What Makes This Trade Great: HPQ Edition

What Makes This Trade Great: HPQ Edition

May 30, 2024

Hello, this is Barrie Einarson from Trade Ideas, bringing you today’s edition of “What Makes This Trade Great.”

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Who would have thought that HPQ, which has evolved significantly over the years, would stand out today? For those unfamiliar, Hewlett-Packard split into two distinct companies: one focused on software and the other on hardware. HPQ represents the hardware division, and it recently reported its earnings.

Following the earnings announcement, HPQ had some initial after-hours movement. The pre-market action saw a minor uptick followed by a dip. However, once the market officially opened, HPQ showed impressive strength. The 9:30 AM candle marked the start of regular trading hours, and from that point, HPQ has shown remarkable resilience with no significant pullbacks.

What makes this particularly noteworthy is that HPQ’s performance is standing out against a backdrop of a declining market. As I speak, the Dow is down 321 points, the Nasdaq is down 88 points, and the SPY is also down. Despite these broader market declines, HPQ is trading on its own merits, showcasing its strength as a classic alpha stock.

This situation is reminiscent of yesterday’s action with Chewy (CHWY) and Abercrombie & Fitch (ANF). Both of these stocks were earnings players that continued to move higher despite the broader market trends. HPQ seems to be following a similar pattern today.

While it’s reasonable to expect some sort of pullback at some point, the current strength of HPQ is undeniable. For now, it remains a strong performer in a weak market.

That’s it for today, guys. I need to get back into the trading room. Have a great evening, and we’ll see you tomorrow. Start trading today