PreMarket Prep Recap: Tesla Price Action Mimics Window Smashing

Reaction to Tesla's new truck and the price action in stocks that reported earnings were the main topics on Friday's PreMarket Prep Show.

A 'Smashing' Debut Of Tesla's Cybertruck

On Thursday evening, Elon Musk revealed Tesla Inc.'s TSLA newest product, the Cybertruck. While the design of the truck had mixed reviews, the test of the windows durability didn't go as planned, when two of the windows shattered upon impact of a metal ball.

Investors weren't able to react to the snafu until 4:00 a.m. EST. Just as the windows were smashed, so were the bids in the pre-market session.

After a lower open beyond the lower end of Thursday's range, traders trimmed $14 off its previous day close of $354.83. Since the issue has had a massive run-up over the last month, traders were alerted to "look out below."

Based on the daily charts, the support level didn't come in until its Nov. 8 low of $332.50. The ensuing decline took the issue to $330 and rebounded into the mid-$330 handle.

Nordstrom Clears Low Bar Of Expectations For Q3 Report

After the close on Thursday, Nordstrom Inc. JWN announced an EPS beat along with a slight sales miss, and also raised the lower end of its 2019 EPS guidance.

With such low expectations for the mall retailer, the report was good enough to instigate a rally in the issue. With the after-hours high at $38.20, both hosts of the show recognized the multiple daily highs at the $38 over the past month and identified it as an important resistance area.

Following a higher open ($37.05 vs. Thursday's close of $34.32), the rally continued to $38 and reversed course. It backed off that high, but remains in the upper $37 handle.

Gap Higher After Q3 Beat

Gap GPS announced an EPS beat along with a slight sales beat.

Co-host Dennis Dick was skeptical of the after-hours and pre-market rally and cautioned that the issue may surrender some of those gains. Although the issue spiked to $17.55 after the release, Wednesday's high of $16.79 was identified as the first resistance level to be tested.

After a slightly higher open ($16.49), the issue collapsed, falling within 3 cents of Thursday's low ($15.85) before sharply reversing course. The ensuing rally has taken the issue a penny beyond Thursday's high ($16.79).

John Inch Joins The Show

Midway through the show, John G Inch, Senior Analyst of Multi-Industrials at Gordon-Haskett joined the broadcast. He reiterated his bearish thesis on General Electric GE and commented on other issues in his coverage area.

On Monday's show, Sean Emory founder and CIO of Avroy And Company will be our guest at 8:35 a.m. EST.