LLY Trade on Oct 23, 2019 09:39 from MarcoG: Tradervue User Stock Trades.

Consolidation & Pull-back play below pm low on ER miss

Requirements:

Gap : >2.5%
RVOL : >1.5
pmVOL : >50 K
avg Vol: >500 K
Vol @ Day : >500 K
Float: >20 M
Short Float: Possibly >40%
Catalyst : Solid Fresh news / ER beats/miss

Overall Picture

SPY showed some strength yesterday trying to break the 300.90 area but failed to close the trading session @ 299. In pm today's session price kind of consolidate below yesterday's close retesting the level 3 times. We seem to be trapped in the 298/300 area. I wouldn't be surprised by a further lower move testing perhaps the 100DSMA.

Today's Watchlist

Today I had on the wachtlist: IRBT, BSX, TXN, TER and LLY. Pm granted quite some names but none of them actually was my preferred. I have to say a controversial scenario considering that more then 5 names would respect pm variables in order for me to select those for a trade during the session.

IRBT: "We delivered 9% total revenue growth primarily due to 25% international growth and a large shipment to a major U.S. retailer that was previously planned for the fourth quarter," said Colin Angle, chairman and chief executive officer of iRobot. "Higher revenue in combination with favorable gross margins and disciplined spending enabled us to deliver strong quarterly operating income and EPS.
Adjusted EPS was $1.37, well ahead of the $1.24 per share FactSet consensus. Sales of $17.80 billion were up from $16.69 billion for the previous period and ahead of the $17.45 billion FactSet guidance.
Well this is a kind of WOW declaration by the chairman and executive officer! And market reaction is even more WOW!! Got to 61 in pm making 13% gap up it ended open today's session @ 44 losing 33% from yesterday's close! Basically for as much as I was following the stock I really didn't have clear what was going on here. Anyway the stock trader higher since the open and I have left it aside.

BSX: Boston Scientific (BSX) came out with quarterly earnings of $0.39 per share, beating the Zacks Consensus Estimate of $0.38 per share. This compares to earnings of $0.35 per share a year ago. This quarterly report represents an earnings surprise of 2.63%. A quarter ago, it was expected that this medical device manufacturer would post earnings of $0.38 per share when it actually produced earnings of $0.39, delivering a surprise of 2.63%. Over the last four quarters, the company has surpassed consensus EPS estimates three times.
The overall scenario supporting the stock was imo quiete good. Short float was 46% and the % held by institutions was 106%. Nothing that wouldn't have granted a further up move. The stock failed pm high trading basically horizontally. I have lost my interest on it.

TXN: (TXN) stock was slumping after the chip maker’s third-quarter earnings slightly missed estimates.Late Tuesday, Texas Instruments reported third-quarter earnings per share of $1.40, versus the $1.42 analyst consensus.
Even with a supportive negative report the stock didn't really took a clear direction besides retesting the 100DSMA @ 121.50sh. I still do not trade stocks gaping down and going high. But certainly those have been the top performers since this Earnings season kicked in.
And perhaps this would justify the fact that is getting difficult to get a full trend continuation move in the last trading days.

TER: TER reported third-quarter 2019 earnings of 77 cents per share, surpassing the Zacks Consensus Estimate by 7 cents. The figure also increased 8.5% year over year.
Moreover, revenues of $582 million increased 2% year over year. Also, the figure surpassed the Zacks Consensus Estimate of $567.9 million and came ahead of the guided range of $540-$580 million.Its share price was up more than 5% in the after-hour trading session, following better-than-expected third-quarter results.
TER was on my watchlist due to the nice ER and for the nice pm pattern. Volumes were needed for the stock to be tradable. The move didn't occur neither were volumes thus left it aside.

Play

LLY

Company Description

Sector: Healthcare
Industry: Drug Manufacturers - Major

Eli Lilly and Company discovers, develops, manufactures, and markets pharmaceutical products worldwide. The company operates in two segments, Human Pharmaceutical Products and Animal Health Products.

