It's not often that PreMarket Prep listeners are treated to the kind of price action that was discussed on Thursday's show.
Cronos Buyer Getting Smoked
For some unexplained reason, there was a relentless buyer in the issue on huge volume. And they were not shy about it either, displaying 500,000 share bids and getting hit on them.
The buys ranged in price from $8.40 to $11.99. With no apparent catalysts, the buyer may be a rogue algo — or a trader who has been sampling the product.
To begin the regular session, the issue opened at the high for the day, $10.56, and has traded as low as $8.33. Cronos was up 3.19% at $8.67 at the time of publication.
Skepticism Of Netflix Earnings Rally
After the close Wednesday, Netflix Inc (NASDAQ: NFLX) delivered a solid third-quarter beat for EPS and sales.
In after-hours trading, the issue rocketed from its close of $286.28 to $318.79. When the issue was being covered during the show, it was in a tight range between $307 and $309.
Both PreMarket Prep were hands-off on the buy side and urged traders to be a buyer if the consolidation resolved to the upside, and to sell or go short if it resolved to the downside.
It's important for Netflix to hold the $300 level on a closing basis, said co-host Dennis Dick.
As it turns out, the consolidation was resolved on the downside and the issue traded down to $288.30, which was within a whisker of the top of Wednesday's range ($288.17).
Netflix stock was up 2.98% at $294.80 at the time of publication.
IBM Is IBM
The co-hosts reviewed the long-term price action in IBM (NYSE: IBM) ahead of its third-quarter report on Wednesday.
The conclusion: it has been serial underperformer in the greatest bull market of all time and is not likely to be a leader in the future.
A mixed third-quarter report with a one-penny EPS beat and a slight sales miss is not what the Street wanted.
The issue was shellacked in premarket trading and not showing any signs of a rally. The premarket low ($132.36) was identified as possible support, but the major support came in at the series of lows at $130 area from late August.
So far, buyers have stepped in just ahead of the premarket low at $132.91 and the stock is now attempting to rebound. It was down 5.42% at $134.34 at the time of publication.
Morgan Stanley Keeps Pace With Other Banks
Before the open, Morgan Stanley (NYSE: MS) provided another good earnings report for the financial sector.
It delivered a 16-cent earnings beat along with a $400-million revenue beat. The initial surge in premarket trading took the issue to $44.85, which was just shy of its Sept. 16 high ($45.05).
Investors were encouraged to chase the issue on the long side and use the $45 area as a target. During the regular session, the rally stalled at $44.50 and is now attempting to remain in the $44 handle. The stock is up 2.2% at $43.75.
2 Guests Friday
Early in the show Thursday, Marc Chaikin of Chaikin Analytics joined the broadcast with technical and fundamental commentary on the markets.
PreMarket Prep listeners will be treated toa pair of guests Friday.
Will Rhind, the founder and CEO of Granite Shares, will be on to discuss his new ETF, XOUT.
William Cohan, an author and contributor to Vanity Fair, will come on to discuss his excellent article on suspicious trading in the S&P 500 index futures ahead of major announcements.
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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Photo courtesy of Netflix.
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