Nvidia will report its results on Wednesday after the market closes, and to say this is the Super Bowl of earnings reports would be an understatement. So much has been said about the exorbitant capital spending that not only companies in the technology sector will have to make to gear up for the AI revolution. My gut tells me that Nvidia (NVDA) will beat those expectations and the stock could hit new highs, but results are always a gamble. We have the overhang of the delayed Blackwell chip that could weigh on the report or any other data point that could hold up investors and trigger a sell-off in the stock. In this article, I want to first take a big step back and look at the technical picture of this company and remind us not to lose sight of the forest for the trees, and then I’ll dive into my playbook for handling our positions in NVDA in our various managed accounts. This is arguably one of the most historic stocks of all time, and from a technical perspective, I think this stock has 50-75% upside potential left before I see any significant resistance come into play. Using a simple Elliott Wave count from the October lows, I see that the first of three trend waves (labeled 1, 3, 5) has traveled 365%. The second trend wave, labeled (3), has traveled 258% through June of this year. The final trend wave, labeled (5), could hit the pair of Fib projection levels that form both a target and resistance zone of $199-234, roughly 70% higher than here. As for the shorter time on the daily chart, I’ve outlined two factors to consider for Wednesday. Since the August dip and drop below $100, NVDA has rallied back to what I consider to be the last opportunity retracement at $128.12. If we can sustain that level, the all-time highs are certainly possible. As for the options market, the expected move is about $12 higher or lower than the current levels that I’ve marked in blue and red. My game plan for the shorter-term active “quick money” account I manage is to keep my position size on report but use some hedges. I plan to sell the $140 calls that expire this Friday, August 30th, currently trading for $2.50. That will be a credit. Against that, I plan to buy a put spread under us to provide some protection with the credit from the call sale. If we buy the $115 put and sell the $105 put, that creates a $115-$105 put debit spread at $1.55. This protection strategy gives us a buffer up to $105, which would be a full 2 standard deviation move down, which would require some very negative news to get the stock to that price. On the upside, we are also capped on a move above the +1 standard deviation and the all-time highs. It’s a risk I’m willing to take by paying some attention to this report. For my longer-term, slower-managed growth account, I currently have a 6% allocation to NVDA, less than the 6.59% allocation in the S&P 500. I have 2% cash in short-term Treasury ETFs that I will most likely invest in NVDA to overweight before the report because regardless of how the market reacts to the earnings report, I think this stock is on a historic bull run and should continue to rise over the next six to twelve months. -Todd Gordon, Founder, Inside Edge Capital, LLC. DISCLOSURES: (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 are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or subsidiaries, and may have been previously disseminated by them on television, radio, the Internet or any other medium. THE ABOVE CONTENT 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 SECURITIES OR OTHER FINANCIAL ASSETS. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT THE UNIQUE PERSONAL CIRCUMSTANCES OF ANY INDIVIDUAL. THE ABOVE CONTENT MAY NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER CONSULTING FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here to view full disclaimer.
