Jim Cramer has, quite unexpectedly, referred to Nvidia stock (NASDAQ: NVDA) as a ‘shortsellers paradise’. Has the eccentric Mad Money host finally turned bearish on the chipmaker?
Despite having a reputation for making extremely ill-timed calls, his bullish appraisal of NVDA was a rare instance of a pure, no-frills win.
Cramer’s statement came in the form of a March 24 X post, which noted the appearance of a death cross chart pattern. These patterns, marked by the 50-day moving average (MA) moving below the 200-day MA, tend to signal the beginnings of sharp moves to the downside.
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Death Cross: short term (50 day) moving below the 200 day.. Shortseller’s paradise…Nvidia
However, Jim Cramer has not, in fact, turned bearish on the Jensen Huang-led venture. On the contrary — the former hedge fund manager has been claiming that Nvidia stock is being manipulated for more than a week.
To be more precise, Cramer claims that zero day options contracts and inverse exchange-traded funds (ETFs) are being leveraged to drive prices downward. The Mad Money host has also opined that it would not take a significant amount of capital to accomplish this — less than $10 million, even in the case of a business that, like Nvidia, has a significant market capitalization.
While he may not have turned bearish, Cramer obviously believes that Nvidia stock is a prime target for short-sellers — let’s examine that claim a little more closely.
Nvidia stock short interest waning, but remains high
First things first — price action. On Friday, March 21, Nvidia stock closed at a price of $117.70. By press time in the pre-market trading session on Monday, March 24, the price of NVDA shares had increased by 2.11%, up to $120.19. Year-to-date (YTD) losses stand at 10.50%.
That’s only one piece of the equation, but it certainly doesn’t suggest a prevailing bearish sentiment. So, what are the most recent developments regarding Nvidia’s short volume ratio?
As covered previously by Finbold, the ratio shot up above 50 for the first time in two weeks on March 13. The short volume ratio has remained elevated — but on Friday, March 21, it fell to 44.25, per data retrieved from Fintel. Such a sharp decline, while far from a guarantee, does suggest that short-sellers are running out of steam.
While the appearance of a death cross is troubling, as the last time this happened, Nvidia stock lost 47% in value in the course of six months, the pre-market session suggests that the pattern could be invalidated soon.
Lastly, NVDA is still seen as a consensus ‘buy’ according to Wall Street analysts. In addition, all the analyst revisions seen following the company’s GPU Technology Conference (GTC) have been positive.
Featured image via Shutterstock
