Synnex Corp. (SNX) shares had resumed their bearish correction after delivering disappointing guidance for next quarter. The company reported inline fiscal first-quarter figures and announced an expected $30 million loss from a negative currency impact on revenue. Today’s 8.44% stock price decline to $88.50 in after-hours trade occurred after the company reported first quarter earnings of $1.37 a share, a slight beat from the analysts’ consensus of $1.36. Revenue missed with $3.13 billion, expectations were for a $3.28 billion print. The company initially guided second quarter earnings at $1.27-1.33 a share, much lower than analysts’ consensus of $1.58. Revenue is eyed at $3.25-3.35 billion, just below the expected $3.37 billion estimate.
Price action on the SNX daily chart shows that the bearish reversal started after priced failed to capture the $103 handle. Today’s slide is tentatively finding support from the $87.50 handle. If bearish momentum continues over the next couple weeks, we could eventually see a formation of a death cross pattern, which occurs when the 50-day SMA crosses below the 200-day SMA. The chart also highlights the potential formation of a bullish Gartley pattern at around the $84.50 area. If this pattern is invalidated, downward pressure may target the $78.50-80.00 zone.
If price stabilizes here and recaptures the $92.50 level, we could see further range bound trading.
The Trade: Sell SNX at $91.50, with a stop loss at $92.50 and a take profit at $87.50. The Risk/Reward Ratio is 1:3