Lights Out Move To The Downside In SolarCity

Joel Elconin is the co-host of Benzinga's #PreMarket Prep, a daily trading idea radio show.

SolarCity Corp SCTY shares were trading lower by $3.87 (7 percent) at $53.23 in Thursday's session. The catalyst behind the decline is a Q4 miss on earnings ($1.33 vs. estimates of $1.27) on slightly better revenue of $71.81 million vs. $71.75 million.

Some investors may have been anticipating a bad report and targeted the $59.00 area as an exit point, putting in place a triple top over the last three trading sessions (technical analysis pattern that is identified when the price of an asset creates three peaks at nearly the same price level); the last three highs in the issue being between $59.09 and $59.31.

After backing off that level and closing at $57.10 on Wednesday, it continued to decline when the earnings were released, reaching the $53.50 level and stabilizing. A brief rally in pre-market session took the issue to $55.10. That was slightly above its opening price ($54.77), which was immediately followed by a washout to $51.76. That is the lowest level for the issue since February 2, when it bottomed at $48.75 and staged a $10.00 rally.

Since making the spike low (a low is far away from previous levels and the bar itself is abnormally large), the issue has rebounded and found intraday resistance at $54.30 area and resumed its decline.