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Swing Trade Idea – May 29, 2020

Market View

In the premarket the world equity markets are slightly lower with Europe and China negative and USA mixed. Macro factors are mixed: USD is down, yield curve steeper but oil is down. Russell 2000 is the weakest US index and Nasdaq100 the strongest, possibly signaling a rotation back to growth from value. Tech earnings were generally good, providing a boost to the Nasdaq. The big news stories are the USA/China trade discussion; China/Hong Kong; and the executive order related to the social media companies. President Trump will be speaking today, which will be market moving. US PMI and consumer sentiment will be released in the morning and Powell is speaking, all of which may be market moving.  Sectors to watch this morning are the cloud/data, discount stores, and gold miners.  Travel and leisure and cannabis look weak. FAANGM stocks have been showing signs of weakness and will drive the markets so need to be watched.

Premarket names:

ZS and VMW moved > expected move on earnings and several upgrades;  WSM beat; BIG beat DLTR/DG upgrades; gold miners; LOGI buyback divi raise; CGC earnings miss

Stock Idea: ZS

ZScaler is a cloud based security company which reported earnings Thursday after the close. It beat earnings and revenue estimates and reported 34% revenue growth Y-Y. The premarket move is well in excess of expected, which can lead to higher prices. Analysts are chasing price this morning which will provide a boost. Short interest is 13% so short covering will also assist with boosting the stock. There is no overhead resistance.  Dips may be long opportunities for day trades but since extended, should be prepared for the alternate thesis.