The stock market is riding high, trading around record levels. Nvidia, arguably the most important stock on Wall Street, isn’t doing nearly as well lately. Nvidia shares are down nearly 3% in December, while the S & P 500 is up 3.7% during that time. On top of that, the stock is 9.8% below a record closing high reached Nov. 7, putting it within striking distance of entering correction territory. Roth MKM’s JC O’Hara also warned that the stock faces a key technical test this week. “This week we expect another test of a zone of key chart support for NVDA. The $125/$130 area will be paramount for the bulls to defend. If NVDA breaks lower, and breadth continues to weaken, the market will surely stumble,” wrote O’Hara, the firm’s chief market technician, in a Sunday note. The stock closed at $134.25 per share on Friday. It was up slightly on Monday. Nvidia’s recent weakness also comes as Wall Street deals with another concerning trend. Friday marked the 10th session in a row in which S & P 500 decliners outnumbered advancers. That, according to Deutsche Bank’s Jim Reid, is the longest such streak going back to 1996. “We have seen this show before. Money continues to enter the market, but the cash has refocused its sights on the largest names,” O’Hara wrote. We wrote about this trend last week , noting that the S & P 500 typically does well a year after such a long streak of negative market breadth. That said, if the few stocks that are actually advancing begin to falter, it could spell trouble for the broader market. Elsewhere Monday morning on Wall Street, Jefferies downgraded Ford Motor to underperform from hold. “De-stocking has become an overhang with US inventory drifting up to 96 days (+1 in November, 26/18 days above GM/STLA) in spite of solid US sales +15% (+4% ytd),” the analyst wrote to clients on Monday. “Sustained production supports the reduced 2024 guidance but suggests a more difficult start to 2025.”
