The Nvidia Pattern That Could Drag the Market Into a Correction

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I’ve been watching something lately that has me thinking about protection — and it involves the one stock that might matter more than any other right now.

Nvidia (NVDA) has absolutely gone nowhere for the last three months. It’s the same consolidation pattern we’ve been seeing in the S&P 500 (SPY), but Nvidia carries a very different kind of weight. If it doesn’t stay bid above the $170 level, the ripple effect could be far bigger than a simple pullback in one stock.

A slip toward $150 or even $140 would not happen in isolation. If NVDA fell 20%, the S&P 500 is likely falling 5-6% by itself — that’s how influential it is. So when I’m watching NVDA’s chart, I’m not just looking at semiconductors. I’m watching the health of the broader market.

That $170 level also ties directly into the Fibonacci structure. The 38% retracement sits near $165, and the 50% retracement aligns with $150 — two technically significant levels where buyers would typically be expected to show up.

If they don’t, symmetry suggests a far deeper move that could drag the index with it.

2 Trades Positioned at Critical Support

With that context, I’m not interested in guessing which way NVDA goes next. I’m focused on positioning. For this setup, I went out to June monthly expiration (always the third Friday), which gives enough time for a potential correction window to play out.

The first structure is built around that $170 support cluster: Buy the $170 put, sell the $165 put, buy the $155 put, seeking $2 credit. This combines a 5-wide debit spread with a 10-wide credit spread, creating a $5 profit trap and zero upside risk. Break-even is around 160, which lines up with the anticipated behavior if NVDA tests the lower end of current consolidation.

The second structure uses the deeper technical levels: Buy the $154 put, sell the $148 put, buy the $138 put, seeking $1 credit. This widens the downside profit zone and captures the $150 region tied to that 50% Fibonacci level. It creates a $6-wide debit spread and $10-wide credit spread with a $6 profit trap, and a break-even near $142.

Why This Approach Makes Sense Right Now

The goal here is not to bet on NVDA collapsing. These trades aren’t directional bets that NVDA is definitely going down. They’re structured positions at technical support levels that capture weakness if it occurs while maintaining profit if NVDA consolidates or moves higher.

That flexibility matters. NVDA is sitting at levels where holding support could spark a bounce, but losing those same levels could trigger a move that weighs heavily on the index. By aligning these structures with the fib retracements at $165 and $150, the positioning remains grounded in the most relevant technical anchors on the chart.

When a stock with this much market influence sits motionless for months and presses against major technical levels, it deserves a strategy built on preparation, not prediction. These two trades deliver exactly that — defined risk, clear reward zones and alignment with the price levels that matter most.

I’ll see you in the markets.

Chris Pulver
Chris Pulver Trading 

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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk. 

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We develop strategies to the best of our ability, but we cannot guarantee a future return. There is always a risk of loss when trading. Past performance is not indicative of future results. The results shown are from a 237-trade backtest from 1/1/20 – 1/1/26. The result was a 70% win rate, 40% average return (winners and losers), with a 7-day hold time.