KHC Trade on Oct 31, 2019 09:46 from MarcoG: Tradervue User Stock Trades.

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MarcoG

 

Consolidation & Pull-back play above pm high on ER Beats!!

Requirements:

Gap : >2.5%
RVOL : >1.5
pmVOL : >50 K
avg Vol: > 1M
Vol @ Day : >500 K
Long Term Chart : Possible Pocket or trend already defined.
Float: >20 M
Short Float: Possibly >40%
Institutional Ownership : Possibly > 100%
History of former runner: YES
Major ETF movement and strength: Trending with +1% up
Catalyst : ER beats


Overall Picture

SPY nicely closed yesterday's trading session spiking till 204.55 new all time high level. Consolidated in after hours to even break previous high trading 305.13. Lost some steam just consolidated above previous high to breakdown in pm. Traded supporting the 303 slightly got 1$ back. Opened at yesterday's close, 304.13, 1 cent below yesterday's close. The difference was that yesterday it was tested basically from above thus the level was creating support, today at the open it was a clear resistance. For as much as we are keeping and holding the 303 we might don't have the needed strength to support a further up move. But who knows, market is always unpredictable, we might find support at 303 in case 304.14 rejects!

Today's Watchlist

Today I had on the watchlist: LITE, W, MMSI, MO, KHC

LITE: Shares of Lumentum Holdings Inc. shot up 5.8% in premarket trading Thursday, after the optical and photonic products company, and Apple Inc. supplier, reported fiscal first-quarter profit and revenue that beat expectations, and provided an upbeat second-quarter outlook. Net income edged up to $47.6 million from $47.4 million, in the year-ago period. Excluding non-recurring items, adjusted EPS grew to $1.44 from $1.32 and was above the FactSet consensus of $1.20. Revenue rose 27% to $449.9 million, beating the FactSet consensus of $448.2 million. Gross margin improved to 37.3% from 35.6%.
LITE was my favorite stock today. It didn't find enough strength to continue and traded basically an untradable pattern at least based on my approach. I have left it apart.

W: Wayfair Inc. (NYSE:W), one of the world’s largest online destinations for the home, today reported financial results for its third quarter ended September 30, 2019.

Direct Retail net revenue, consisting of sales generated primarily through Wayfair’s sites, increased $607.2 million to $2.3 billion, up 35.9% year over year. Gross profit was $539.9 million or 23.4% of total net revenue
GAAP net loss was $272.0 million
At the end of the third quarter, cash, cash equivalents, and short-term and long-term investments totaled $1.3 billion.

W gaping down in pm due to missed er didn't really take a clear direction. Traded horizontally don't providing me a possible trading scenario.

MMSI: Merit Medical (MMSI) came out with quarterly earnings of $0.28 per share, missing the Zacks Consensus Estimate of $0.45 per share. This compares to earnings of $0.47 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents an earnings surprise of -37.78%. A quarter ago, it was expected that this maker of disposable medical devices would post earnings of $0.50 per share when it actually produced earnings of $0.42, delivering a surprise of -16%.

Not the best er ever though the drop was consistent. It was on watch for a gap down going up trade. The move occurred partially and wildly completed at the open. I didn't have any opportunity to find an entry.

MO: Altria Group Inc. MO has released third-quarter 2019 results, with the top and the bottom line increasing year over year. The quarterly results gained from higher revenues in the smokeless and smokeable products businesses, mainly due to higher pricing.
Quarter in Detail:
Adjusted earnings came in at $1.19 per share, which rose 10.2% year over year.
Net revenues inched up 0.3% year over year to $6,856 million.
Higher revenues in the smokeless and smokeable units drove the top line. Revenues net of excise taxes rose 2.3% to $5,412 million. Gross profit in the reported quarter improved 7.4% to $3,497 million from the prior-year quarter’s number. Notably, reported OCI increased 13.8% to 3,002 million and reported operating income rose 15.1% to $2,944 million.

MO was under my view due to the 200DSMA as magnet @ 49.17 There was just a level of resistance to take @ 47.15 that was also pm high and price could have easily went to fill the pocket to the 200DSMA. Price rejected 47.15 as textbook and definitely lost strength dropping till Multiday VWAP at 44.80sh

Play

KHC

Company Description

Sector: Consumer Defensive
Industry: Packaged Foods

The Kraft Heinz Company manufactures and markets food and beverage products in the United States, Canada, Europe, the Middle East, and Africa. Its products include condiments and sauces, cheese and dairy, meals, meats, refreshment beverages, coffee, and other grocery products, as well as infant and nutrition products. The company offers its products under the Kraft, Oscar Mayer, Heinz, Philadelphia, Lunchables, Velveeta, Planters, Maxwell House, Capri Sun, Ore-Ida, Kool-Aid, Jell-OY, Cracker Barrel, Classico, McCafe, P'Tit Quebec, Tassimo, Plasmon, Pudliszki, Honig, HP, Benedicta, Karvan Cevitam, ABC, Master, Quero, Golden Circle, Wattie's, Glucon-D, and Complan names.

