rallied from there. When this happened, a number of the people who sold around $167 regretted it.

There is a good chance that many of the people who sold then will buy their shares back if they can do so at their selling price. This means if NVIDIA reaches $167, they will place buy orders.

If there are enough of these orders, it can create support at the level again.

Successful traders know how to identify bottoms. They understand that sellers’ remorse can create support at prices that previously held as support. This creates opportunities for profit.

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