Trading Strategies For Nvidia Stock Before And After Q4 Earnings

NVIDIA Corporation (NASDAQ: NVDA) was declining about 3% on Wednesday ahead of the company’s fourth-quarter earnings print, set to be released after the market closes.

When Nvidia printed a third-quarter earnings beat on Nov. 21, the stock closed down 2.46% the following day and subsequently entered a slight downtrend until bottoming out at the $450.10 mark on Dec. 4, where the stock began to surge into a steep uptrend.

For that quarter, Nvidia reported earnings per share of $4.02 on revenues of $18.12 billion, exceeding a consensus estimate of EPS of $3.36 on revenues of $16.12 billion.

For the fourth quarter, analysts, on average, estimate Nvidia will report earnings per share of $4.53 on revenues of $20.24 billion. Traders and investors will also be paying attention to how Nvidia guides its earnings for the next quarter and how it plans to continue harnessing opportunities in its AI applications.

Ahead of the print, Cantor Fitzgerald analyst CJ Muse reiterated an Overweight rating on Nvidia and maintained a price target of $775. Rosenblatt analyst Hans Mosesmann also weighed in on the stock, reiterating a Buy rating on Nvidia and a price target of $1,100.

From a technical analysis perspective, Nvidia looks neutral heading into the event, having negated its uptrend but working to print an inverted hammer candlestick on the daily chart.

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Bullish On Nvidia? Traders and Investors looking to play the possible upside in Nivida stock but with diversification may choose to take a position in the Spear Alpha ETF (NASDAQ: SPRX). SPRX is an actively managed fund offering investors the opportunity to achieve more than passive tracking of the broader market. Some of the fund's most popular holdings include Nvidia, weighted at 10.48%, Advanced Micro Devices, Inc (NASDAQ: AMD) weighted at 9.04% and Snowflake, Inc (NYSE: SNOW), weighted at 8.87%.

SPRX invests in companies capitalizing on emerging trends in industrial technology, aiming to uncover undervalued opportunities within various value chains aligned with themes such as enterprise digitalization, automation, AI, environmental focus, photonics, additive manufacturing, and space exploration. The ETF, traded on the Nasdaq exchange, targets long-term capital growth and is up about 64% over the last twelve months and about 4.2% year-to-date.

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.

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The Nvidia Chart: Nivida negated its uptrend on Tuesday by forming a lower low under the Feb. 13 higher low of $696.20. The sharp drop on Tuesday and on Wednesday may have been caused by the double top Nvidia formed on Feb. 12 and Feb. 16 at the all-time high of $746.11.

On Wednesday, Nvidia was attempting to hold support above the 21-day EMA, while printing an inverted hammer candlestick. An inverted hammer candlestick can indicate the local bottom has occurred and a bounce is on the horizon. The lower prices over the last two trading days have helped to drop Nvidia’s relative strength index (RSI) down from overbought territory to about 55%. When a stock’s RSI is measuring near the 50% mark, it indicates that there’s room for the share price to move in either direction over the short term. Bullish traders want to see Nvidia receive a bullish reaction to its earnings print and for the stock to rise up to form a new all-time high, which would suggest the recent downturn was a bear trap. Bearish traders want to see Nvidia suffer a bearish reaction to the news and for the stock to drop under the 21-day EMA, which could accelerate downside pressure. Nvidia has resistance above at $696.20 and at $746.11 and support below at $634.93 and at $608.50.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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