Apple and NVIDIA tumble: What it means for tech investors
Tech giants Apple and NVIDIA are falling from their recent highs. Yahoo Finance Markets Reporter Jared Blikre delves into the stocks' unexpected downturns.
Apple (AAPL) shares fell in Wednesday's trading following a report that China is banning government officials from using iPhones for work. Blikre points out that history has shown that when Apple's fall from grace is swift, it often leads to a prolonged decline, signifying a potential rocky road ahead for its shares.
Adding to the tech turmoil, NVIDIA (NVDA) struggled to surpass its earnings day high of $499, causing concern among investors. While NVIDIA shares remain close to their record high, Blikre breaks down the chart to show why investors may want to be cautious.
Despite these setbacks, Blikre highlights some positive indicators in the tech sector, with the Technology Select Sector SPDR Fund (XLK) showing promise due to an upcoming double top formation. Similarly, iShares Expanded-Tech Software (IGV) surged by nearly 5 percent over the last month, outperforming competitors like iShares Trust- iShares Semiconductor (SOXX), which fell by about a one percent.
Video Transcript
SEANA SMITH: Jared Blikre is here with a closer look at some of those technical moves that we're seeing in the sector. Jared.
JARED BLIKRE: Yeah. So we're looking at some of the worst days here, particularly for Apple and NVIDIA in about four weeks. Let's pull up the technicals for Apple. This is over six months. I put candlesticks here, and I'm going to put on the 50-day moving average so you can see how previously when we were descending from these highs, we skipped right below it. That was a huge down day. We were descending pretty rapidly in here.
I did a study at the time that saw that when Apple falls from a record high very quickly, it tends to be prolonged-- in other words, that drawdown tends to be prolonged. And indeed we came right above the 50-day and now we are selling off strongly from it once again. That is a clear technical signal that we are to be on alert for further downside potentially.
Now, I want to take a look at NVIDIA. I'm going to put a 3-month chart. This big red candle up here, that was a record high by the way that occurred on its earnings day. And there was some interesting action with respect to buybacks. They sold about $1 billion worth of stock at $499. It'd never seen that price before, so that was potentially exit liquidity for some insiders. I think the main point here is that NVIDIA has not been able to climb above that high there. So even though we are still close to these record highs, I would be a little bit cautious at this point.
Now, I want to go to XLK, that is the SPDR S&P 500 technology select fund. And I'm going to put a 5-year chart on here so we can see what's happening and put some lines there. I've heard some rumblings on Twitter, tech is setting up for a huge double top here, and here's how this would play out. However, you'll notice that we are missing this final down leg here. And in fact, you would have to breach 120 decisively to the downside in order to get that top information.
Right now, we could easily skirt to new highs. I do want to see a break above these highs here eventually, especially to confirm strength. But for now, I think tech is in a decent position. I'm going to show you Microsoft. Microsoft also in a very similar chart, but also decent position.
And then just finally, on the tech note, software versus SOXX-- that is the chip stock. Software over the year to date, that is actually the-- excuse me, the SOXX is actually outperforming year to date. However, over the last month, you will see that software has come from behind. And so software indeed looking a little bit better than the chip stocks at this stage. Seana.
