Nvidia (NVDA) - Get NVIDIA Corporation Report has been going through a volatile time over the last nine months. Can the company find some better rhythm in the second half and help give its stock a boost?
Long-time investors are hopeful that it can. Monday's price action helps, with news of a de-escalating trade war giving investors hope that a deal can be reached in the future. The news is giving a jolt to stocks -- with the S&P 500 hitting new highs -- but semiconductor stocks are seeing the largest gains. Advanced Micro Devices (AMD) - Get Advanced Micro Devices, Inc. Report , Nvidia, Broadcom (AVGO) - Get Broadcom Inc. Report , Micron (MU) - Get Micron Technology, Inc. (MU) Report , Qorvo (QRVO) - Get Qorvo, Inc. Report and others are up big on the day.
These gains come on the first trading day of the second half of 2019, giving the stock a good start to the third quarter. Nvidia stock is up about 3% to $167 on the day, although it was up more than 5% at one point in morning trade.
Nvidia is RealMoney's stock of the day. Here's what they're saying.
The fourth quarter of 2018 was hard enough for investors. The Federal Reserve was hiking interest rates, stocks were under pressure and volatility was very high. The Nasdaq cratered 20% from its high to its lows, as tech stocks were hammered.
For Nvidia, that added volatility was salt in the wound, as shares fell by more than 50% from peak to trough in the fourth quarter. The company misplayed the crypto bust, as chip inventory became bloated once buyers dried up.
This hit revenue and earnings and is still something the company is working through. Last quarter showed promise, though, with management hopeful that its other secular businesses would carry it forward. When the company reports earnings in mid-August, investors will be looking to see that Nvidia remains back on track with its best-in-class business units.
While analysts expect a year-over-year decline for both earnings and revenue this year, investors will be focusing to see whether growth is on track to return next year. That will have a big impact on whether the stock can get back above and stay above $200, or if the lows may be probed once more.
Trading Nvidia Stock
As we've talked about and as you can see on the chart above, Nvidia stock has been crushed from its highs last October. Shares are still trying to fight their way higher, but this name has seen a lot of sellers step up.
After a big selloff in May, NVDA stock has bounced back and the 20-day moving average is now trending higher. Bulls will want to see Nvidia stock push through its 200-day moving average, which is currently near $176.50 but trending lower.
Above it and shares can return to the $188 to $192 area. The former is the 38.2% retracement for the one-year range, while the latter was resistance in the second quarter.
This is where the waters get a little murky. If Nvidia stock can get above its 200-day moving average in the not-too-distant future, it will put its key retracement levels on the table, which come into play near $188, $208 and $228.
If Nvidia stock can't push through the 200-day, bulls will want to see the 20-day and 50-day moving averages act as support. If they don't, a dip into the $130's is possible. The company's August earnings results and any trade-war developments can be the catalyst for either scenario on the charts, depending on how it plays out.
This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.