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    Today’s Trading Edge: Synnex Corp shares plunge following weak guidance

    WWM_SNX_MAR_28_2016.jpg

    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 


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