Smith & Wesson (SWHC) blew away earnings estimates! Time to buy? You’ll be surprised at what I have to say. (June 16, 2016)
SWHC
I want to look at Smith & Wesson ( NASDAQ:SWHC ). They reported blowout numbers after the market, great earnings. You can see what happened to the stock, it really blew out to the upside. So what are we going to do with this? You get the headlines, the whole gun controversy and all that. I’ve got nothing to say about that in this venue. But I do have something to say about this ( NASDAQ:SWHC ), the stock’s in a box. I wouldn’t be buying it tomorrow morning. We could see a bit of a short squeeze, but the short interest isn’t that high. The reason I wouldn’t be buying it is just simply a function of discipline. Resistance, right there, a little below 25.00. The stock is trading right here. The time to be buying this, if it weren’t for earnings, would have been down here. Anytime over the last week, week and a half or so. So now you’ve got to just wait.
Even if the stock starts breaking out, I still wouldn’t be a buyer. I really wouldn’t, because it just has more work to do. And also, the whole thing about guns and the whole gun control issue and this and that. It’s not a whole lot unlike what’s happening with the Fed and what they’ve been doing the last seven years or so. With the guns, what’s happening in the news and the fear that people have is actually pulling future purchasers in to the now, they’re pulling them back. It’s like it’s not pent up demand. It’s not pent up demand. It’s actually creating buyers that maybe at some point in time later might have bought, might have not. Anybody, other than the most ardent, “No guns please. I only want to have criminals have the guns and then we’ll know who they are, because they’re the ones pointing the guns at us.” Everybody except you guys might, at some point, decide to buy a gun.
Well what’s happened? Anybody who was on the fence has been pulled in already. And so the market is a, Not what have you done for me lately? But the market is a, What are you going to do for me NEXT market? And so if you’re looking at this and you’re thinking, “How many people are left to buy guns? Everybody is rushing to buy them before they can’t.” Then I would look at this and be VERY careful of this stock, because it’s had some nice sideways consolidation for a while and then a real choppy blastoff. This could turn out to have been a real important top, right here; big high volume distribution right there. I’m looking for this, I just think it’s going to fail. And if it does move higher, I don’t see it moving back up there. I just don’t. I think that there’s all this pent up demand that’s actually pent down demand. It’s already come out. Stay away from here. Wait for a better buying opportunity.
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