Price Exhaustion Just Before NVDA's Earnings Report
Primary Chart: Trendlines, VWAPs and Fibonacci Levels
Summary:
1. NVDA's bear rally shows signs of exhaustion by breakout to the upside out of its parallel channel.
2. Seasonality remains bullish so that could cause more unexpected moves to the upside before lower.
3. In the intermediate to long term, NVDA likely heads lower. The bear could resume this week. Or it could resume in a few weeks or a month or two. No need to guess, just follow price.
4. Earnings are risky binary events, and price can whipsaw or even move further than the expected move. As a hypothetical example, consider the price path shown on the primary chart, which should not be read as a forecast but a possibility around earnings.
5. In a prior post from mid-September 2022, SquishTrade showed a chart that revealed a path to about $83 for NVDA in the longer term. That target remains viable. That won't happen in a straight line and it likely won't happen in a day or a week. That chart is shown below:
This chart is found in the updates to ST's September 12 post linked here:
NVDA's countertrend price move shows signs of exhaustion just before earnings reports after market close. NVDA could react in either direction similar to FAANG and other tech stocks' reactions last month. Some tech stocks surprised to the upside with a failure soon afterwards (AAPL), while others fell further than expected (AMZN, GOOGL, META).
On November 13 (Sunday), a prior NVDA post was updated with some countertrend targets after the rally that had begun on Thursday, November 10 (post CPI data report in the US). That update can be found here. One of those targets has been reached—see the larger yellow circle on the chart above. That was the major resistance zone of $165-$174 around the Covid-low VWAP and the .786 Fibonacci retracement.
While this author provides technical analysis generally, leaving all decisions about trading to each trader's own system and rules, he avoids trading just before earnings. Most traders would be wise to do the same unless they have a strategy or edge specifically for those types of binary events. Some traders choose to trade volatility strategies around earnings—perhaps buying vol a few weeks before and selling it just before earnings, or selling vol just before earnings and closing thereafter. But those are difficult to implement and manage, though some experts appear to have viable strategies for this.
Beware the whipsaw move post earnings as well (as happened with AAPL around earnings in late October 2022), a pump and then a dump or a dump and then a pump followed by another dump. The Primary Chart shows a hypothetical example of such a whipsaw—please do not interpret the price path as a forecast, though it could by some luck work out that way. The price path is a hypothetical illustration showing what sorts of moves could occur post earnings.
Lastly, please note that although this post is designated as "short," that is the long-term view. The short-term view remains bullish until price reverses. SquishTrade prefers not to fight bear rallies but allow them to unfold until their natural ending. Finding that bear rally top for a good short is everyone's dream, though it's not particularly realistic. But no need to do so—the money can be made more consistently by catching a good piece of the next trend move rather than trying to squeeze every last penny from top to bottom (or bottom to top), which often and inevitably results in capital loss.
Thanks for reading.
________________________________________
Author's Comment: Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate (respectfully presented) in the comment section. Shared charts are especially helpful to support any opposing or alternative view. This article is intended to present an unbiased, technical view of the security or tradable risk asset discussed.
Please note further that this technical-analysis viewpoint is short-term in nature. This is not a trade recommendation but a technical-analysis overview and commentary with levels to watch for the near term. This technical-analysis viewpoint could change at a moment's notice should price move beyond a level of invalidation. Further, proper risk-management techniques are vital to trading success. And countertrend or mean-reversion trading, e.g., trading a rally in a bear market, is lower probability and is tricky and challenging even for the most experienced traders.
DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified financial adviser or other investment / financial professional before entering any trade, investment or other transaction.
Summary:
1. NVDA's bear rally shows signs of exhaustion by breakout to the upside out of its parallel channel.
2. Seasonality remains bullish so that could cause more unexpected moves to the upside before lower.
3. In the intermediate to long term, NVDA likely heads lower. The bear could resume this week. Or it could resume in a few weeks or a month or two. No need to guess, just follow price.
4. Earnings are risky binary events, and price can whipsaw or even move further than the expected move. As a hypothetical example, consider the price path shown on the primary chart, which should not be read as a forecast but a possibility around earnings.
5. In a prior post from mid-September 2022, SquishTrade showed a chart that revealed a path to about $83 for NVDA in the longer term. That target remains viable. That won't happen in a straight line and it likely won't happen in a day or a week. That chart is shown below:
This chart is found in the updates to ST's September 12 post linked here:
NVDA's countertrend price move shows signs of exhaustion just before earnings reports after market close. NVDA could react in either direction similar to FAANG and other tech stocks' reactions last month. Some tech stocks surprised to the upside with a failure soon afterwards (AAPL), while others fell further than expected (AMZN, GOOGL, META).
On November 13 (Sunday), a prior NVDA post was updated with some countertrend targets after the rally that had begun on Thursday, November 10 (post CPI data report in the US). That update can be found here. One of those targets has been reached—see the larger yellow circle on the chart above. That was the major resistance zone of $165-$174 around the Covid-low VWAP and the .786 Fibonacci retracement.
While this author provides technical analysis generally, leaving all decisions about trading to each trader's own system and rules, he avoids trading just before earnings. Most traders would be wise to do the same unless they have a strategy or edge specifically for those types of binary events. Some traders choose to trade volatility strategies around earnings—perhaps buying vol a few weeks before and selling it just before earnings, or selling vol just before earnings and closing thereafter. But those are difficult to implement and manage, though some experts appear to have viable strategies for this.
Beware the whipsaw move post earnings as well (as happened with AAPL around earnings in late October 2022), a pump and then a dump or a dump and then a pump followed by another dump. The Primary Chart shows a hypothetical example of such a whipsaw—please do not interpret the price path as a forecast, though it could by some luck work out that way. The price path is a hypothetical illustration showing what sorts of moves could occur post earnings.
Lastly, please note that although this post is designated as "short," that is the long-term view. The short-term view remains bullish until price reverses. SquishTrade prefers not to fight bear rallies but allow them to unfold until their natural ending. Finding that bear rally top for a good short is everyone's dream, though it's not particularly realistic. But no need to do so—the money can be made more consistently by catching a good piece of the next trend move rather than trying to squeeze every last penny from top to bottom (or bottom to top), which often and inevitably results in capital loss.
Thanks for reading.
________________________________________
Author's Comment: Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate (respectfully presented) in the comment section. Shared charts are especially helpful to support any opposing or alternative view. This article is intended to present an unbiased, technical view of the security or tradable risk asset discussed.
Please note further that this technical-analysis viewpoint is short-term in nature. This is not a trade recommendation but a technical-analysis overview and commentary with levels to watch for the near term. This technical-analysis viewpoint could change at a moment's notice should price move beyond a level of invalidation. Further, proper risk-management techniques are vital to trading success. And countertrend or mean-reversion trading, e.g., trading a rally in a bear market, is lower probability and is tricky and challenging even for the most experienced traders.
DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified financial adviser or other investment / financial professional before entering any trade, investment or other transaction.
SquishTrade
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