It was not the reaction the bulls were hoping for after graphics-chip major Nvidia (NVDA) – Get NVIDIA Corporation Report reported earnings.
Even as the company beat consensus expectations, Nvidia stock was slightly lower coming into Thursday’s session.
Once the opening bell rang, sellers leaned in and buyers were absent, driving the shares down more than 8.5% at one point Thursday morning.
Now the shares are bouncing a bit, and the bulls are paring the losses. That’s fair, given that this is one of the higher-quality growth stocks out there.
The Santa Clara, Calif., company’s guidance left a bit of concern and is responsible for today’s dip. That said, its revenue outlook was still well ahead of analysts’ expectations and investors are understandably frustrated by the stock dip.
Nvidia is the champ and it’s my opinion that bulls were looking for a reaction much like we saw with Advanced Micro Devices (AMD) – Get Advanced Micro Devices, Inc. Report, even though the latter faded from its initial post-earnings pop.
In all, it’s pretty simple: There’s a bear market in growth stocks and while Nvidia reported solid results, it’s not yet being rewarded. Will it be?
Trading Nvidia Stock
Daily chart of Nvidia stock.
Chart courtesy of TrendSpider.com
Nvidia plays this interesting role where it’s not a pure growth stock but it’s also not one of the titan-like tech giants with a fortress balance sheet, like Apple (AAPL) – Get Apple Inc. Report, Alphabet (GOOGL) – Get Alphabet Inc. Class A Report (GOOG) – Get Alphabet Inc. Class C Report or Microsoft (MSFT) – Get Microsoft Corporation Report.
It’s in between those two categories and just a phenomenal entity overall. That’s why it draws so much attention and why bulls are hoping that Nvidia can help lead a rebound in the tech world.
That hope sits where support came into play today.
When Nvidia stock sold off this morning, it undercut a few levels and moving averages, but ultimately found its footing near $240, just as it has all month. In fact, today’s low is at $241.65.
The bulls are hoping that this could perhaps be the start of an ABC rally as the stock carves out the B leg of the current rise.
That means they are hoping for an eventual C leg that takes Nvidia stock up through $270 and leads the charge back toward $300-plus.
To do that means Nvidia stock will need to clear several weeks worth of highs, as well as the 21-week and 50-day moving averages, and the daily VWAP measure.
On the flip side, we have to be careful enough to ask, “Could this be an ABC correction and we’re only in the B leg right now?”
We could be, particularly given the struggles of the overall market. While Nvidia is one of my favorite companies, the stock is not invincible.
The bulls’ hope takes a blow on a break of $240, although not all hope is lost if the shares can find support and the 200-day and weekly VWAP measure.
Below that and the $210 to $220 area and the 50-week moving average could be in play.
Source: https://www.thestreet.com/investing/trading-nvidia-nvda-stock-after-earnings-pullback?puc=yahoo&cm_ven=YAHOO&yptr=yahoo