Tuesday Morning Thread

Gator's Chart of the Day - SNDK

SNDK - Weekly Chart

SNDK - Daily Chart

Sandisk warned last week that they were seeing weak demand and that the quarter may be disappointing. You can see the market response on the daily chart. Looking at the weekly chart there is no nearby support.

There are two trades here with different time frames. For the nimble there is a very short term bounce that is likely as the stock has spent the last 3 days below the lower Bollinger band set at 2 standard deviations and 2 days outside the 3rd standard deviation band.  (Fitz says the 2nd standard deviation should contain about 90% of all data points and the 3rd should contain nearly 99%.)  I expect to see a bounce back inside the tighter band (2 s.d.) which would be above 44.82.  It is not likely to last though.

On a longer term (given the outlook from the company) we could see the "Drop Dead Gorgeous" pattern developing.  That's when the stock drops and then doesn't make much of a recovery  and grinds sideways for a short interval and then takes another leg down.  This trade could set up very quickly following the bounce trade.  Wouldn't it be sweet to have the stock pay you off both ways?  It could happen.