Gap reversal

Last night after the close VECO reported better than expected earnings.

03-Aug-15 16:02 ET

VECO

Veeco Instruments beats by $0.03, beats on revs; guides Q3 EPS in-line, revs in-line  (25.76 -0.12)

Reports Q2 (Jun) earnings of $0.20 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus Estimate of $0.17; revenues rose 38.1% year/year to $131.4 mln vs the $127.6 mln consensus. Co issues in-line guidance for Q3, sees EPS of $0.22-0.40, excluding non-recurring items, vs. $0.32 Capital IQ Consensus Estimate; sees Q3 revs of $135-160 mln vs. $148.8 mln Capital IQ Consensus Estimate.

Courtesy of Briefing.com

VECO gapped down a dollar to 24.77 and fell very swiftly to 21.52.

blog veco daily 8-4-2015

As you can see by the chart above once it reversed it made a strong recovery. Support levels were as listed on the chart and I placed orders at 21.26. Unfortunately the bottom was 21.52 and I had to chase it a little to get in. If the bottom had been over 23.00 I would have passed on the trade or bought a small position that I could add to later without getting into a bad upside down situation.

blog veco 15 sec 8-4-2015

The chart above is a 15 second per bar chart. When I’m trading a weak stock and am not sure how far it’s going to fall but I have strong confidence that it will recover I switch to this very short time frame so I can get a clearer picture of what’s going on.

 

VECO’s earnings for the past year have only been 30 cents. That translates into only 4.50 for the value of the stock, but there revenue increased by 38 percent over the same quarter last year. This tells us that their business is picking up and with continued strong growth their stock price could go back to the 50/60 dollar area.

 

I sold at 25.00 because there is no assurance of continuing strong growth and I had a 15 percent profit in an hour and a half.

 

This trade was a price action trade triggered by the gap down after a long run down and better than expected earnings

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