The Closing Print live trading and financial blog during market hours.

Twilio Inc. (TWLO) is expected* to report earnings on 05/02/2017 after market close. The report will be for the fiscal Quarter ending Mar 2017. According to Zacks Investment Research, based on 7 analysts’ forecasts, the consensus EPS forecast for the quarter is $-0.14. – Source Nasdaq

We are anticipating that traders will buy the stock into earnings. We are looking to do the same with a slight twist. Given the company’s recent history, a beat is likely. The percent surprise quarter to quarter, continues to increase. This leads me to believe management is conservative in their estimates, as the stock builds a following.

Recent price action was supported at VBP. Buyers stepped up near a descending trend line at the closest target 32.38. We are projecting TWLO moves to that area over the next couple of days. We are considering buying the stock today using the TD setup (5min TF). If the stock holds near the highs of the session, we will either take profits or we will sell the next strike higher, for Friday weekly expiration (4 days).

If all goes as planned and we keep the shares, we will capture the increase in share price with an added premium to boot. If shares are assigned on Friday, so be it, as we intend to exit before earnings anyway. We keep the premium and the increase in share price.

To enter this trade, we will buy shares of TWLO today using the TD (5min) setup, with the stock at $30.93 (+/-) per share in multiples of 100 shares. We will sell the 2017 28-APR 31.0 call option for $0.60 or better. Hopefully if the stock pushes we can get close to 0.70 for our calls, or sell the 32.00 strike. This trade will expire in 4 days and return more than 0.5% if the stock is assigned at expiration. Implied volatility is pretty high, for this strike.

SPY is trading near recent pivot highs, 237.66 as we go to print. A constant push above this zone would trigger more short covering and increase the potential for higher prices in the indices.

SPY daily Renko chart is beginning to show a new trend. If price action remains bullish, more white bricks would confirm the new trend. As a result, we will have the thumbs up for gradually becoming more aggressive in our trade size, number of positions and risk.

With all indices back above their respective 50sma, the shift in momentum is nearly complete. As we push higher, previous pivot highs will be our targets. In the case of Nasdaq, we leapt over the hurdle yesterday.

Happy Tuesday – Vinny

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