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

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.

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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.

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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.

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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.

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

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About Scott Redler 367 Articles

Scott Redler is the Chief Strategic Officer of T3 Live. He develops all trading strategies for the service and acts as the face of T3 Live. Mr. Redler focuses on thorough preparation and discipline as a trader.

Mr. Redler has been trading equities for more than 10 years and has more recently received widespread recognition from the financial community for his insightful, pragmatic approach. He began his career as a broker and venture capitalist where he was able to facilitate relationships that led him into trading. Beginning his trading career at Broadway Trading in 1999, Mr. Redler moved on with Marc Sperling to Sperling Enterprises, LLC after establishing himself as one of the best young traders in the firm. As a manager at Sperling Enterprises, continued to trade actively while working closely with all traders in the firm to dramatically increase performance.

Mr. Redler has participated in more than 30 triathlons and one IronMan, exhibiting a work ethic that also defines his trading. His vast knowledge and meticulous attention to detail has led to regular appearances on CNBC, Fox Business, Bloomberg, and he is a regular contributor to Minyanville and Forbes’ Intelligent Investing blog. He has been quoted in the Wall Street Journal and Investor's Business Daily, among other publications.

Scott received a B.B.A. in Marketing/Finance from the State University of New York at Albany, graduating Magna Cum Laude from Albany's School of Business.

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