Shares of Nvidia are exploding to all-time highs on better-than-expected earnings. Snowflake is falling despite Wall-Street-beating quarterly results.
Although the cloud-services provider beat on earnings and revenue estimates, its guidance disappointed investors — and they didn’t waste any time letting the company know.
The stock was down about 16% at last check and was off 19% at the low.
Snowflake commanded a lot of attention during its September 2020 initial public offering, with the valuation swelling. Warren Buffett’s Berkshire Hathaway (BRK.A) – Get Free Report (BRK.B) – Get Free Report and Salesforce (CRM) – Get Free Report both took stakes, too.
The valuation ultimately shot up toward $130 billion. Now, though, the stock has come under considerable pressure despite the company’s high growth rate.
Is there a buying opportunity here?
Trading Snowflake Stock on Earnings
Daily chart of Snowflake stock.
Chart courtesy of TrendSpider.com
Bullish traders don’t have a lot on Snowflake’s daily chart to hang their hats on.
The stock opened below the 50-day and 200-day moving averages, temporarily rallied back above them and then was rejected again.
That said, here are a few positives.
First, the stock filled the gap from May 3 near $147.50. It’s also holding the May low at $142.44 (and came within a dollar of that mark this morning). Clearly, buyers keep stepping in near this area.
It’s also holding up above the 78.6% retracement, although I would have liked to see this level tested today.
So how do traders navigate from here?
Keep a close eye on the $140 to $143 area. That’s the 78.6% retracement and this month’s low. A break of this zone could put the $120 to $130 area in play, which has been a huge support zone over the past few quarters.
Those who like the long-term story could consider scooping up some shares in this zone.
On the upside, the bulls need a move up through the post-earnings high near $160. Ideally in that scenario, SNOW shares would go on to fill the gap up near $172.
But with the bearish reaction to the quarter, that type of rally does not look especially likely in the short term.
For now, it’s simple. Watch $140 to $143 to see whether it holds as support.
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