AAOI trade ideas
AAOI - Watching for Put EntryAAOI is an interesting play opportunity. I will have to watch this one closely, because the short term chart looks like it has potential to go either way. This has been in a bearish market for the past year. This had a strong 3 day drop from around 42 to 32. It has consolidated between 30-34 for the past couple weeks after this drop. The last trading day formed a doiji signifying an attempt to start running back up or dropping back to the 30 support. If 30 cracks this will likely test the 25-28 support area. With the high short float, I'm looking for puts on the rundown back to 30. I will be looking for entry 33-33.50 with a SL around 34.
Applied Optoelectronics, Inc Ready to turn up Enter price: 42.40
Stop Lose: 41.40
Target Price: 43.95
Size: 350 shares (a volatile counter)
$AAOI shut down HARD at resistance today!This might not be a bad short setup - I'm personally taking no position, but potential certainly seems to be there for a failed breakout.
long-term sentiment is positiveLast week, Rosenblatt initiated coverage of AAOI at Sell amid worries of price wars and declining margins. Even with demand up for fiberoptics in China and the United States, price competition should heat up in 100G and 400G module markets, which may make AAOI's 40%-range gross margin unsustainable.
Piper Jaffray is upbeat on the optical-equipment makers today, as the firm sees easier comparables amid a reset at China's ZTE, now working free of a U.S. ban.
Our technical analysis shows that:
The stock short-term sentiment (next 30 days) is trending negative;
The mid-term sentiment (3-6 months) is trending positive;
The long-term sentiment (9-12 months) is positive.
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More room to go down if break resistantForming a 'double top' in the last two months. If the resisitant is broken, the downward room is huge.
AAOI Possible two weekish swing tradeFeels like a possible setup for a two-weekish swing trade. The stock hasn't broken the trendline yet and is still trending long with decent volume.
Two possible entry points: the bounce off the trendline retest or near support @ around $40.50.
Profit Target: $49
Stop Loss (Trendline Retest) $41.90
Stop Lost (Trendline Break) $39.90
Shakeout....look at gap down close level...supportShakeout....look at gap down close level...support
AAOI LONG IDEA80% SHORT FLOAT SHOULD PROVIDE JUICE FOR A MOVE HIGHER ON A CLOSE OVER 44ISH.
EYEING JULY 20 45 AND 47 CALLS AROUND $2 AND $1.4 RESPECTIVELY. WILL UPDATE IF SETS UP AND WE CAN CATCH IT
Watch for $39 - $36 levelsShould sell off and find short-term bottom at these levels and decide where to go afterwards.
AAOILooking for this to either push through 46.90 or back test the .618 at around 39.57. A push past 46.90 brings 50, 52.77 and 61.56+
$AAOI Inverse Head & Shoulders$AAOI Possible inverse H&S pattern forming. 50d EMA trending upward. Volume picking up. Watch for strong break through 35.00 level in the near term.
Targeting mid-40s in the medium term. Breaching the 200d ema on the daily and 37.50 resistance will be key.
$AAOI C&H Pattern Setup$AAOI C&H pattern developing. Monitoring for a possible short squeeze coming. 1st target $37.82 near 200d ema. Note: very high short interest 75-80%.
Bottom FoundThe bottom of the almost 1 year lasting decline seems to be found. Even if we may try another test down there shall be a retracement up finally.
AAOI: Fool Me Twice? Ignore The Hype, Wait For Trust (PT $24.50)The recent run up in AAOI stock price is a familiar story if you've been tracking or involved in the company since last year. What was once a glorious shining star from a parabolic blowout, quickly became a bubble of sorts and collapsed. The stock is tainted because of leadership's comments and weak guidance last quarter. The only reason to run the stock up is to profit and then watch it come back down, which I believe it most likely will. This is a volatile market full of excuses to bring any and all names down and AAOI is a very, very easy target.
I personally took a $70k loss last quarter on an investment I started back on 9/19/2017. I'd averaged down and waited for news and the tide to turn. A nice chunk of my portfolio ended up being allocated within the position, so it was dead money just sitting there for over 4 months. I think the company's technology, manufacturing capabilities and products (margins) are phenomenal. I think their execution to leverage their strengths and positions within the industry, plus their credibility, are found wanting though, and that's the real killer holding the stock back.
AAOI was dead money until the recent run-up. It's not going to grow back into the $40s without some serious and flawless momentum. You have an insanely high amount of short interest always playing against you. No matter what gains the price makes, they'll bring it back down. On top of that, ANY bad news will just send the stock down even further. It's already hit the mid $20s. People have been calling for prices into the teens without hesitation. I'm inclined to believe they'll push it down there if they want to on a bad, upcoming call.
The volatility in both the price and management's lack of transparency is not good for anyone seeking stability or trying to recoup money lost within the stock. Again, any good news will be processed and then cast aside because of the short interest. Any bad news will be magnified and blow the price down. Management made some really weird comments in their last call that make the specter of dishonesty rear its head. A lot of people already don't trust what they say, so you're playing against that as well. Leadership in ANYTHING has to be solid for any entity to move forward.When that starts getting questioned, it does not bode well for results or for participants.
Guidance for Q1 was terrible. Almost all the commentary and other positive catalysts for the company are taking place in the second half of 2018. June is about where the stock will finally start to test whether it can go back up, and that's assuming nothing crazy or weird hits the company again. My thoughts are that this quarter will meet expectations and guide for some growth, but it will only keep the stock back in the $30s. Anything less and it'll be back down to $24.50, maybe less if sh*t hits the fan. The short interest is just so brutal and easy for people to hold down that it's a struggle. If the stock starts to rebound, stabilize and hold, positive news starts rolling in (FB extends their contract into Year 2) and the short interest starts to decrease after June, I'll look at possibly buying again. That's a ton of 'ifs' and a great company shouldn't have to instill that kind of hesitation in investors.
It'll be another year before the stock even tries touching back to the $40s or $50s. Management has to rebuild trust, their execution has to blow the competition away and they have to chase out the massive short interest. Please be careful with this one. The risk is extremely high. Don't bother "hoping" for some quick cash. Find the stability and begin a position then if guidance is promising.
