NVDA Is Showing Relative Weakness vs SPY as the Ratio Line Breaks Down

 NVDA Is Flashing Relative Weakness Before Price Confirms

Above is a daily chart of NVDA, and in the lower pane is a ratio chart of NVDA versus the SPY. I rely heavily on ratio charts because they tell me how a stock is behaving relative to the market, not just in isolation. Right now, that message from NVDA is hard to ignore.

The ratio line is clearly sloping downward, which tells me NVDA is lagging the broader market. While the SPY has been holding up, NVDA has been quietly underperforming. This kind of relative weakness often shows up before the price chart breaks down  and that’s exactly what we’re seeing here.

Relative Weakness Is Leading Price

What really stands out to me is how weak the ratio line has become. NVDA price is still above its pivot low from 12 days ago, but the ratio line is not. In fact, the ratio has already broken below that prior low and gone on to make a five-month low. That’s important.

When a ratio line makes a new low before price does, it tells me that institutions are rotating elsewhere. Money is leaving NVDA relative to the SPY even though price hasn’t fully reflected it yet. This is a classic example of relative weakness leading price, not lagging it.

Why Ratio Line Correlation Matters

When I use ratio charts, I want to see a clean relationship between price and the ratio line. If the stock goes up, I want the ratio line moving up. If the stock goes down, the ratio line should move down as well.

If a ratio line chops sideways or moves randomly while price trends, I don’t find it useful. In my opinion, a ratio that doesn’t correlate well with price has little analytical value. That’s not the case here with NVDA, the correlation is excellent. The stock’s struggles are being confirmed by a weakening ratio line. That gives me confidence that this relative weakness is real and not just noise.

NVDA Isn’t Broken — But It’s on Watch

At this point, I’m not short NVDA. I’m simply watching it closely. Price is still holding above support, including the pivot low from roughly two weeks ago. As long as that level holds, NVDA can continue chopping around.

However, if NVDA breaks below the 169.55 low from two weeks ago, that would get my attention. A breakdown in price, combined with a ratio line already making multi-month lows, would be a strong confirmation of downside risk  especially if the broader market is also heading lower.

Why I pay attention to Relative Strength

This is exactly why I focus so much on relative strength. Price alone doesn’t always tell the full story. The ratio chart often gives me an early warning when a stock is falling out of favor.

Right now, NVDA isn’t leading. It’s lagging  and the ratio line is making that crystal clear. Until that changes, I’m treating NVDA as a stock to watch carefully, not one to aggressively buy.