Trade Scenario

Eli Lilly (LLY) came out with quarterly earnings of $1.48 per share, beating the Zacks Consensus Estimate of $1.43 per share. This compares to earnings of $1.39 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 3.50%. A quarter ago, it was expected that this drugmaker would post earnings of $1.46 per share when it actually produced earnings of $1.50, delivering a surprise of 2.74%.Over the last four quarters, the company has surpassed consensus EPS estimates three times. In the specific posted revenues of $5.48 billion for the quarter ended September 2019, missing the Zacks Consensus Estimate by 1.48%. This compares to year-ago revenues of $6.06 billion. The company has topped consensus revenue estimates just once over the last four quarters.
I had watching LLY due to the down gap supported by the needed trade variables. In addition there was the 100 level just there behind the corner.

Trade Variables

Symbol : LLY
Gap : 3.50%
RVOL : 2 (above 1 last 2 days)
pmVOL : >100 K
avg Vol: 3 M
Vol @ Day : 7.4 M
Float: 800 M
Short Float: 1.33%
Institutional Ownership : 81.50%
avg ATR: 2.35
ATR @ Day: 2.45
pmPATTERN : Bear Flag and consolidation. Broken and retested price opened at bottom of the first sell impulse.
Catalyst : ER miss

Technical Levels

Support: S1 105.25 S3 104.17 S3 100
Resistance: R1 107 R2 108.89 R3 109.84
Inflection: 104.17

Trade Plan

A break of 52 Weeks Low @ 104.17 could grant a move up to 100 psychological level.
Short in case of brake and pull back to 104.17.

Set-up : Down-Trend Continuation on consolidation below pm low.
Side : Short
Size : 60
Entry : 104.150
Takes :
Exit : 105.32 (Above S2)

Trade Analysis:

I haven't been able to see anything but LLY today. All the stocks I had on watch literally traded in a way that didn't provide me any tradable price. LLY has dropped at the 3rd minute after the open touching a low @ 102. Made a sort of support @ 103sh to retest 52 weeks low @ 104.17

Intuit:

The drop and retest of the 104.17 opened my eyes on spotting the opportunity. I have set the order at first wrong by size, just few shares, but I have immediately cancelled it and again set it right.

Tape reading:

I haven't been able to spot anything by the tape. I didn't get any relevant discrepancy within bids and offers.

Internalization

I have got the signal and processed it in a calm approach.

Orders:

I have placed my orders with the aim of trading within S2 and S1. After got filled I have already set down my next sell order at 104.87 that hasn't entered just for 1 cent. I didn't find it appropriate to add then when price confirmed a denial of my trading area.

Comments:

I have no particular comments regarding my executions and overall implication with the trade. I have instead a consideration to do in relation to the earning release thus to the catalyst behind the stock. I think now when reviewing the trading session and having the opportunity to rewatch my trading session that LLY was not meant to break the 100 today. The results were not that disappointing overall.. Instead around 100 buyers stepped in to spot a better price to long. It has been trading against the main trend basically.
I have to dig in the news I trade deeper and deeper to interpretate better the overall picture.
I could have closed breakeven but I am deciding to let it go, still testing my attitude toward bigger sizes and my will to stick to the plan up to the end! Many and many times I have lost profits due to change of plan, many times I have saved myself from losing changing the plan. It is the moment to stick to it up to the end unless real clear signal steps in. Today was not the case. I have seen immediately the up drifting pattern forming on the 1min chart but a rejection up to 5 cent to previous low at 10:15 or so gave me confidence in giving it another try. I stayed in the trade when price micro consolidated @ 104sh just below VWAP cause my trading area was still not denial.

What I did not like about the trade:
Perhaps closing the trade break even would have given me another opportunity to trade it in case of fade below point of control @ 104sh?
I should have gotten deeper in reading the er release to realize that the results were not that negative overall.

What I have liked:
I liked that I have followed the plan and stayed on the ship up to when she sank.

Could sound silly but for me its important to be able to be fine when I am losing. If I will get enough answers on how I respond to a negative balance on a trade and I will be able to understand that basically size does not affect my choices, I will then be able to close a position regardless my plan cause the variables I have spotted by the tape and price action would be supported by a solid state of mind! This is extremely important for me. I can't trade big sizes if my choices are affected by those. I won't create a self destructive machine out of myself!
Looking forward to spot a good opportunity. Earning season just started and many days are here to come!