Chewy ($CHWY) tanks after earnings? Here’s one way to trade it tomorrow. (June 09, 2020)
CHWY
Let’s look at Chewy ( NYSE: CHWY ), this is why: The company reported earnings after the bell, we’ll get to that in just a second. This stock had a really solid break out here from a volatility squeeze. I didn’t trade it, which is my bad. We first saw it move here; sometimes weird stuff happens. The reason I didn’t trade it is, I was kind of preoccupied with something else. I saw that earnings were kind of right around the corner and I am going, I don’t need it, I just don’t have time to track it.
And that turned out to be a mistake because, well, it wasn’t a mistake, the stock kept going though but I made a decision that I have got too many other things going on in my personal life, I can’t make every trade; sorry. So the stock went up nicely, then here it was waiting for the earnings call. This is where it was pre-market, right here. Then once the company reported earnings you could see the stock scrambled all around. This is what the stock looked like.
Now, I happened to notice on CNBC the chyron that Chewy ( NYSE: CHWY ) “tanks” after reporting earnings, it was down 2-2.5 percent or something like that. Okay, fine. I wouldn’t say a 2.5 percent, I’m not looking at this as really tanking but I get it, it’s down a bit. But what’s important to me is the stock is stabilizing here. From an actual results standpoint, I’m not going to get into the numbers with you, that’s not my deal. They lost money in the first quarter, which was expected but they didn’t lose as much. They had good revenues, they actually beat what the estimates were but the stock is still down.
Here’s my point, this is a stock that could give you a buying opportunity tomorrow. It’s not the greatest; the greatest opportunity, frankly, was the one that I missed, the one that I passed up, I didn’t get it. But I don’t just want to say, oh crap, I don’t ever want to talk about that stock again. No, you keep charts of good companies on your watch list; you want to be tracking these. So from kind of a longer-term standpoint, I think it would be great if the stock would kind of drift around a little bit. But this is a weird market these days, where day traders can grab onto these stocks and really start taking them for a ride.
And so with Chewy ( NYSE: CHWY ) I would just say, watch this stock tomorrow. If it runs up above 53.60, that’s the post-earnings high, if it runs up above 53.60 this stock can really start running up higher. If it doesn’t I wouldn’t buy the stock. I would only be buying the stock tomorrow if it moves to new high and here’s why; because if it doesn’t well then there is obviously sales going on and then you are going to want to wait a little bit and get a better entry on the stock; that’s how I would trade it.
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