WWM - Analytics

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    Today’s Trading Edge: Hibbett Sports Inc shares continue to respect the 200-day SMA

    WWM_HIBB_MAR_13_2016.jpg

    Hibbett Sports Inc. (HIBB) shares were unable to maintain their higher open on Friday following their mixed fourth quarter earnings figures. The Alabama based company reported a fourth quarter profit of $0.76 a share, a penny higher than the forecast. Revenue disappointed with a $245.7M reading, lower than the eyed $250.0M analysts’ consensus. The company also raised their EPS guidance to $2.90-3.04 per share from $2.87-2.94, but Wall Street was expecting a higher increase around the $3.11 area. The company also announced initiatives to improve their sales systems that will impact EPS by $0.l4-0.16 per share.    

    The sports-goods company have seen their shares rise almost 20% over the past few months and it appears we may see price ultimately consolidate or pullback here.

    Price action on the HIBB daily chart shows that price formed a potential bearish butterfly pattern and closed below the 200-day SMA. Point D was targeted with the 141.4% Fibonacci expansion level of the X to A leg and the 261.8% Fibonacci expansion level of the B to C leg. If we see a break of the psychological $35.00 level, price could target the $32.00 region. Further downward pressure may target the $28.50-30.00 zone. If we see price stabilize here, major resistance will come from the $42.00 handle.

    The Trade: Sell HIBB at $36.75, with a stop loss at $37.75 and a take profit at $33.75.  The Risk/Reward Ratio is 1:3


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