Historically Bullish Signal Emerges for Nvidia Stock

Chip behemoth Nvidia Corp (NASDAQ:NVDA) is trading 8.7% lower at $182.75 this afternoon, extending its retreat from an Oct. 6 record high of $243.37 amid the latest tech selloff. The shares are now trading at their lowest level since April, while pacing for their sixth loss in the last seven sessions. However, the recent pullback has the stock within striking distance of a historically bullish trendline.

According to Schaeffer's Senior Quantitative Analyst Rocky White, Nvidia stock is trading within 3% of its 12-month moving average after spending the previous five months above this trendline. This setup has appeared 18 other times over the last 20 years, after which the stock was higher three months later 82% of the time, averaging an 11.4% gain. From its current perch, a move of this magnitude would put the shares just below $260 by the end of November. 

It should be noted that options traders have been a bit more bearish than usual, and an unwinding of pessimism could help give the shares a boost. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Nvidia stock's 10-day put/call volume ratio ranks in the 97th percentile of its annual range.

Options are relatively affordable too. The chipmaker's Schaeffer's Volatility Index (SVI) comes in at 54%, which stands higher than just 11% of all other readings from the 12 months. This indicates that now might be the perfect time to buy the dip on NVDA.