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Swing Trade Idea – May 7, 2020

Market View

Ahead of the expected USA 3M unemployment report, the USA and European markets are strong while China and India are down. Russell is leading in the premarket, which is common on a short squeeze led bounce. Oil is up today, lifting all names but some of the weakest companies the most. S&P500 is in a consolidation range with the options market setting a range of 2800-2900. Look for fast moves outside the range. Several names which reported positive earnings have made large moves in the premarket, these can be continuation plays, ideally after short pullbacks or flags. Most of these companies have high short interest, which leads to larger moves.

Premarket names

PTON strong move up on earnings beat;  TWLO earnings beat, should spill over into other smaller cloud names; LYFT earnings beat; PYPL earnings beat. Energy names OXY et al 

Stock Idea: PTON

PTON produces exercise bikes with a screen that allows members to join remote spin classes. The business model focuses on subscriber revenue in addition to sales of the bike. Subscriber revenue grew 92% Y-Y and total revenue is forecast to be 30% higher than expected.  PTON is forecasting positive earnings versus losses. Short float is 40% so large moves are possible.

Possibly a good day trade candidate.  No overhead resistance. Look for a profit taking dip near open for possible entry.  Will be volatile so handle with care.