What happened to AVAV today ? Why did AVAV tank/drop so much today? Nasdaq:AVAV Aerovironment Inc

AVAV Drone – stock crashed down today
Nasdaq:AVAV – Aeronvironment Inc.

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What happened to AVAV today ? Why did AVAV tank/drop so much today?  Nasdaq:AVAV Aerovironment Inc

AeroVironment is a world leader in the design and manufacture of Unmanned Aircraft Systems (UAS) – Drones

 

1) They got hit and dropped so much due to poor earnings results :

AeroVironment shares have nose-dived Wednesday morning after the maker of military drones posted results for the fiscal third quarter ended January 26 came in well short of Street estimates.

For the quarter, the company posted revenue of $47.1 million and profits of 17 cents a share; consensus had been $89.2 million and 37 cents.

For the April 2013 fiscal year, the company is now projecting revenue of $230 million to $250 million, down from a previously projected $348 million to $370 million, with profits of 30-50 cents a share, down from prior guidance of $1.41-$1.51.

From Forbes :  http://sg22.ly/YNtZGU

 

2) but then did an amazing bounce off the premarket lows of $15.35 to $19.32 ( chart attached)  As you can see the bounce was 20%+off the lows .

Why did $AVAV  bounce so much off the lows?

  • Well it was mentioned on CNBC in premarket and into market open
  • Probably a bit of short covering from  those wanting to lock up the huge profits this a/m but its a very low Short Interest 4.5%
    Short % of Float (as of Feb 15, 2013): 4.50%
  • but most likely traders taken advantange of the huge drop & trying to pick up the stock cheap in case they get any Drone contracts.
  • They should be affected by the Sequester cut in defense spending but Drones in US are a new market & we could see many US law enforcement look into new purchases for them.
but just an incredible bounce and perfect fib retrace action on AVAV today.

I’ve traded many of these gap down stocks in the past and have not seen such a perfect huge bounce into the fibs in quite some time.

As you can see as $16 broke through after the open it just continued up into that $19 area before finally retracing back a bit. By using the key whole numbers and fibonnaci levels this was a pretty easy 10%-15% intraday scalper – Rarely see this ( I saw many of these type of moves in early 2002-2004 but have not seen this in a while). Will have to try to keep an eye on this pattern on future gap down stocks. Could be with the stock market so high that makes some of these plays attractive , along with the notes I posted above.

Will be interesting one to watch into the afternoon trading past 2pmEST

As a swing trade I would wait for it to settle for a few days to 1 week , but this could still make some scalping money today depending on a drop sub 50% fib or a retest of the $19+ area.

Hope you find the chart and notes helpful. (click the AVAV chart to make notes easier to read)

march 6 , 2013 nasdaq:AVAV Aerovironment Inc. chart

march 6, 2013 nasdaq:AVAV Aerovironment Inc. 5 min chart ( including pre-market)

Join us this Saturday March 9th at 10amEST at our Free Webinar :

We will chat about Defense Stocks and how they may be affected by the Sequester : http://stockguy22.com/2013/03/04/stocks-portfolio-affected-sequester/

 

 

 

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