Why I am shorting $MOD here - Jan 21 2024 trade idea

marketchan Updated   
BATS:MOD   Modine Manufacturing Company
Price reached the upper limit of the multi-months parallel channel.
Stock is overbought on pretty much all high time frames.
Modine Manufacturing has strong fundamentals and has been performing very well and beating expectations in the previous earnings, which is great but expectations are very high for the next earnings report on Jan 30.

Stock price went up too much too fast. More than exponential growth for this stock.

Important to note that 95+% of shares are held by institutions, which will only 'panic sell' if the company's earnings disappoint.

I opened a short via options with expiry mid-February.
Trade active:

In the past week, the price action was very interesting as the price briefly got out the parallel channel, shacking out some short sellers.

But it was only a false breakout, as the price is now back within the boundaries of the parallel channel.

Moreover, the price already dropped 10.1% since the high of the false breakout at 69.90 USD which is a strong rejection.

A new downward channel has formed, with a lower high and a lower low printed.

I am still holding my short position, which is now profitable, with targets at 61 and 53.

Reminder: earnings will be announced on the 01/30 after market close.
I used today's drop (-9%) after earnings at the open to close my short position with a nice profit.

I expect the stock to bounce in the short term, but I will not trade it for a while.


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