On many occasions what occurs in the after-hours and premarket sessions in a particular issue can be very different from what happens in the regular session. This can be even more magnified when a company has news such as an earnings report. On Thursday’s PreMarket Prep Plus show, the early price action in the always volatile Nvidia Corp (NASDAQ: NVDA) was dissected for the upcoming trading session.
Wednesday’s Nvidia Price Action: An easy way to interpret price action in an issue following its earnings report is to note the previous day’s price action. The reason: any investors in the issue for a short-term trade are going to lean on those levels for exits.
Of course, the most important one is the closing price, as that is where all investors (long or short) are going to market on profit and loss.
The range in Nvidia from Wednesday was $160 to $171.11 with a closing price of $169.75.
Nvidia's After-Hours Beatdown: The Street reacted in an extremely negative way off the earnings release minutes after Wednesday’s close.
In fact, it was slammed from its closing price ($169.75) down to $152.20. That exceeded its former low for the move by over $3, which was made on May 12 at $155.67.
Following the washout, the issue caught a sustained bid and ended the after-hours session with a closing print of $158.12.
Nvidia's Premarket Creep Higher: The rally continued off the opening of the premarket session and the issue had recovered to the $163 area when it was being covered on the broadcast.
Bulls in the issue were alerted to the cluster of lows at $160 over the last five sessions, signaling accumulation by larger participants in the issue.
For investors who did not wait for the $160 area to go long and were attempting to go long at $163, the risk on the downside was the same. With two of the previous four lows at the $157.50 area, a breach of that area may indicate a move back down to the premarket low.
On the upside, it was emphasized that for a sustained move to the upside, clearing Wednesday’s closing price would be extremely bullish.
NVDA Price Action: After a much lower open, right into the aforementioned support at the $160 area, the issue immediately bottomed at $160.22 and began to rip higher.
It had no problem surpassing Wednesday’s closing price and has continued to make new highs for the session. As of 1:50 p.m. EST, the high for the session stands at $180.92. The daily high comes in at its May 18 high of $181.18.
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