Trading Strategies For Wayfair's Rally Off Cyber Monday Results: What The Chart Shows

Over the years, investors have paid more and more attention to Black Friday and Cyber Monday sales results. So much so, that the results, mainly the positive ones, instigate rallies in the corresponding retail issues.

This was evidenced by the initial price action in Amazon.com, Inc. AMZN and Shopify Inc SHOP on Monday. And it is factoring in the price action for Wayfair Inc. W, which is the PreMarket Prep Stock of the Day.

Wayfair's Volatile Few Weeks: On Wednesday, Nov. 9, Wayfair nearly matched its ultimate low for its extended decline ($28.11) when it bottomed at $28.70. Those lows were comfortably above its pandemic low of $21.70.

Only three sessions later, the issue reached $43.92 and posted its high for the rebound the following day at $42.16. Over the next four days, it swooned to $30.99 and matched that low on Tuesday with a low of $31. It rallied off that low to close at $31.67, which was the lowest closing price of the decline.

The Wayfair News: After the close on Monday, Wayfair announced that it had a robust five-day peak holiday shopping period. Between Thanksgiving and Cyber Monday, it had a low single-digit sales increase in the U.S. compared to the same time period in 2021.

Customers turned to Wayfair throughout November for their home needs in response to a robust offering, including in-stock availability, speed of delivery and price value, the company said. 

In addition, 73% of the customers were repeat customers.

PreMarket Prep's Take On Wayfair Shares: When the issue was being covered on the show Wednesday, it was trading in the upper $34 handle.

In furious after-hours price action, the issue traded nearly $4 higher when it peaked at $35.55. Co-host Dennis Dick was able to catch both upside and downside price action.

“I was able to get long the issue off the headline and covered, then flipped to a short at $34.75 and covered it this morning before the show,” he said. “When got up over 10%, it looked like an overshoot to me.”

The author of this article alerted investors that the after-hours high ($35.55) surpassed Wayfair's seven-day high ($35.39) and would be a formidable target if reached again. Also, it was noted that both Amazon.com and Shopify faded off their early morning highs on Monday.

W Price Action: After a higher opening ($34.11 vs. $31.69), Wayfair made an attempt to reach the aforementioned high, but came up just shy, only reaching $35.29 before reversing course. 

Wayfair is trading 15.57% higher at $36.60 ahead of the close Wednesday in a volatile session. 

The discussion on the issue from Wednesday’s show can be found here:

Photo via Shutterstock.