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PreMarket Prep Stock Of The Day: Children's Place

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 upco

Benzinga · 08/25/2020 16:44

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.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

While some issues in the retail sector have thrived in the COVID-19 economy, others have been thrashed, such as mall-based retailers. One of those issues, Children's Place Inc (NASDAQ:PLCE), is getting throttled in today's session and is the PreMarket Prep Stock Of The Day.

Peaked In 2018: Many of the issues that haven't fared as well in the recent rally off the March low are issues that were in a downtrend before the crisis started and this issue fits the bill.

It's hard to imagine now, but the issue peaked in October 2018 at $160.23 and faltered to end that year at $90.09. After attempting to rally in early 2019, it lost a third of its value in a strong market falling to $62.52.

No Kid’s Play During Meltdown: The issue did start the year on a positive note, rallying to $72.50 before caving in with the broad market. In fact, it was one of the hardest-hit issues, falling nearly 900% when it bottomed in March at $9.25.

Recess Over In June: While the broad market has continued to march higher off the March low, the issue peaked in June at $58.70 and resumed its ugly downtrend. Along these lines, the Street was leaning the right way into the report as it has shed $10 over the past month, falling from its July 23 close ($30.75), ending Friday’s session at $21.77. It did participate in Monday’s rally ending the session at $23.31.

Before today's open, the company announced an EPS miss of 34 cents, but did manage a sales beat of $3.71 million. Early in the session, the Street was emphasizing the huge EPS miss versus the slight sales beat.

Price Action During The Show: With traders being traders, they always think to try to pick a bottom in an issue going straight down or try to pick a top in one going straight up. When the issue was being covered on the show, it was trading at $20. The author of this article identified a step-down seller that had more stock to go.

Co-host Dennis Dick warned against randomly buying the open or flat-out trying to pick the bottom. Instead, he discussed an old trading technique, that may trigger a long in the issue off the open.

"It may reverse on the session, but not go green," he said. "See where it opens and if goes lower, perhaps attempt a long when it comes back up through the open and then stop myself out at the current low of the day.”

Price Action Off The Open: Dick's scenario didn't play out immediately. After a much lower open, it managed only a 10-cent bounce to $19.70 and then swooned to $17.78 before staging a rebound.

Later in the session, it did go through the open, rallying to $20.78, but has been unable to hold the rally. As of 12:30 p.m. ET, it has fallen back to the lower $19 handle.

The full discussion on the issue from today’s show can be found here