If you've been waiting to play earnings on the upside, today may be your day. We've watched many names get beaten down post-earnings, whether day one or over the following days. Through my years of trading, I've found this a nice countertrend to play as sentiment gets so low after strong names beat and fall that the last reporting names have baked in disappointment.
While PayPal (PYPL) is higher as I type this, the stock did struggle in the red earlier this morning. The results point to likely strong numbers from Square (SQ) but that stock is trading lower by 3.6% today into their numbers. Or Cloudflare (NET) down 13% after Fastly (FSLY) disappointed. Fastly is down 26% on the day, so NET has already been hit by half that amount. We could see a huge reversal in this one should NET not disappoint. If they do disappoint, I doubt their net downside (no pun intended) would be another 13% unless their CFO leaves as well.
Roku (ROKU) is down 8% into its number and roughly 20% from the highs of the month already. We have even completed the fourth day of trading and it is down that much. Bulls need a strong reaction here as I peg support under $250 ($235-$240). On a measured move, this one points to $200. Datadog (DDOG) looks almost the same.
Few of the charts look any good, outside of something like EOG Resources (EOG) or Consolidated Edison (ED) or American International Group (AIG) , which have been the home to new money as folks flee much in the way of momentum or risk. These don't hold a lot of interest to me into earnings.
So, without any sort of technical hints, a trader needs to go where they have comfort, especially if buying shares. You have to be happy to own the company even if they disappoint. For options trades, you need to be willing to lose what you risk. Overall, I think the reward actually favors the risk tonight in the beaten down names mentioned above. NET would probably be my name of choice, but this is a situation where you want to be comfortable with one of these names if you're going to take a risk.
