Before The Bell-CROX Update-Name Brands That Got Crushed Jan 19th

Jan. 19, 2012 7:27 AM ETCROX
Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Contributor Since 2010

Individual investor since 1994.

CROX is on our Name Brands that Got Crushed Trade list. Fund managers look to get long these type of household names, once established price discovery base has been identified. (Balance between sellers and buyers)

CROX got crushed down to $15 last October. The shares have not gone a penny lower since, thus price discovery.

The last two candles have formed a Bullish Engulfing Pattern, defined as:
Bullish Engulfing Pattern is a pattern characterized by a large white real body engulfing a preceding small black real body, which appears during a downtrend. The white body does not necessarily engulf the shadows of the black body but totally engulfs the body itself. The Bullish Engulfing Pattern is an important bottom reversal signal.

Volume interest seems to be picking up slowly as noted by a slightly rising 20 day moving average. I use the ema20 over volume to determine buy interest. If the ema begins to upswing, either reversing a down slope or a flat slope, this is a good indication elephants are moving in.

Tim what is the catalyst to move higher?? Glad you asked.
CROX reports earnings on Friday 20th. Looking at numbers posted on Yahoo, analyst expect a 20% decline, eps of .04cents, reduced from .06cents. Last report, CROX beat estimates by 150%.
The mean 1year price target by analyst is $25.50, or 38% above current price. Call options that expire Friday, have largest open interest at $20.

Conclusion: CROX seems to have a few big players moving in ahead of earnings. With a solid base at $15, and still 38% below its yearly mean price target, the downside risk of $3 for a reward of almost $10 seems like a decent bet.
  
The best way to play is a buy above $20, which will confirm the Bull Engulfing Pattern and move past call option resistance.
 
Tim Kathlina

Recommended For You

Comments

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.