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PreMarket Prep Stock Of The Day: SunPower

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PreMarket Prep Stock Of The Day: SunPower

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: SunPower

Holding an issue into an earnings report can be a dicey proposition. For long-term fundamental investors, one earnings miss may not derail your thesis in the issue, but the price action from a report has to be evaluated. The reason being it may temper your future price expectations or reduce your tolerance on the downside.

Any investor in SunPower Corp (NASDAQ: SPWR) had to be feeling pretty good about the issue based on the price action in Wednesday's session. The broad rally in the solar sector took the issue along with it. Following a higher open, it marched north for the entire session, reaching $11.18 and ending the session at $10.94, or nearly 11% higher.

That marked the highest level for the issue since October when it peaked at $11.65. The retreat off that high didn't end until November at $6.88.

Come On In The Water Is Fine

The decisive breakout on the daily chart attracted momentum buyers as well, with the rally taking place on nearly three times its average daily volume. Those buyers were certainly expecting follow through on Wednesday's move, which could have been aided by an earnings beat.

What those investors were banking on was a strong report and better yet some raised guidance.

Mixed Report Not Nearly Good Enough

After Wednesday's close, the company announced a fourth-quarter adjusted beat of 2 cents but was well shy on sales by $34.34 million. Also throwing fuel on the fire was a downgrade by Cowen from Outperform to Market Perform.

To long-term investors, the poor sales figure and downgrade may not impact their view of the company. For the short-term momentum investors falling for Wednesday's breakout that turned into a fakeout, it's time to cut their losses and move on.

Get Me Out, Now

As evidenced by the early price action in the issue, there's nothing but unabashed selling. After a $1.20 lower open, sellers engulfed the issue. In a straight down fashion, the issue fell all the way to $8.95 and is attempting to rebound.

If the decline continues, the next support based on the daily charts comes in at the series of five consecutive highs at the $8.50 area from late January and early February,.

 

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