Nvidia is in correction territory, and that marks a rare buying opportunity, analyst says

Shares of Nvidia tanked as much as 11 percent from its recent intraday high, but Todd Gordon says this could just be the best time to buy.

The TradingAnalysis.com founder said the charts are showing that Nvidia actually has room to rally before the stock enters overbought territory. Gordon pointed out that since 2002, the stock has sat in a parallel uptrend, and that upside resistance on the chart doesn't actually appear until $250.

For more proof that fear about Wednesday's volatility in Nvidia could be overblown, Gordon looked back to September 2015. Since then, he said, the stock has seen three corrections of 27 percent, 21 percent and 18 percent, but he pointed out that the corrections became smaller each time.

The stock fell 6.78 percent Wednesday to close at $196.42. Gordon said he would be concerned if a bigger correction breaks that trend.

"What we would have to see for this break is an 18 percent or 20 percent correction," he said on the "Trading Nation" segment in CNBC's "Power Lunch." "That would bring you down to about $179 [and] would break the series of lower corrections."

"So until we start breaking $180, I would say this is very much to be expected, and maybe even a buying opportunity," he added.

In Thursday's premarket, the stock was up about 1 percent.

Chantico Global CEO Gina Sanchez, however, said that despite the consecutive strong earnings beats Nvidia has recently seen, two things may ultimately hit the stock. She said there's been "a dramatic rise" in the use of Nvidia machines for cryptocurrencies, and a giant sell-off in bitcoin on Wednesday speaks to the volatility of the cryptocurrency space.

Second, Sanchez said, the rise of insider selling in Nvidia could be a warning sign for investors.

"You're seeing some significant insider selling on Nvidia, particularly the CEO who rarely sells massive amounts of shares," Sanchez said on "Power Lunch." "And so I do think that is an important element to watch."

Despite the sell-off, Nvidia was still up 84 percent this year as of Wednesday's close.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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