NASDAQ:ALGN   ALIGN TECHNOLOGY INC
The Entry
  • ALGN has had repeatedly good earnings and I believe last week's crash is an opportunity given the situation was largely driven by the broader market
The Situation
  • Entering trade because ALGN current price is nicely positioned above the 200MA line and is one of the few stocks that has managed to be in this position despite last weeks crash.
  • RSI shows the price exiting the oversold area
Issues
  • I'm betting on a positive reaction to the earnings report on the 23 Oct. I'm slightly not comfortable with this but the price decline makes it somewhat tasty.
  • I think this should be a short term trade that I should close a day or 2 days after earnings .
Comment: Price hit my SL. I was reflecting on this trade and as a reflection, I think if i was trading the earnings there was no need to enter to early. I should have just entered 1 day before just to reduce risk.

Anyway earnings release is after the close. I have just entered again with double the units. My trade plan still will stay the same - Short term trade with a close on the day itself or a day after (Friday)
Comment: Stock dropped drastically by +25% even through Align reported earnings of $1.24 per share, rising nearly 23% to top the average of analysts polled by Zacks Investment Research for $1.19. Sales of $505.3 million grew more than 31%, and beat expectations for $501 million.

But Align's outlook for the fourth quarter lagged. Align expects to earn $1.10-$1.15 per share on $505 million to $515 million in sales. Analysts called for earnings of $1.32 a share and $544 million in sales.

The observation I'm seeing here is that for stocks with a sold earning record and strong business fundamentals. Good earns are almost a given so small cracks that might derive from future earnings or even a slight dip in current will cause it to break.

In reflection, with the information assumptions I had. I think I would have still entered this stock.
Comment: I need to see how I can get out of this, would be open to any suggestions.
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