Nvidia (NVDA) releases its report after the market close, but if there’s ever a time when you don’t have a technical edge, it’s right before a company releases its earnings results. So why do we bother writing about it? There is one very important reason. That’s because the reaction of stock prices to any news, whether micro or macro, tells us more than the news itself. And charts can be very helpful in putting that response into perspective. In this case, the period just before the earnings announcement is the best time to: Understand a stock’s current chart settings Analyze how past big reactions have been handled Review long-term charts Understand current chart settings Don’t put technical-driven trades before earnings reports . It is very important to know what the current chart pattern is. In many cases, identifiable geological formations are under construction. In that case, the best-case scenario would be for the formation to survive post-revenue. Currently, NVDA is in breakout mode after breaking through the $915 zone late last week. If the stock reacts negatively to earnings, this doesn’t leave much room for change. If the stock falls below (and remains below) $915, the breakout will be invalidated. If $915 holds, the measured upside target of $1,075 would be maintained. Looking at the weekly chart, NVDA’s big rally was driven by two major pattern breakouts. The first pattern occurred in January 2023 and the second pattern occurred in January 2024. Before both of these breakouts occurred, the stock endured months of volatile sideways movement. Currently, the last time NVDA hit a new high was on March 4th. This period is not as long as the previous two weeks, but given that the stock has been net flat for the past 10 weeks, the chances of another big move are increasing. Analyzing how past big reactions have been handled Not surprisingly, the three biggest daily moves since early 2023 occurred on days after earnings exploded +14% ( 2/23/23) +24% (5/25/23) ), +16% (2/22/24). Again, there is always risk involved in buying ahead of returns, even if it is ultimately the right move. But buying after a big one-day move like this has also proven to be a great play, although it seems even riskier at first glance. The difference is that buying after a big reaction does two things: 1. Gap risk is eliminated. 2. This gap acts as a stop. NVDA has not recorded significant movement after each earnings release over the past two years, but in all three releases, it has respected the upside gap on all three occasions. Essentially, the gap served as a support. In other words, if the upside gap closes this time, it could be telling the market that something has changed. Look at the long term chart. Even before closing, it’s a good time to broaden your horizons and consider a long-term perspective. As we all know, NVDA has become synonymous with AI and has rapidly become popular. The company’s stock is aiming for six consecutive quarters of growth. And from Q4 2022 to Q1 2024, it increased by nearly 860%. But remember that the company had a storied history even before this last step. In particular, from Q3 2015 to Q3 2018, it rose for 13 consecutive quarters, showing an astonishing growth of +1365%. In other words, NVDA has had a long history of success both as a company and as a stock. Reacting to a single earnings report is not enough to change this situation. -Frank Cappelleri Founder: https://cappthesis.com Disclosure: (none) The above is subject to our Terms of Use and Privacy Policy. This content is provided for informational purposes only and does not constitute financial, investment, tax, or legal advice, or a recommendation to purchase any security or other financial asset. The Content is general in nature and does not reflect any individual’s unique personal circumstances. The above may not be appropriate for your particular situation. Before making any financial decisions, you should strongly consider seeking the advice of your own financial or investment advisor. Click here for full disclaimer.
Key levels to watch on Nvidia’s stock chart and its big earnings report is almost here
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