This week is another big earnings week with companies like MRO, BP, FB. PFE, GILD and of course BABA.
That’s what this article will be based on, my set up and analysis for BABA.
As with every earnings gap on are stock my 5 main questions are
“Where could it gap to?”
“If it does gap into this price, how will people feel?”
“Who would be making money?”
“Who would be losing money?”
“Is there more fear or optimism?”
On BABA I have 3 potential zones.
Two green, one red. My thought is if BABA opened in the $105-$108 zone all of those shorts who piled in on the recent bearish candles would be trapped and forced to buy to cover. That is why I would be innumerably bullish if BABA opened in that area.
The one red zone would likely cause anyone who bought since September 12th, 2016 to lose money.
The other green zone around $94 is my ‘buy low, sell high zone’. Anyone who did get in bullish recently would be down around 10%… likely too much to stomach and they wouldn’t sell. Those traders who never got in and missed that huge move since August might view this as a good time to buy.
For a day trade, I’ll be keeping my eyes on options expiring this Friday. For a swing trade? We will see where BABA opens at how fast she moves. Either way, I’m expecting a smaller gap, since the last earnings move was so large.
It’s going to be fun either way. Let’s create our plan and trade that bad boy!
You all rock!
JN
