NVIDIA Corporation (NASDAQ:NVDA) is set to print its fourth-quarter financial results after the market close. The stock was muted heading into the event, trading near flat to where it closed the trading session on Tuesday.
When the technology company reported its third-quarter earnings on Nov. 17, the stock gapped up 10.61% the following day and reached a new all-time high of $346.47 two trading days later on Nov. 22.
For the third quarter, Nvidia reported earnings per share of $1.17 compared to the consensus estimate of $1.11 and revenue of $7.103 billion, which beat the estimate of $6.83 billion.
On Tuesday, Piper Sandler analyst Harsh Kumar reiterated an Overweight rating and $350 price target on Nvidia. Kumar believes the company could be the big winner this earnings season and predicts a 4.3% quarter-over-quarter increase for the January quarter, which he said Nvidia could beat.
From a technical analysis perspective, Nvidia’s stock looks set to climb higher but it should be noted that holding stocks or options over an earnings print is akin to gambling because stocks can react bullishly to an earnings miss and bearishly to an earnings beat.
Options traders, particularly those who are holding close dated calls or puts, take on extra risk because the intuitions writing the options increase premiums to account for implied volatility.
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The Nvidia Chart: After reaching its new all-time high, Nvidia entered into a downtrend and plummeted almost 40% until hitting a bottom on Jan. 24 at the $208.88 level and reversing into an uptrend. The stock has since formed a consistent series of higher highs and higher lows, with the most recent higher high created on Feb. 10 at $269.25 and the most recent higher low formed at the $237.55 mark on Feb. 14.
The stock is also trading within a rising channel pattern on the daily chart between two parallel lines, with the upper ascending trendline acting as resistance and the lower trendline acting as support. The pattern is considered bullish until the stock drops below the lower trendline on higher-than-average volume.
Nvidia is trading above the eight-day and 21-day exponential moving averages (EMAs) and on Wednesday the eight-day EMA crossed above the 21-day, which is bullish. The stock is trading below the 50-day simple moving average (SMA), however, which indicates longer-term sentiment is currently bearish.
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- Bulls want to see big bullish volume come in as a reaction to Nvidia’s earnings print push the stock up over the 50-day SMA, which will allow Nvidia to pop up above a resistance level at $272.29. Above the level, the stock has further resistance at $288 and $314.
- Bears want to see big bearish volume come in following the earnings print drop Nvidia down below the Feb. 14 low-of-day, which will negate the uptrend and cause the stock to fall out of the rising channel. There is support below at $252.59 and $230.43.
