Buy Nvidia After Muted Earnings Response: A Look at the Chart

Nvidia reports another quarter of strong results but the stock price is hardly budging. That seems like an opportunity for long-term investors.
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Nvidia  (NVDA) - Get Report was down about 1% on Thursday, despite reporting strong earnings on Wednesday after the close of trading.

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.

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Trading Nvidia

Daily chart of Nvidia stock.

Daily chart of Nvidia stock.

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.