Q1 earnings season has been a bit of a mixed bad so far. I can’t say that the single stock volatility has been greater than some recent earnings seasons over the last year, but anecdotally it seems that way. That being said, there has been a trend among some stocks on our radar that have bounced following seemingly better news, only to spend the next few trading days filling in the earnings gap.
The best example was NFLX over the last couple weeks that saw a very nice one day 7% gain following their Q1 print on April 23rd, only to give it all back and then some:
Another example was YHOO’s 6.25% one day gap higher on April 15th, only to give it all back over the next week or so:
And lastly YELP, which just last week saw an almost 10% gap higher on April 30th following a better than expected results, only to spend the next 2 trading days filling in the entire gap:
The examples seem to show that investors are using any strength in some recent internet high flyers to sell and cut exposure.
Another high valuation stock, (while not an internet stock, but sure trades like one) that had a nice gap last week on May 1st of 7.3% was WYNN. Since closing on the high of the day on Friday, right at the stock’s 50 day moving average, WYNN has since given back a portion of Friday’s gains and is now flirting with the… wait for it… gap:
The 6 month chart below of WYNN shows a potentially troubling technical pattern, the dreaded “triangle of death” or just a little head and shoulders top formation:
What’s also interesting about the WYNN chart is that it nearly stopped on a dime at its 50 day moving average (purple) on Friday’s close and today, with a flat market, the stock is heavily at almost 3% on the day. This is a stock that we want to keep a close eye on as if it were to make an attempt at the $200 neckline we would be inclined to play for a break back to $180.