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PreMarket Prep Stock Of The Day: Hasbro

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PreMarket Prep Stock Of The Day: Hasbro

Benzinga's PreMarket Prep airs every morning from 8-9:00 a.m. EST. During that fast-paced highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to a recording, Benzinga will highlight a stock of the day that was featured on the show.

Stock Of The Day: Hasbro

The Street was leaning the wrong way into Hasbro's (NASDAQ: HAS) earnings print. Despite a strong rally in the broad market over the last week, the issue swooned from last Thursday's close of $105.07 to a low on $99.17 on Friday; that was matched in Monday's session before rebounding to close at $100.27.

Before Tuesday's open, the company announced a solid fourth-quarter beat of 31 cents but came up shy on sales by $14 million. During pre-market trading and for the early part of the session, the EPS beat was dominating the price action. Off the number, the issue sprinted to $111.18, over $10 higher than Monday's close, but immediately began to fade.

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What Is Meant 'By Leaning The Wrong Way'?

Ahead of earnings for many companies, investors will add or pare positions ahead of new fundamental information being released. Companies such as Apple (NASDAQ: AAPL) or Microsoft (NASDAQ: MSFT) often trend higher ahead of reports and on most occasions, investors aren't disappointed.

Other issues that are not in as strong of an uptrend may sell off ahead of a report, as investors aren't as optimistic about the upcoming earnings report.

In the case of Hasbro, investors unsure of a strong report overwhelmed buyers that were anticipating an earnings beat. As a result, the buyers over the last few days that were trying to "catch the falling" knife were banking on a good report to break-even or eke out a profit on the trade.

Overhead Supply Rules The Day

When the issue was being discussed on the show, the possibility of overhead supply in the issue may dictate the outcome of the session. In other words, buyers during the dip over the last few sessions were under water and may use the unexpected rally to exit the issue.

As it turns out, the sellers over the last few sessions may not have been "leaning the wrong way'' as much it seemed during the pre-market session. After a higher open, Hasbro continued in that direction but came up shy of the pre-market high, peaking at $109.50 and sharply reversed course. The issue went into freefall that has found intra-day support just under Monday's closing price ($100.90) at $100.70 and has returned to the $102 area.

 

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