NVIDIA Corporation (NVDA) is the second largest component of the iShares PHLX Semiconductor ETF (SOXX) with a weighting of 8.28%. Intel Corporation (INTC) is the largest component with a weighting of 8.98%. Intel reported first quarter earnings on April 26 and beat analysts' estimates. NVIDIA will be put to the earnings test after the closing bell on Thursday, May 10. Intel set a multi-year high on April 27, and NVIDIA set its all-time intraday high of $255.87 on Wednesday, testing my quarterly risky level of $255.75.
Analysts expect NVIDIA to post earnings per share between $1.47 and $1.63. Activities related to data centers, cloud computing and gaming should more than offset potential slippage in automobile and cryptocurrency applications. These initiatives are powered by artificial intelligence. NVIDIA stock closed Wednesday at $255.78, up 32.2% year to date and in bull market territory at 25.4% above the 2018 low of $204.00 set on Feb. 6. Wednesday's high of $255.87 was the stock's all-time intraday high.
The Semiconductor Index held its 200-day simple moving average between April 24 and May 4, with this average at 1,254.58, and tested its 50-day simple moving average of 1,322.85 on Wednesday. The SOX is up 6.7% year to date and 11.1% above its Feb. 9 low of 1,203.66. The index is 8.7% below its all-time intraday high of 1,464.61 set on set on March 13, which was a "key reversal" day in which the close was below the March 12 low. (For more, see: Intel Is the Top Chip Maker Since Earnings Report.)
The daily chart for NVIDIA
The daily chart shows that NVIDIA began 2018 hopping above its 50-day simple moving average on Jan. 3, when the average was $201.78. This average is now $234.51. The recent move above the 50-day simple moving average on May 4 led to a test of my second quarter risky level of $255.75, which is the horizontal line at the top of the chart. This week's value level is $219.99, while my semiannual value level is $156.64. Above the chart is my monthly risky level of $263.67.
The weekly chart for NVIDIA is positive, with the stock above its five-week modified moving average of $236.59. The stock is well above its 200-week simple moving average at $84.06 and rising each week as the "reversion to the mean." The 12 x 3 x 3 weekly slow stochastic reading is projected to end this week rising to 58.21, up from 52.46 on May 4.
Given these charts and analysis, investors should buy NVIDIA shares on weakness to my weekly value level of $219.88 and reduce holdings on strength to my monthly risky level of $263.67. My quarterly pivot should become a magnet at $255.75. (For more, see: NVIDIA's Stock Poised for Big 8% Jump on Earnings.)