NVDA failed a cup-and-handle breakout on weak volume and broke below its 50-day average; momentum is declining, signal red, market unfavorable, and he exited. He expects a test of 208.70 and $200 if it collapses; a bounce to 222 only if it closes the gap, but if Nasdaq selling continues, it falls further.

we will talk a little about the market leader Nvidia , because what is happening is that selling Nvidia shares is causing the rest of the market to decline as well.

Let me show you what's happening with us and Nvidia. First, we move on in our system to stock timing, and you can see... Okay, let's start with market timing because market timing indicates what is going on.

The market turned cautious yesterday. So, he said, " Guys, it's time to take your foot off the gas pedal or stop if you can , just like you do at a red or yellow traffic light."

Therefore, the market trended downwards. Next , we move to the stock index and look at Nvidia, and we can see that I have entered Nvidia data, and it is now showing a red signal.

It turned red today. Three days ago, I switched to caution mode. So, she began to say, " Guys, listen up." Incidentally, I had a financial center, so I got out of it today as soon as this turned red.

But who knows if we will be right or wrong, but the trend and probabilities at the moment point to the negative side. You can see that the momentum is declining. We got one red indicator today above three yellow indicators, which reflects a nice upward trend as the market has been green for some time.

So let's take a look at what's going on. As I said, the market has been selling today, yesterday, the day before, and kind of continuously this week, but you can look at this; I'm going to zoom in.

Actually, let me go ahead and enlarge this. This is our pattern recognition system , so I have selected patterns and I want to enlarge them so that you can see the entire screen.

You can see that he created the cup pattern, a cup with a handle and a ripe base, which means that it is still ripening. As you know, it starts out fresh and then it ripens, and soon when something is ripe, you don't want to buy it from the store because you only have a few days to eat it.

So we are at that mature base. It is indeed a perfect point on the chart, but 40% of all breakouts fail even when properly formed, especially when the market is not favorable .

Now we have a market that is neither bad nor good, it's just unfavorable, isn't it? He is not saying, "Here are favorable winds for you." You can see here in our top indicator that the market timing indicator is yellow, and you can see that the stock indicator is this red dot here.

What happened here is that we witnessed many times Netflix stock attempted to break through. This is the buying zone here based on the cup and handle pattern, and the price has just broken out of the buying zone and was unable to hold.

If you noticed, there wasn't enough trading volume to lift it, and trading volume is a crucial element for a successful breakout. And so, we saw a collapse after that: three days of selling, a fourth day of selling outside the buying zone, and then a nice bounce two days before the 50-day moving average.

We needed more trading volume to be convinced that it would maintain the 50-day moving average. We didn't get that. Then yesterday we saw more selling volume and the stock closed below 50.

Today there was a downward gap below 50, let's take a look at the trading volume here. This indicates a ratio of 2% above the 50-day average trading volume . Ah, here. No , he doesn't say that.

So, it is 14% above the 50-day moving average. That was yesterday. I just thought so . There is a gap here on the graph. Gaps tend to fill, but the stock must first find a bottom.

I think it will first test the 208.70 level, approximately. Wherever the turning point was at 208.93. Then there is a turning point very close at 207.02 here. This red area is what I call the circuit breaker or sales area.

It is now located at the sales area. A lot of things went wrong for me today , so I got out of it. Um, I'm not saying you should get out of it . If you have a longer time horizon , that's great.

But what I've noticed is that the stocks are trending downwards, haven't they? This stock is recovering now today. This is good. You tend to want to go down and find a lower level to test.

Now, we've broken the 50 level. We're now below it. We have jumped down to below it . Now we want to get to that level here and see what happens. If he does so with a good trading volume, he will probably exceed that volume, but if he does so with a volume of less than 132 million shares.

If he does that at 132 million shares, it will continue to decline. If he does that with a smaller size, there is a possibility of a rebound. This is how I read this graph. If everything collapses here, which I don't think it will, we would expect a move towards the $200 level in this support zone , wouldn't we?

The market might pull it down. For example, if a red market appears, it might pull it down.

But there was a massive sell-off in many technology stocks today, which is why QQQ and Nvidia indexes fell .

Therefore, please be careful if you are investing in " Nvidia". Even if you use covered calls like we do, you still get income, but if you're making 2% a week or even 1% a week, and the stock drops 3% in one day, it hurts.

You are still receiving income, but you need to protect yourself from the risks of a downturn. The way I protect myself is by putting out " circuit breakers" and letting the sellers take their time.

When the buyers come back and get excited about the stock again, I'll buy, right? I will buy at the appropriate point on the chart. I will not buy at any random point. I will wait until the right conditions are in place.

So , things are not looking good at Nvidia right now, so I wanted to at least warn you and let you know that the trend is downward at the moment . Yes, there is a possibility of a bounce to the 222 level at the 50-day moving average in the next few days if the stock manages to close that gap, but if the selling continues in the Nasdaq, I think the stock will fall further, and that is my reading of the situation .