Nvidia (NVDA) reported what financial reporters and some analysts are calling a "blow out" quarter and the stock has gapped higher. It's Friday's 'Stock of the Day' at Real Money.
Sell side analysts are rushing to raise their price targets for the company. We wrote about NVDA yesterday ahead of the earnings release and looked for: "In this Point and Figure chart of NVDA, below, we can see the price action simplified by only looking at specific price swings and ignoring some of the 'noise'. A trade at $280 will be a breakout and should refresh the uptrend."
With prices reaching $292 this morning we need to touch base with the charts again.
In this updated daily bar chart of NVDA, below, we can see that prices have gapped higher. There are three kinds of price gaps - breakaway gaps, runaway gaps and exhaustion gaps. NVDA is not breaking away from a consolidation pattern or a base pattern. With the broad market still in a bull phase I don't think NVDA will be making an exhaustion gap and top out soon. That leaves us with a runaway or a measuring gap. A runaway gap happens in the middle of a rally and can mark the halfway point.
Prices are above the moving averages. The On-Balance-Volume (OBV) line is strong and so is the Moving Average Convergence Divergence (MACD) oscillator. None of this should be a surprise.
In this weekly bar chart of NVDA, below, we can imagine that Friday's close will be a new high close.
In this first Point and Figure chart of NVDA, below, we can see the move up to new highs without a price gap.
In this second Point and Figure chart of NVDA, below, we used weekly price data. Here the chart needs a trade at $293.97 for a breakout. I suspect it will come soon enough.
Bottom line strategy: NVDA could fill some of its price gap today but I suspect that part of the gap will remain and prices will be heading still higher in the weeks ahead. The $300 and $340 areas are our two nearest price targets. Stay long.
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