Box Inc. ($BOX) reported a less-than-expected loss as well as revenue that exceeded estimates yesterday after the close (3/9/16); the company also reported guidance that was better than estimates. The stock gaped up 15 percent in the after-hours following the report. As you can see from my notes from the morning, I had $14 and $14.50 as levels I was watching on the upside, which had acted as prior resistance levels (see chart below).
While the intraday fundamentals of the stock were bullish (i.e., earnings/revenue/guidance better than expected), what made me begin to favor the short was seeing the stock fail at the $14.50 resistance (mentioned above) both in the after-hours and then again in the pre-market (see chart below).
My trading plan for the open was to look for another potential spike and failure up towards that $14.50 level to short into and look for an initial move lower to pre-market support. I put out an offer to get short before the market opened that unfortunately never got hit. As you can see from the 1 minute chart below, the stock drove lower after an initial failure at $14.40. Once I saw the stock drive lower and get below VWAP, I got short after seeing the stock fail to hold above $14 on the tape. At that point, I was ideally looking for the gap fill towards that $12.70-$13 that I outlined in my morning notes. You can see my trade management in the 1 minute chart below. Admittedly, I did cover a bit early! 😉
Shorted $BOX on the open. #Intraday
— Jake Huska (@MarketPicker) Mar. 10 at 09:45 AM
— Jake Huska (@MarketPicker) Mar. 10 at 10:00 AM
Covered rest of $BOX intraday short, flat. #Intraday
— Jake Huska (@MarketPicker) Mar. 10 at 10:12 AM
Will try to do a post on why I focused on the short in $BOX on the open. #Intraday
— Jake Huska (@MarketPicker) Mar. 10 at 10:23 AM
The point of this post is that while I generally try to trade in the direction of the intraday fundamentals, the price action will ultimately determine how I trade. While trading in the direction of the intraday fundamentals can have greater expectancy, the intraday price action dictates my entries, exits, and stops.
Thanks for reading. Please let me know if you have any questions or comments.