Signals of retail investors retreating and institutional absorption currents intertwine, NVIDIA (NVDA.US) teeters on the brink, testing the $170 critical support level.

Bloomberg News reports that individual investors have been consistently buying Nvidia (NVDA.US) for a long time, making it the largest company by market capitalization in the S&P 500 index. However, this Wednesday, these investors sold the stock for the first time since July last year. Amid a market pullback caused by geopolitical conflicts and a retreat from AI-driven gains, this move may signal a potential shift in investment sentiment.

According to Vanda Research, the net selling by individual investors was not large—only $44.9 million. Compared to Nvidia’s over $4 trillion market cap, this is a drop in the bucket. However, the firm views this as a positive sign—retail investors are often the last to withdraw, and their exit could indicate an upcoming rebound.

In a report to clients on Thursday, Vanda Research stated, “Historically, such capital flow patterns often have constructive implications.”

The last similar situation occurred on July 2, after which Nvidia’s stock price rose approximately 20% over the following six weeks. Vanda Research believes this suggests that “retail selling may coincide with institutional demand on the other side.”

However, BTIG pointed out that recent declines have brought Nvidia close to a key technical level, which could trigger a rebound or signal further significant drops. On Thursday, amid a broad market decline, Nvidia fell over 4%, closing near $171.24—its lowest level since mid-December.

Jonathan Krinsky, Chief Market Technician at BTIG, said, “Nvidia is approaching the critical support level of $170. If the closing price falls below this, it could mean a major top has formed, with downside risk toward $150.”

Despite the S&P 500 dropping more than 5% this year, the semiconductor sector overall has still gained. However, Krinsky also noted a worrying sign: Micron Technology’s stock has fallen for six consecutive trading days, down more than 20% from its 52-week high, despite recent positive earnings reports. He pointed out that since 1999, there has been no instance of a stock dropping about 20% from its 52-week high and closing lower for six days in a row. He added, “When good news is met with selling, it’s time to be cautious.”

Nvidia’s recent pullback may also be a similar situation. Krinsky said, “Nvidia is the largest company by market cap globally, and the semiconductor sector is the largest weighted industry in the S&P 500. If this sector breaks down, it could have a negative ripple effect on the overall market.”

However, Vanda Research also sees reasons for optimism, noting that the heavy selling early Wednesday “gradually turned into net buying by the end of the day.” The firm believes that if retail funds flow back in on Thursday, it could mean “market sentiment is reignited.” Unfortunately, tech stocks continued to face selling pressure on Thursday, with Nvidia closing down 4.16%.