Nvidia Corp. - (NVDA) - August 28, 2024

We last reviewed the charts of Nvidia Corp. in early May, following the split when the shares were trading at $921 each. At that time, Nvidia shares were scattered across the SIA model portfolios, ETFs, mutual funds, and pooled products. Conviction in relative strength kept SIA practitioners invested in the name long after many were shaken out. As the balance of spring and summer progressed, the stock continued to rally both pre- and post-split but encountered trouble as the summer doldrums set in. The shares eventually fell victim to selling pressure, leading to distribution. More importantly, our main coach issued a warning when the shares dipped into the Neutral Yellow Zone and its SMAX score toggled RED. As per model policy, the shares were removed and replaced with the top RS name in the model universe. Gains from this trade were substantial, providing investors with what will undoubtedly be remembered in the annals of investing. But don’t count Nvidia out just yet. This Relative Strength weakness quickly subsided, and shares of NVDA rallied back to the top position, capturing #1 once more earlier in August. NVDA continues to be an important position for the market and its investors, so today we’ll draw some lines in the sand to hopefully assist you on this binary day. Binary situations are those with only two possible outcomes, where everything is either one thing or the other. Sentiment around Nvidia's earnings has this feel today (good or bad), and after the bell, it will likely set the stage for the fall session. Let’s examine the technical picture and see what the SIA platform suggests about the prospects. The first chart is a monthly candlestick chart set to a wide-angle view, which provides little more than a trend line and the long tail wicks on the past three monthly candles. This suggests that buyers are still in control of the stock and willing to take positions, especially as shares approach the $90-$110 level. However, long wicks above the candles also indicate that sellers are active around the $130 level, now a resistance point. With its bullish SMAX score (a near-term 30 to 90-day indicator comparing an asset against different equal-weight asset classes) of 10 out of 10, NVDA is still exhibiting short-term strength against all asset classes.

The second chart is our reliable point and figure chart, which provides more precise numbers that will be significant in after-hours trading. Support is now clear at $118.34, with additional support at $97.08 and $93.31. Notably, a recent sell-off of PDD, which had similar support levels and a similar binary earnings situation, resulted in a +30% sell-off, closing at $100 that day and drifting further since. The point is, whole numbers matter. We mention this comparison because the $100 handle will be an important psychological level today if investors react negatively to the earnings news or guidance. Recall that PDD Holdings reported earnings YoY of $97.04B vs. a $100B estimate, with earnings of $21.61 per share vs. $19.01 per share (yes, up) but apparently disappointed guidance. Investors wiped out over $60B in market cap from the company. To say the market has a hair trigger is an understatement. Should NVDA shares react positively to today’s news and surge upward, resistance will first be at the old high of $135.94, with further resistance at $153.09 and $182.96 based on a vertical count of prior consolidation ranges. Nvidia enjoyed top relative strength and has a 10 SMAX score, so unless there are hidden money flows that SIA isn’t aware of, the picture looks as good as it gets as we approach the final hours before what will undoubtedly be a binary earnings situation, hopefully setting a good precedent for the fall. Shares of Nvidia are no longer held in portfolios managed by SIA Wealth Management.