Earnings Pop…Stock Drop! Here’s your trade on Semtech (SMTC) (May 31, 2017)
SMTC MOMO SMTC
I want to look at Semtech ( NASDAQ:SMTC ) here (not the explosive). Here is the thing: The company, analog and mixed signal devices for mobile phones, computers, etcetera, etcetera. A really, really strong company, great earnings, not the strongest in their group but still you can’t really fight the uptrend, it kind of works. So what are we going to do with this stock? They report earnings, they beat estimates, all good, but the stock is down. Look at it here. Not on huge volume but you can see what happened. I am looking at this as a potential buying opportunity.
If the stock was up, lets say it was up the $39.00 or $40.00, this is definitely one you want to fade. It has already been rising out of this channel; not hugely over bought but it has been kind of strong. So the stock gaps up even more you have got to figure that traders are going to be taking profits. As I look at this now, with this stock pulling back to around 37.00, a little bit below 37.00, this actually looks like a pretty good buy zone to me. As close as you could get it to the 20-day moving average.
Again, they posted strong numbers, the stock is just down. We have seen that on other stocks recently, Momo ( NASDAQ:MOMO ), a different sector all together, but Momo ( NASDAQ:MOMO ) had great earnings. Look what happened here. The stock traded down and it is just now kind of finding it’s legs. But my bet is, you look at this a year from now, you will look at me and say, “Gosh Dan, thanks for telling me to buy this stock at $38.00 with a stop under there.” You are going to like that.
Similarly with Semtech ( NASDAQ:SMTC ) here, this stock is at 37.00, maybe it falls a bit more tomorrow, hopefully. You wait until the stock kind of firms up, don’t just catch a falling knife. Once it looks like the selling is over, and that can be within the first minute of trading or the first 5-minutes but at some point the stock is going to bottom, that is when you buy this stock. And then you just hang on to it for a while, you have to be patient with it. Generally speaking these are the kind of easy stocks to own. They don’t go anywhere fast but they just kind of gradually move higher. And so these are like no fuss, no muss trades that just kind of keep working enough to make you happy you own them. But they are not so volatile that they keep you late at night.
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