NVIDIA experiences a significant decline; is the U.S. stock market about to start plummeting?

With NVIDIA suddenly experiencing a substantial drop, is the U.S. stock market doomed?

In recent days, the market has been receiving consecutivebad news.：

1. On August 15, Trump posted a tweet before the market opened, stating:High risk.

2. On August 18, OpenAI CEO Sam Altman expressed to the media:AI investment is overheated in the short term, but positive in the long term.

3. On August 19, The New York Times reported:Meta's AI division has begun downsizing, with some executives leaving.

NVIDIA experienced a significant decline of over 3% on August 19 and could not withstand the selling pressure; thus, when the market enters a state of uncertainty, many negative narratives emerge.

As previously mentioned,if NVIDIA experiences a significant drop without recovery, then short-term sentiment will be very poor,and it will be necessary to wait for crucial milestones to restore institutional confidence; at this point, retail investors will be hesitant to buy, unless the decline becomes substantial enough for them to consider purchasing.

Quantitative trading will automatically execute buy and sell orders based on market news, so the nodes where good news appears are either from Jerome Powell's dovish remarks on Friday or the earnings report from NVIDIA.

In the past two days, I have also seen market rumors that NVIDIA is developing chips for China that are of a higher level than the H20 technology. If widely reported by the media, this could potentially become a turning point, triggering quantitative buying.

Therefore, from an overall time perspective, the panic sentiment has not been fully digested, and technology stocks are still under significant pressure. The video mentioned on Monday morning also pointed out that PLTR has broken the 10-day moving average and could not recover, which is very dangerous.

The reason cited by bearish analysts for shorting PLTR is its excessively high price-to-earnings ratio, which cannot support its current valuation.

Actually $Palantir (PLTR.US)$ It is the king of popularity among mid-cap stocks in this round; if it cannot hold up, it signifies that mid-cap tech companies cannot withstand the pressure either.

$Oklo Inc (OKLO.US)$ It represents the king of popularity among small-cap tech stocks, lacking performance, yet experiencing a surge in stock price due to endorsements from major figures and being in an absolute popular sector like nuclear power. However, once it begins to decline sharply, small-cap tech stocks will undoubtedly face widespread misery.

$NVIDIA (NVDA.US)$ It is the last line of defense for large-cap tech stocks; once NVIDIA cannot hold up, the pressure on the entire tech sector will be significant, although the market is still supporting the Dow Jones large-cap stocks.

Thus, the market is actually presenting a dichotomy, but once NVIDIA cannot sustain itself, it will trigger a mass exodus of institutions and retail investors, placing enormous pressure on the entire index. Therefore, even defensive sectors will face some impact.

Consequently, the current situation is quite difficult; the best approach is to reduce positions to below 50% and retain sufficient cash to manage risks.

Of course, if the stock you purchased has already plummeted significantly or has been declining for a while, you might consider holding onto it, as even in a difficult market, it is unlikely to be more challenging than the downturn experienced in March and April.

However, if they are inherently high-priced technology stocks, that would be quite risky.

2025 is expected to be a volatile year, requiring a thorough digestion of the stock market gains from the previous two years, thus demanding higher personal discipline. Therefore, everyone should plan their position management, and those who can strictly adhere to discipline may consider joining our community.

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