Multiple bullish signs despite sell off
Updated
A lot of others have pointed out the cup and handle formation that slack has made where the handle formed after the last earnings. But also that test of $40 prior to earnings is forming an ABCD pattern that puts the D greater than $50 by end of October. Slack's last earnings report was almost profitable, and their expectations is actually less than their last quarter's performance by 0.01. If slack can pull off a positive earnings, or even 4-5 cents positive they'll prove that they can take on MSFT and potentially emerge a winner in the work productivity space. Since Slack news is few and far between, I find that the recent bearish end of the week trend we had was only due to the way the rest of the market was reacting, since a lot of other big names have been dropping fast. At $29 slack is very near the $27.61 C point which proved to be a point of support. Additionally, $28.77 is a prior point of support from before the point C, which we bounced off of at the end of the day on the 4th (low was $28.00) showing a good sign that it doesn't intend to go lower.
Note
I suspect the 8th will open green prior to earnings as everyone piles on to get in on the action.Note
I've been selling covered calls on my shares for many weeks now, and the typical week the ATM call 7 days out has been poor, around 65 cents per share or so. Today, the $10 OTM call is selling for around this price ($39 call ended the day at $0.39-0.72 for a midprice of $0.55). Puts on the other hand dry up after 1 standard deviation (the $22.5 put sells for $0.07-0.14), so there is a lot of call skew. The options flow data implied volatility is pricing in a +/- $4.85 move by the 11th. But from the 2nd to the 4th we had a $5.93 move to the downside. Several tech stocks like CRM, ZM and others have been far exceeding the IV prediction by the market and I believe slack will too.If slack breaks through the $40 resistance after earnings, I see a path to a $50 target before the end of October.
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