Nvidia will report earnings after the bell on Wednesday, and calling this the “Super Bowl” of earnings would be an understatement. There has been talk of massive capital expenditures that will be needed not just from companies in the technology space to prepare for the AI revolution. My gut feeling is that Nvidia (NVDA) will beat these expectations and the stock could rise to new highs, but taking profits is always a risk. We do have the pending release of the delayed Blackwell chip, which could weigh on the report or any other data points that investors might be paying attention to, causing the stock to sell off. In this post, I want to first take a step back and look at the technical picture of this company, reminding us not to miss the forest for the trees, and then I’ll get into my playbook for handling our positions within our various managed accounts. NVDA. This is arguably one of the most historic stocks of all time, and from a technical perspective, I think this stock has room to go 50% to 75% before I see any major resistance coming into play. Using basic Elliott wave counting from the October low, I see the first of three trend waves (labeled 1, 3, 5) moving 365%. The second trend wave, labeled Wave (3), had spread 258% by June of this year. The final trend wave, labeled wave (5), may reach the Fibonacci forecast level pair, creating a target and resistance zone of $199-234, approximately 70% above here. Turning to the smaller times on the daily chart, I outline two factors to consider on Wednesday. Since the downturn in August and the drop below $100, NVDA has worked its way back up to $128.12, which I believe was the final pullback. If we can sustain a move to this level, the likelihood of an all-time high is high. Turning to the options market, the expected move is about $12 above or below the current levels that I marked in blue and red. My strategy for the short-term active Fast Money accounts I manage is to include my position sizes in reports but deploy some hedging. I plan to sell the $140 call options expiring on Friday, August 30th, currently trading at $2.50, which will be a credit. Against this, I plan to buy below our put spread to provide some protection using the credit collected from the call sale. Buying the $115 put and selling the $105 put creates a put debit spread of $115 to $105 at a cost of $1.55. This protection strategy gives us a cushion down to $105, which would be a full 2 standard deviations down and it would take some highly negative news to drop the stock to that price. From the upside, we would also limit its move beyond +1 standard deviation and all-time highs. I’m willing to take the risk and follow this report. For my long-term managed slower growth account, I currently hold a 6% allocation to NVDA, which is below the S&P 500’s allocation of 6.59%. Overweight NVDA on report because regardless of how the market reacts to the earnings report, I think this stock is in the midst of a historic bull run and should continue to move higher over the next 6 to 12 months. -Todd Gordon, founder of Inside Edge Capital, LLC Disclosure: (Gordon owns NVDA personally and in his wealth management firm, Inside Edge Capital. Charts shown are from MotiveWave.) All opinions expressed by CNBC Pro contributors The views expressed are theirs alone and do not reflect the opinions of CNBC, NBC UNIVERSAL, its parent company or affiliates, and may have been previously disseminated by them on television, radio, online or other media. The above is subject to our Terms and Conditions and Privacy Policy. This content is for informational purposes only and does not constitute financial, investment, tax or legal advice or a recommendation to purchase any security or other financial asset. The content is general in nature and does not reflect any individual’s unique personal circumstances. The above may not apply to your particular situation. Before making any financial decisions, you should strongly consider seeking advice from your own financial or investment advisor. Click here to view the complete disclaimer.
