Shopping for a stock to buy? Try Shopify ($SHOP). Here’s your pre-earnings trade. (October 26, 2020)
SPY SHOP
The market ( NYSEARCA: SPY ) was in real sell-off mode today, it recovered towards the end of the day. This is certainly looking like a sign of weakness. If you look at the trading box that existed just last week and then extend it to capture today’s action, we got a really big downdraft here.
I am looking, though, for a little bit of a rebound over the next couple of days and for Shopify ( NYSE: SHOP ) that is probably about all we are going to need. Here’s why: The company reports earnings on Thursday and so we’ve got like a 3-day trade; they report after the close.
And as I look at the stock, the way it’s trading, it’s off of the 50-day moving average today. I would be putting a stop just on the even figure, $1,000.00, so I would put it just 999.95, something like that. If it pulls back that far then you don’t want to be in the trade anyway because it’s got, at least for now, a calendar stop on it too, a time stop, which is you want to be out before earnings.
The one difference that might occur is, if the stock happens to run-up several percentage points between now and when they report earnings, in that case you say, I’ve got a nice profit, I want to protect it, so you would take half off the table and then ride the other half through earnings. But I am getting ahead of myself.
The bottom line is here, I think you can be buying this stock tomorrow if it trades above today’s intraday high, which is 1044.39; let’s just say 1045.00. If the stock starts trading above 1045.00 then you can be taking this stock for a ride. But again, keep a stop just below $1,000.00 so you are actually risking very little money, you are risking 5 percent on a trade that may make you more than that.
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