Multiple bullish signs despite sell off

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.

Kommentera:

I suspect the 8th will open green prior to earnings as everyone piles on to get in on the action.

Kommentera:

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.