Tuesday Morning

Gator's Chart of the Day: MWIV

MWI Veterinary Supply Inc is a wholesale medical equipment company.  They reported earnings before the market opened Monday.  Results looked good with a bottom line of 1.15 vs 1.05 expected and the company guided higher.  Well ... apparently closer inspection found some folks wanting their money back as they sold heavily into the gap up.  The result is a classic "gap and crap" candle.

Is this a good place to buy?  For all intents and purposes the 50 day simple moving average held but where does it go from here?  The volume was 8X the average and before the day began 7.75% was sold short with nearly 12 days needed to cover.  Since the float is 11.86 million shares the short interest was about 900k so there is still a bunch left to buy back.  I suspect some was covered as the stock initially moved higher from the open. 

The Trade
This all depends on the open.  If the stock prints a higher open I think you can take a bite on the long side and put your stop just a bit below 97.  If a squeeze develops be prepared to add quickly and if it breaks 100 I would add more and move the stop on almost all of the position to about 99.60.  If the stop is not hit I would sell most as it approaches 110.