After roaring higher in the second and third quarters of 2020, Nvidia has been surprisingly quiet lately. That’s particularly interesting following its third-quarter earnings.
Revenue grew 57% year over year to $4.73 billion, easily beating expectations of $4.4 billion. Earnings of $2.91 a share grew more than 60% from the same period a year ago and also beat expectations.
Guidance for next quarter was solid too, coming in at plus or minus 2% of $4.8 billion. Consensus estimates were near $4.45 billion.
In the words of Real Money’s Stephen Guilfoyle, “Nvidia is just killing it.”
Given the quiet reaction to the stock, I think it’s worth another look at the charts.
A look at the daily chart above shows the recent digestion period of Nvidia stock.
Shares surged from sub-$200 in March to more than $400 by July. By the first trading session of September, shares were up to $580. After that extreme move though, the stock lost its momentum, pulling back with the rest of tech.
Nvidia has done a nice job carving out a low near $475, as well as putting in a series of higher lows (blue line).
With a double-top high near $580, that is clearly resistance for the time being.
Bulls now want to see Nvidia stock hold the 50-day moving average and uptrend support. If the stock can do that, they’ll be looking for a rotation over $550 and for an eventual retest of the $580 area.
When we don’t see bullish reactions to good news, it is somewhat concerning in the short term. However, Nvidia’s muted response may give longer-term investors a chance to accumulate a bit of stock, in my opinion.
On the downside, a break of uptrend support could put the 100-day moving average in play, and possibly the $475 area.
But really, without a larger breakdown in the overall markets, bulls are not going to let Nvidia stock fall too far. Not with this type of growth.