Nvidia Is Up Some 115% Since April. Here's What Its Chart Says Ahead of Earnings

Huang said in public remarks that he asked TSM for additional chip supplies because "the business is very strong and it's growing month by month, stronger and stronger."

I can't wait to see if next week's earnings release tells the same tale.

Nvidia plans to roll out its latest results after the closing bell next Wednesday (Nov. 19).

Wall Street's consensus view calls for the firm to report $1.25 in adjusted earnings per share on roughly $54.8 billion in revenue. That would represent a 54.3% gain from $0.81 in adjusted EPS the same period last year, as well as better than 56% top-line growth from the $35.1 billion that NVDA saw a year earlier.

While many investors would see that as incredible growth, Nvidia's sales have actually been decelerating from almost unheard-of levels in recent years due to the law of large numbers. However, a print like that would be in line with Nvidia's fiscal Q2 result released in August.

Meanwhile, 32 of the 39 sell-side analysts that I know of who cover NVDA have revised their estimates higher since the quarter began, while six have reduced their forecasts. (One estimate has been left unrevised.)

Next, let's check out NVDA's year-to-date chart through Monday afternoon:

Readers will see that NVDA this spring blasted out of a cup-with-handle pattern, as denoted by the green box and purple curving line at the chart's left. This is a bullish technical set-up.

The shares then rallied in late summer in an ascending-triangle pattern, marked with a green box and black lines at the chart's right.

That's normally a pattern of bullish continuance, which is exactly what Nvidia saw until the U.S. government shutdown impacted markets as October moved into November.

That said, Nvidia managed to find support at its 50-day Simple Moving Average (or "SMA," marked with a blue line at $183.90 in the chart above). That's where investors would look for professionally managed money to potentially defend the stock.

Conversely, the $212.19 intraday record high that NVDA set on Oct. 29 might serve as the stock's upside pivot.

Looking at Nvidia's secondary technical indicators, the stock's Relative Strength Index (the gray line at the chart's top) appears to have found some support recently at the neutral line and began moving higher again.

Meanwhile, Nvidia's daily Moving Average Convergence Divergence indicator (or "MACD," marked with black and gold lines and blue bars at the chart's bottom) isn't bullishly postured – at least not yet.

However, the histogram of the stock's 9-day Exponential Moving Average (or "EMA," denoted by blue bars) could be poised to move back into positive territory soon.

And while Nvidia's 12-day EMA (the black line) recently moved below the 26-day EMA (the gold line), the black line seems to be curling upward and might soon re-cross over the gold one. The bulls would be rooting for that.

As I write this, the options market is pricing in a roughly $16 move in Nvidia (or 8%) in relation to next week's earnings.

Option traders who expect Nvidia to rise in response to next week's earnings and who would rather use leverage than lay out to purchase the stock might employ a simple bull-call spread in this situation.

This strategy involves purchasing one call while simultaneously selling a second call at with higher strike price, but the same expiration date. Here's an example:

-- Long one NVDA $200 call with a Nov. 19 expiration date (i.e., after next week's earnings release). The cost is about $7.85 at recent prices.

-- Short one Nov. 19 NVDA $215 call, generating a $2.85 premium.

Net Debit: $5

The trader in this example is risking the $5 net debit, which would represent his or her maximum theoretical loss in the above spread.

But if NVDA rises as the trader in this example expects and both options are exercised, the person would realize $15 of proceeds minus the $5 debit for $10 net profit (the maximum gain).