EarningsBeats.com Digest

Published: Wed, 07/22/20

EarningsBeats.com Digest for July 22, 2020

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An Online Retail Company That's Consolidating - In Bullish Fashion

I've discussed the benefits of basing and consolidating in many blog articles and TV show highlights. Typically, after an uptrend, it's very beneficial to see a stock struggle for a period of time to move higher. Generally, that struggle ends with another breakout to the upside. Chewy, Inc. (CHWY) is a perfect example of an online company that made a big move higher and is now consolidating in bullish sideways fashion. I fully expect to see the recent sideways action resolve itself to the upside:

In June, CHWY raised its revenue guidance, but it has yet to clear overhead price resistance near 52. CHWY won't report its results for two more months, but in the meantime, Wall Street certainly appears to be favoring a very strong report. It's certainly worth mentioning that CHWY resides in the specialty retailers group ($DJUSRS), which remains an area of exceptional relative strength. Watch price support close to 44.50. As long as that holds, I'd expect to see this consolidation ultimately result in another upside breakout. Upon breakout, the initial measurement would be approximately 60.

Happy trading!

Tom Bowley

Chief Market Strategist

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