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PreMarket Prep Recap: Charting Gildan's Plunge, Buying E-Trade Off The Q3 Print

Joel Elconin

Retail stocks were in the spotlight on Friday's PreMarket Prep show following Gildan Activewear Inc (NYSE: GIL) blindsiding of investors after-hours with lower third-quarter and full-year guidance.

The news had a domino effect on many issues in the retail sector, which had been quiet as of late.

A Gildan Trading Strategy 

When you are coming in long on a day trade or scalp in the issue, it is hard to bite the bullet and take the huge loss.

Co-host Dennis Dick said he has been met with this type of scenario on more than one occasion and finds it prudent to take the loss and move on. 

Another tip: even when short-term trading, attempt to have a balanced portfolio when holding positions overnight.

With the type of oversized move seen in Gildan, the co-hosts immediately went to the monthly charts to find a potential area of support. That chart offered up a pair of monthly lows from the $25.50 area from July and August 2018.

Since that area had already been breached in premarket trading, it appeared likely the issue had some more work to do on the downside.

As opposed to just blindly buying the issue at that area or lower, investors who wanted to attempt a long or cover a short in the issue were encouraged to participate in the opening print.

The reasoning: with the huge down move, sell-stops were going to be triggered as well as some funds throwing in the towel, exerting major selling pressure on the open.

The designated market-maker would take the issue to a level where he or she could find buyers and perhaps participate on the long side.

As it turns out, the issue bottomed 6 cents from its opening print at $23.55 and embarked on monster rally that took the issue as high as $28.30 within one hour of the open.

The stock was down 21.85% at $27.65 at the time of publication. 

What To Make Of E-Trade's Q3

The Street was applauding E*TRADE Financial Corp (NASDAQ: ETFC)'s third-quarter report in Thursday's after-hours session and premarket Friday.

The issue was a SOH — sit-on-hands — scenario for the PreMarket Prep co-hosts.

This quarter's results included a period when the company still charged commissions, and the impact of commission-free trading may not be truly reflected on the bottom line for a quarter or two. 

It was hands off on the buy-side from a long-term perspective. For those looking to cover a long or attempt a short, there was no identifiable resistance area until the bottom of the range from Sept. 30 ($42.89). That was the low of the day ahead of Charles Schwab Corporation (NYSE: SCHW)'s announcement of commision free-trading.

On that day, E-Trade cratered from its close of $43.69 to $36.51, trapping longs along the way.

So far, the rally in the issue has come up shy of that level. The stock was trading up 4.24% at $40.70 at the time of publication. 

Studebaker Joins Monday 

Midway through Friday's show, Will Rhind, the founder and CEO of GraniteShares joined the broadcast to talk about his new ETF, XOUT. The large-cap index aims to exclude U.S. large cap companies that are most likely to suffer from technological disruption over the long-term.

Just before the show ended, William Cohan, the author of a Wednesday Vanity Fair story highlighting controversial trades in the e-Mini S&P 500 index futures ahead of major tweets sent by President Donald Trump, joined the broadcast.

Cohan discussed the research behind the article and the responses he has received so far from regulators.

On Monday's show, William Studebaker will join PreMarket Prep to talk about his ROBO Global And Robotics And Automation ETF (NYSE: ROBO).

PreMarket Prep is a daily trading show hosted by prop trader Dennis Dick and former floor trader Joel Elconin. You can watch PreMarket Prep live every day from 8-9 a.m. ET here. The replay can be found on Benzinga's YouTube channel, and the podcast is on iTunes, Google Play, Soundcloud, Stitcher and Tunein.

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