All eyes, ears, stethoscopes, and microscopes are trained on the after-the-bell earning report from Mag 7 darling Nvidia (NVDA:NASDAQ) which lost 4.8% yesterday but is up 46% YTD and up 472% since the lows in October 2022. NVDA is also the poster child for the Mag 7 group, so if the market likes the forward guidance as well as the EPS number, the entire group should be fine.
However, expectations are in the clouds for a "big beat," so we could be witnessing a classic "sell the news" setup and possible near-term correction in the U.S. markets.
The chart of NVDA shows a diverging RSI now coming out of the plus-70 "overbought" territory, where it spent a full five weeks as the stock price ascent went from "gradual" to "near-vertical". That parabolic arc to the all-time high of US$746.11 may have left behind a classic "exhaustion gap" from the US$660 level so when added to the bearish MACD crossover and bearish Money Flow Indicator, it certainly appears as though NVDA is ripe for a move down to at least the 50- dma at US$574.02.
The 100-dma is at US$514.15 and the 200-dma is at US$464.60, although I strongly doubt that the Wall Street spin doctors will tolerate a move of that magnitude. The NVDA earnings call is at 5:00 pm, with the actual earnings expected after the closing bell. According to those who trade the tech sector for a living, it will be the forward guidance that will determine the next big move in NVDA.
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