Traders should wait to buy the dip on Nvidia, history shows

Jen-Hsun Huang, CEO of Nvidia, holds a Nvidia Drive PX Auto-Pilot Computer during the GPU Technology Conference in San Jose, California, last March.
David Paul Morris | Bloomberg | Getty Images

Nvidia shares were plunging more than 9 percent midday Thursday after the graphics chip company was downgraded by Instinet to a reduce rating from buy due to competition from AMD. Traders shouldn't bet on a quick rebound, history shows.

The company's shares have more than tripled in the past 12 months even after Thursday's sell-off. Nvidia is still the No. 1 performing stock in the past year, according to FactSet.

So traders may be inclined once again to buy the Nvidia dip due to its stellar recent performance. But the chipmaker's history shows traders may want to think twice before doing so.

Using hedge fund analytics tool Kensho, CNBC PRO found that Nvidia dropped 8 percent or more during a single day of trading on 26 occasions during the last decade. Here's what the shares did one week later, on average, if you bought on the close of those big down days: