In a recent note, analysts at Raymond James have indicated that Nvidia's stock (NASDAQ: NVDA) could experience a significant downturn in the short term. Over the past five days, NVDA has seen a decline of 7.20%, while July has seen an overall drop of approximately 8%, with the stock currently standing at 113.29.

Javed Mirza, an analyst at Raymond James, has identified a "mechanical sell signal" for Nvidia in a moving average convergence/divergence indicator that measures price momentum. Mirza's Technical & Quantitative Analysis note reveals that Nvidia's price is currently moving below a crucial technical level at the 50-day moving average. Additionally, there are early signs of selling pressure evident in the stock's volume.

According to Mirza, these negative technical developments suggest that Nvidia may be entering an intermediate-term corrective phase, expected to last around 1-3 months. He further warns that if the stock closes below the support at the 50-day moving average for multiple days, it could potentially lead to a further decline of 16.9% from the current levels, resulting in a filling of the gap around 94.94.

Despite the potential selloff, it is important to note that Nvidia has demonstrated significant growth, with a remarkable rise of 128.9% year-to-date and an astounding increase of 2,500% over the past five years. However, the upcoming Q2 earnings results, scheduled for August 28, are expected to shed more light on the current state and future prospects of the company.

Investors and market participants will be eagerly awaiting Nvidia's report to assess the impacts of recent developments and gauge the company's ability to navigate the potential headwinds in the market. As the chipmaker behemoth gears up for its earnings announcement, analysts are keeping a close eye on how the market dynamics and technical indicators may influence the stock's performance in the coming months.

It remains to be seen how Nvidia will respond to the potential technical selloff and whether it can maintain its impressive growth trajectory amidst the prevailing market conditions.