Stock Trends

The way-too-early reaction to Nvidia

Good morning,

It’s always a little tricky providing analysis for a move that hasn’t even happened during normal market hours, but luckily Nvidia’s rally coming into earnings made it a little easier.

Nvidia rallied right up to its 52-week high line ahead of the report and while it pales in comparison to last quarter’s move, the stock is solidly higher this morning in the premarket. Any move and/or close higher than 2.2% today will be good for a new all-time high, so absent a huge intraday hurdle that should be easily cleared.

And going forward? All we really want to see is the $480 level hold. Semiconductors broadly continue to lead and none are stronger than Nvidia.

This week we’ll also look at:

• Defensive stocks hitting 52-week lows

• Timely long opportunities in energy

• REITs strengthening at homebuilders’ expense

• Discretionary movers

• and more!

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The way-too-early reaction to Nvidia

Here are the levels to watch today

As mentioned above, barring a huge intraday reversal, it looks like more upside for Nvidia has to be the base case. If the stock gaps higher at the open (as the premarket price implies) there is always risk of a minor gap fill, but $480 should be viewed as support going forward.

Think you missed it? Give AMD a look

There’s nothing wrong with chasing Nvidia as long as you manage risk, but it is understandable if you don’t want to hop on now. If so, I would give Advanced Micro Devices a look. The stock was already setting up nicely with a declining wedge pattern and bounced strongly off support at $102. Its move today should be able to propel a breakout and a chance to head back to the June highs near $132.

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