Even as Nvidia rallies, a bearish technical signal arises

Even Nvidia’s decent gain on Thursday hasn’t been enough to prevent a technical signal to be triggered that’s typically considered bearish for the stock.

Enter the dark cross. The dark cross is a close cousin of the infamous death cross, marked by a stock’s 50-day moving average falling below its 200-day moving average. (For a death cross, both of those numbers need to be moving down; for a dark cross, only the 50-day needs to be trending lower.)

Hat tip to the fine folks at Renaissance Macro Research for bringing this to our attention.

This is just the 12th time in the more than 25-year history of the stock that such an event has occurred.

That’s not too much to go off. And the forward results for the other 11 occasions, as you might guess, are all over the place. 45% of the time the stock is higher three months later; 55% of the time it’s lower. Its best such showing after a dark cross was a 64% gain, and its worst was a 47% decline. Even the average and median three-month forward performance have different signs in front of them: +5% for average and -10.6% for median.

(For this exercise, instances of a dark cross and associated forward performance are contingent on there not having been another dark cross within the prior three months. Some of these dark crosses are also death crosses!)