Jensen Huang – Nvidia’s chairman – has some heavy lifting to do.
He’s scheduled to announce the company’s most recent earnings report after the market closes tomorrow. Expectations are high.
And, Mr. Huang quite likely has the fate of the entire stock market weighing on his shoulders.
The bulls hope he doesn’t shrug.
The Pressure Is on…
Of course, NVDA has led the stock market higher this year. Even with the semiconductor sector (SMH) trading 14% below its mid-July high, shares of NVDA are within spitting distance of its all-time high.
The strength in this one stock helped propel the S&P 500 above 6,000 earlier this month.
So, the pressure is on. If Mr. Huang can continue to impress Wall Street, and NVDA shares react favorably to its earnings report, then the rest of the stock market will likely rally to even higher levels.
On the other hand, if the report is a dud… if NVDA breaks down… then the rest of the market will follow.
Look at this chart…
The chart of NVDA has formed a “rising wedge pattern.” This is a bearish setup that most often – not always – breaks to the downside.
Astute readers will also notice that while NVDA made a new high earlier this month, the technical indicators at the bottom of the chart all made lower highs. This sort of “negative divergence” is often an early warning sign of a change in trend – from bullish to bearish.
From a purely technical perspective, this chart looks vulnerable. If NVDA breaks down following its earnings report, the stock could trade back down to $120 per share or below – overnight.
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Which Way Will the Chart Break?
That sort of action will weigh on the broad stock market.
But, news can trump the chart patterns. It’s possible that good news on the earnings front could cause an upside breakout for NVDA shares, negate the bearish setup on the chart, and send the stock 20 points higher instead.
That sort of action would likely send the S&P 500 back up to the 6,000 level again.
Traders are going to pay close attention to what Mr. Huang has to say on Wednesday afternoon. The NVDA earnings report will likely determine where the broad stock market is headed for the rest of the year.
Best regards and good trading,
Jeff Clark
Editor, Market Minute
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