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Earnings and Stock Splits: Can Nvidia Hit New Highs?

Nvidia recently announced a stock split and will report earnings later this week. Here's how to trade the stock as shares race higher.

Nvidia  (NVDA) - Get NVIDIA Corporation Report over the years has become known as a growth giant, even if it’s had a somewhat stagnant stock price over the last few quarters.

Up almost 3% on Monday, the stock is continuing what it started on Friday when it popped on news that it would undergo a 4-for-1 stock split.

The stock has been on an impressive winning streak lately, racking up a 14% gain in just four trading sessions. However, even with those gains, Nvidia stock has gained less than 5% from its September high.

Prior to the recent run, shares were actually down about 8% from those highs.

That said, Nvidia continues to outperform Advanced Micro Devices  (AMD) - Get Advanced Micro Devices Inc. Report, as well as high-growth stocks. The latter has been stuck in a brutal bear market, while Nvidia’s superior financials and larger market cap have kept the stock out of trouble.

Now the question becomes whether Nvidia stock climb to new highs.

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Trading Nvidia

Daily chart of Nvidia stock.

Daily chart of Nvidia stock.

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In April, Nvidia hosted its GTC Conference when management provided a better-than-expected outlook for the current quarter.

Will that sap some of the post-earnings potential? Maybe. However, that update was enough to send Nvidia to new all-time highs last month, a level the stock is still trading below.

Keep in mind, its original guidance came in well ahead of expectations too so it’s clear that business is humming right along.

Now back above all of its key moving averages, bulls will want that to remain the case after the company reports earnings on Wednesday after the close.

Specifically, they’ll want to see Nvidia stock hold $590 on the downside. To do so will keep the stock above its shorter term measures like the 10-day and 10-week moving averages.

Further, it will also keep Nvidia stock above prior range resistance.

On the upside, let’s see if we can get a run to the current high near $648.50. A move above this level will put the 161.8% extension in play near $668, followed by $700 and the two-times range extension near $717.

Keep in mind, this strong stock has been consolidating for several quarters now. If the market cooperates, we could get a powerful and lasting rally at some point.

In that case, longer term bulls could use the 261.8% extension as their upside target, near $800. If shares were to split today, Nvidia would be trading near $155. In a post-split word, the 261.8% extension would come into play near $200.