Here’s the trick with earnings that you’ve got to learn…
What matters with earnings is… the reaction to earnings. It follows one of my core rules for short-term trading: we don’t anticipate, we react.
Today, I’m giving you my top setups for NVIDIA earnings. Jack Kellogg sees it differently, and I think you should learn from him, too…
Jack says most traders could be staring at the wrong stock when NVIDIA reports.
Join him live…
Table of Contents
The Big Picture
NVIDIA Corporation (NASDAQ: NVDA) reports earnings today after the market close.
People will load up into NVDA this afternoon, particularly with options. And they’ll probably get destroyed.
This is what so many people screw up. They want to play guessing games, and that’s all it is.
Now, what’s the smart way to play NVDA? Here are two ways for you to trade it…
2 Top NVDA Earnings Trade Setups
When a company like NVIDIA reports earnings there are so many people who don’t know what they’re doing. There are people trading options that have no idea. They’re just YOLOing options. Zero-day (0DTE) stuff. They have no clue.
Now, that creates a tradable opportunity for people that don’t anticipate, but react.
So, there are two ways to play NVDA this week. Because there’s two things that almost always happen with these hotly anticipated earnings plays.
- The stock gaps down out of earnings. They shake out everybody that’s overleveraged. And then a couple days later, they’re back at the highs.
- The stock gaps up out of earnings. Then, the next morning you have a bunch of profit taking, which is smart. The stock usually gaps down and then you simply buy the red to green move.
How To Trade NVDA If There’s a Post-Earnings Gap Down
If there is a massive post-earnings gap down on NVDA, buy the dip. Because what that is, is people overleveraged on these options plays getting smoked out.
So, big gap down post-earnings, buy the dip and risk the breakdown area.
The other contingency is… What if NVDA gaps up post-earnings?
How To Trade NVDA If There’s a Post-Earnings Gap Up
If NVDA gaps up post-earnings, here’s how to trade it. You’re going to use the Wednesday after-hours close (8 p.m. ET) and a weak open red-to-green (WORG) for entries into day two.
Now, in case you’re unfamiliar with the WORG pattern, here’s a primer.
What Is the Weak Open Red-to-Green Pattern?
The WORG is a day-two continuation pattern. Since we’re talking about NVDA, below is my criteria for mid-cap and large-cap WORGs.
- Earnings or another big catalyst
- A stock that is strong all the way through the day. Usually we’re keying off of the previous day’s close (PDC). Now, because NVDA is a highly anticipated earnings play, we’re going to key off of the after-hours close (8 p.m. ET)
- A weak open or sell-off
- Sideways price action after the sell-off (consolidation)
The Weak Open Red-To-Green Trade Plan
- Entry = PDC
- Stop = Morning consolidation
- Target = ?
Now, because we’re talking mid-caps, large-caps, earnings winners, etc., we may not have a target. That may shock some of you reading this. But these types of plays are our swing trades.
So, we can use trailing stops on these. We can hold these for days or weeks and not worry about crazy penny stock moves. You may just put in a trailing stop and let it go.
If it’s trending up, there’s no real reason to sell when you’re talking about higher quality stocks. And you might hold for weeks or months if you’re looking for that big gain. If it never pulls back enough to trigger your trailing stop, you just leave it on. If it does no wrong, stay long.
My Take
I think NVIDIA is going to crush earnings. You know how I feel about AI. It is a force multiplier and it is here to stay. NVIDIA is the ultimate ‘picks and shovels’ company of the AI gold rush. Now, remember the trade plans above.
Watchlist
NVDA, obviously:
NVDA 1-year, daily candle
On My Radar
- 30-year Treasury highest since before the GFC
- Directly from SEC Chairman Paul Atkins: “Make IPOs Great Again”
- Apple and NVIDIA represent 15% of the S&P 500. It’s the highest top two concentration since it debuted in 1957.
Day Trading for Beginners Lesson 8: The Only Day Trading Indicators You Need