Trade Scenario

Kraft Heinz Co. stock rose 4.2% in Thursday premarket trading after the food company reported third-quarter earnings and sales that beat expectations. Net income totaled $899 million, or 74 cents per share, up from $619 million, or 50 cents per share, last year. Adjusted EPS was 69 cents, beating the 53-cent FactSet consensus. Sales of $6.08 billion was down from $6.38 billion in 2018, but were below the $6.13 billion FactSet outlook. In August, Kraft Heinz reported $1.2 billion in impairment charges and a steep earnings decline. Since then, the company has announced hundreds of job cuts, and other changes. "We are making good progress in identifying and addressing the root causes of past performance, as well as setting our direction," said Chief Executive Miguel Patricio in a statement. Kraft Heinz stock has fallen 48.2% over the last year while the S&P 500 index is up 12.4% for the period.)

Trade Variables

Symbol : KHC
Gap : 8.67% max extension, opened with 5.45% gap
RVOL : 5
pmVOL : > 1M
avg Vol: 7.5 M
Vol @ Day : 38.7 M
Float: 640 M
Short Float: 1.50%
Institutional Ownership : 85.55%
avg ATR : 0.69
ATR @ Day : 0.80
History of former runner: Not a chopping price action for sure but I wouldn't identify him as the ER runner we would like to trade with.
Long Term Chart : Coming out from a deep low @ 24.86. Got into an uptrend since then and today we are making the new high. Getting above 100DSMA and most probably will be attracted by its 200DSMA @ 32.33
Major ETF movement and strength: XLP is stuck in a horizontal move since enough time now. Last high was in September last year and since then we still didn't find strength for the ETF to perform. The open granted quiet a nice break above level of resistance @ 61.20sh. Broken such level price traded and rejected the 61.50 to literally fall till 60.85sh level of support. I have set my order on my traded stock when XLP made is first impulse move. I didn't plan it, it has been a pure coincidence that I want to keep taking trace of.

pmPATTERN : Bull Flag and 2nd up impulse that fails to the mid of the flag to find support in a up drifting pattern up to 31. Faded the high with a whole dollar pull back. Opened at the 30sh
Catalyst : ER Beats

Technical Levels

Support: S1 30 S2 29.10(SSR) S3 28.79(100DSMA)
Resistance: R1 30.51 R2 31 R3 31.50 R4 32.45(200DSMA)
Inflection: 31

Trade Plan

KHC was on my list due to the fact of being close to the 200SDMA. Usually such level acts as magnet for price. Nice pm formation, supportive volume and a great bounce at the open set the stock for a good continuation up wards.

Set-up : Up-Trend Continuation on consolidation above pm high. Entering at the pullback
Side : Long
Size : 130 + 130
Entry : 31.05
Takes :
Exit:

Trade Analysis:

KHC was not my first name on the list, but still I was following it. It took my attention when already easily took 30.50 level of resistance and with no hesitation broke even R2 @ 31. I have held at this pull back cause not above pm high. Thus I have set my order only after at 31.05 due to the micro pull back that occurred at 31.50 but price never looked back again up to 31.77. Here little pullback at R3 31.50 to get his way to 32. Again pulling back and holding the 31.50 finally traded the 32.45 200DSMA with an high 32.46 (lol).

Intuit:

I have noticed the strength on the stock and focused my attention on it. Internalized the action I have already prepared my order for it to be executed. Price never got to my entry level. I have realized I was going to miss the trade too late. I have realized at the open that price found support when pulling back at first @ 30.87. I have realized that the pattern was created as my previous trade just below pm high. The difference with my previous trade is that I was trading a relevant psychological level such as the 10. Today KHC didn't have that level to be traded thus an entry below pm high would have consist in something outside of my rules.

Tape reading:

I didn't have the opportunity to focus on the tape cause I didn't enter the trade and cause I have started to follow other stocks afterwards.

Internalization:

I had doubts today in relation to the pullback below pm high. I really wanted to enter just @ 30.90sh. I am still fighting within respecting pm high or not. I think the answer will be in just lowering the size for those setups I don't consider my bests, in order to just give me an opportunity to spot a good trade but with no pain losing an entire 1 R on it.

Orders:

My order was too far from where the price pulled.

Comments:

I have not a bad feeling in relation to today's trading session. It can't always be a party. There are days in which you might accept that there is nothing for me to take. It's rare that on Thursday I don't place a single trade but today was the case. ER season is in the middle thus we'll have enough stocks to trade in the coming days :D

What I did not like about the trade:
I didn't like to have excluded 30.87 as possible level of support just cause below pm high. I could have traded at least a really small position, to give it the opportunity to be back tested considering that I am willing to backtest more strategies but still I don't place a trade that is not in my A+. So I think I have just to unlock a bit :)

What I have liked:
I liked that I have placed an order on the only stock in my watchlist that in the end has performed today.


Execution detail:

Date/time Symbol Side Price Position
2019-10-31 09:46:00 KHC buy $31.050 long
2019-10-31 09:46:00 KHC sell $31.050 0


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