Breaking Down a Profitable Trade Setup
NVIDIA Corporation (NVDA) is a technology company with a focus in visual computing. The company’s stock is currently trading around $30.05 in a 52 week range of $19.09-$33.94. The stock has been underperforming the market this year with shares lower by nearly 8.9% year to date. NVDA did see a nice rally in Thursday’s session however as the stock popped 8.6% on the back of solid fiscal fourth quarter earnings. NVDA reported better than expected top and bottom line numbers sending the stock to levels it hasn’t seen since the first week of January.
Whenever there is such a large move in a stock traders ask themselves if there was any kind of signal that the stock might respond to earnings the way that it did and in this piece we will break down some key metrics that might have clued a trader in to the potential move in NVDA to these levels and potential trade setup.
When analyzing any stock ahead of a catalyst event like earnings a trader first must consider the stocks historical performance record on earnings day. By looking at how the stock has traded over the past releases on earnings day a trader can get an idea of how the stock tends to perform and can recognize patterns in movement. Going into this most recent release from NVDA the stock had rallied 8 of its previous 11 releases on earnings day. While this by no means guarantees that the stock will rally this time it does tell a trader that over the past 11 quarters the stock was far more likely to rally in any quarter than sell off. This means that while doing the rest of the analysis a trader should be leaning to a bullish sentiment in the stock for his/her trade setup.
This content is restricted to site members. If you are an existing user, please log in. New users may register below for FREE.