Sells rest of JOY 19.75
Joy reported bad earnings and guidance yesterday (see previous post).
The logic? for this trade was as follows;
The lower end of JOy’s guidance was 1.80. With a 10 P/E that gives me a value of 18.00. Support on the weekly chart is 17.06. The stock dropped 4.40 from the previous close, that’s 20 percent.
Although they missed their earnings by 7 cents they came in with with 54 cents, an O.K. profit, not going out of business.
Additionally JOY gapped down sharply after a long run down from the 65 dollar area. JOY could almost be considered a value stock at these prices.
Almost any large drop (15/20 percent or more) will bring in buyers if it doesn’t look like the company is going broke.
I had a tiered buy that would get me in at 17.51 if they had all filled. I considered a bounce off 17.06 a sure thing even if it goes lower later. Obviously I didn’t think it would reach 17.06.
The reason for the sell at 19.75 was a 50 percent retracement of the 4.40 drop
and by belief that the overall market is going much lower and JOY is going with it.
I hope this is helpful.