ENPH Power Earnings Gap, A Sign of Things to Come?
Hi everyone,
Today I wanted to discuss ENPH as well as how you can use Earnings Reactions as a barometer of the health of the market.
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Earnings season can provide insight on the risk appetite of institutions. Seeing multiple earnings gaps out of sound bases is a sign of a strong market.
Gap ups signify that the street has been caught off guard. Institutions are forced to bid up the stock and will likely continue adding to positions over the next few weeks and months. This creates an uptrend that we can ride as retail traders.
Meanwhile gap downs, as we saw earlier this year, especially on seemingly strong earnings reports, indicate that institutions are distributing stock. Like with Gap ups, the trend is likely to continue in the direction of the gap.
Today ENPH (Enphase Energy) Gapped and closed strongly +17% on 300% Average Volume.
TEVA also had a strong Gap up although the chart is not as appealing.
Although we have yet to see a proliferation of gap ups and breakouts, it’s encouraging to see a few starting to appear.
On a weekly chart you can see that ENPH is moving up the right side of a long term base that it has been forming since 2020.
There are several techniques to trade gap ups and the resulting trend. I’ll likely make a few posts on the topic so once again make sure you are subscribed so you don’t miss them.
After an initial range, ENPH trended well and finished strong, an indication of institutional support.
3 minute chart:
I have no position at this time as this is the first strong gap up. If ENPH turns out to be a monster, there while be multiple entries along the way.
In the meantime, this gap is an excellent test for the strength of the market. Watch to see if ENPH holds the gap and is able to trend. This would be a vote of confidence for the strength of this rally.
If, however, ENPH sells off and fills the gap, that would suggest weakness.
Let me know your thoughts on the market and ENPH in the comments below. Do you think it will hold?
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Cheers!
Richard
Thank you for sharing this.
Thanks Richard; as usual, great insight. I was notified yesterday that Enphase was within 10% of a Green Line breakout; this morning that threshold was broken several times before the price and volume both stabilized. That was fast. Technically, I guess that would reset the threshold if the run doesn’t hold.
As far as the market uptrend holding (if that’s what you were asking about) – we can hope so, but I don’t think so. It seems like there just aren’t enough positives yet. I think the outlook is still Downtrend Under Pressure. But that’s only an opinion, and it’s the same one I had in Spring of 2020; you know how that went.
Looking forward to more. Thanks for your constant vigilance and sharing.