PreMarket Prep Stock Of The Day: Snap

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. 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.

One unique aspect of the PreMarket Prep Show is the variety of guests we have on the broadcast. From Wall Street analysts to hedge fund managers to swing traders, the show covers the gambit.

On Thursday, we had a crowd favorite, Jerremy Newsome, the founder of Real Life Trading as our guest and he had some insightful comments on many issues. Perhaps his best call was the continuing price action of Snap Inc SNAP after posting a huge earnings beat on Wednesday.

Its follow-through price action makes it the PreMarket Prep Stock Of The Day.

Wednesday’s Price Action: After the close on Tuesday, Snap announced a third-quarter EPS beat of 6 cents along with a sales beat of $128.7 million. Notably, the company reported DAUs of 249 million, which was up 18% year over year.

The price action speaks for itself. After a $5 higher open, it had only a brief retreat to $34.52 and resumed its move higher. Later in the session, it rallied to $38.89 and ended the session at $36.50, for a remarkable 28% gain.

Newsome’s Take On The Move: One unique trait Newsome has acquired is to recognize that when an issue has a gap opening, a void in price from the previous day’s action, will the move continue or fade?

Many veteran traders, like myself, sometimes lean towards the void in price eventually being rectified.

Although that does happen on some occasions, fortunes have been lost waiting to retreat to an area that one thinks it should go back and fill the gap.

When the issue was being discussed with Newsome on the show, it was trading a tad in the red from Wednesday’s wild session at the $36 area.

"This a strong break-out at the monthly charts, this thing is dirt," he said. "I do not think Snapchat ever goes down and fill that gap."

Thursday’s And Friday’s Price Action: After a slightly higher open on Thursday, it had only an 8-cent retreat to $36.86 and ripped higher for the rest of the day, finishing just off its new all-time high ($39.19) at $38.97.

It's been more of the same in Friday’s session. Following a higher open, Snap found buyers at the top of Thursday’s range ($39.19) at $39.17, blasted to $43.05, and is now trading actively in the mid-$42 handle.

The full discussion with Newsome can be found here and his specific comments on Snapchat can be found at the 41-minute 30-second mark.