One more look at Pandora (P), with a plan for trading pre-earnings.
Discussed in this article: Pandora Media ( $P )
I want to make sure you’re keeping your eyes on Pandora ( NYSE:P ). Twenty-seven percent of the float is short. The company announces earnings on August 22nd, so we’ve still got a ways to go, a couple weeks of trading before the company announces earnings.
Here’s something that I want you to keep in mind; lately shorts have really been getting killed on some of these stocks that are expensive. They shouldn’t be as high as they are so I’m going to go ahead and short this stock. They announce earnings that aren’t horrible, maybe they’re actually good, the stock screams and the shorts get squeezed, they start yelping, and the stock moves up even more.
Here’s what I’m watching for, I’m watching for some short covering over the next couple weeks. Watch to see if this stock starts to move up in anticipation of earnings. If that’s the case I don’t really see it as new buying; perhaps there’s going to be some of that, but I really think what’s happening is that shorts are starting to close their positions because they don’t want to be killed again.
So what I would suggest doing is using this latest level here, that’s your reference. If the stock starts pushing above that level then go ahead and go along this stock for the next couple weeks. What you do with it in to earnings, there’s two weeks between now and then and I’m not into predictions or fortune telling, so I’m not going to say that, I’m not going to even talk about that. I just know that if the stock moves above $20.00, it’s only 80 cents below that now, we’re probably going to see this stock starting to move to new highs before earnings are announced.