Stocks With Weak Earnings That Could Be Headed Lower – BIDU, VMU, COH

By Feb 11, 2013, 6:21 PM Author's Blog  

At T3Live we don’t generally consider it prudent to take stock into earnings if you have a short-term strategy. Instead, we prefer to trade stocks following their earnings reports based on which direction they gap and how they treat that gap in relation to the longer-term trend.

Unlike Apple (NASDAQ:AAPL), which finally saw a much anticipated bounced last week and has filled a portion of its bearish earnings gap, we have seen a number of stocks that have had a hard time bouncing after reporting disappointing earnings. Stocks that have continued to act week following earnings-driven gap downs include VMware (NYSE:VMW), Baidu (NASDAQ:BIDU), and Coach (NYSE:COH). These are stocks we are watching now as potential short opportunities as they are all coming into significant support levels.

Stocks With Weak Earnings That Could Be Headed Lower   BIDU, VMU, COH

(click to enlarge)

VMW gave a first potential entry today as it broke below Friday’s low of $78.62. The stock is approaching a major support area of $24-26 from 2011 and 2012 lows. A break below this could send the stock lower.

Stocks With Weak Earnings That Could Be Headed Lower   BIDU, VMU, COH

(click to enlarge)

We see the same scenario in BIDU and COH as these stocks show very little effort to fill their big earnings gap. A break below $95.30 trigger our sell price in BIDU.

Stocks With Weak Earnings That Could Be Headed Lower   BIDU, VMU, COH

(click to enlarge)

COH has been making its way lower after seeing a big earnings gap down. The $48.38 level is acting as its short-term support as well as last line of defense as this level lines up with 2012 lows of $48.24. A break below this key level could bring out more sellers.

Stocks With Weak Earnings That Could Be Headed Lower   BIDU, VMU, COH

(click to enlarge)

Disclosure: Scott Redler is long MSFT, C, FB, CRUS, ZNGA, BAC, MGM, GE, TBT. Short SPY

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