Yeti's Stock Sitting Out Under Blue Skies: A Technical Look Heading Into Earnings

Yeti Holdings Inc YETI is set to report its first-quarter 2021 earnings before the opening bell on Thursday.

When the high-end outdoor products manufacturer printed its fourth-quarter 2020 earnings on Feb. 11, its stock gapped down almost 10% despite the company beating expectations. Yeti reported sales of $375.8 million, a 26% increase from the same period the year prior. The company’s adjusted earnings per share increased 70% year-over-year and came in at 74 cents.

Yeti’s stock had run up 22% in the eight days prior to its fourth-quarter earnings release and when a stock runs into a known event, it's more likely to sell off following the news.

Although Yeti reached a new all-time high of $90.65 on Monday, it hasn’t made a run into its first-quarter earnings. If Yeti’s stock continues to trade sideways into the event. it has a better chance of getting a positive reaction to an earnings beat or a negative reaction to an earnings miss.

Traders should keep in mind, however, that earnings reactions are often arbitrary.

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The Yeti Chart: Yeti’s stock has been trading in a sideways pattern for the better part of the past three weeks. Although it made a new high on Monday, the stock didn’t get bullish continuation and on Tuesday it pulled back in sync with the general markets but held a support level near $84.50.

Tuesday morning’s sell-off caused Yeti to lose the eight-day exponential moving average (EMA) as a support and on Tuesday afternoon when bulls came in to buy the Yeti dip, the stock rejected the eight-day EMA as resistance and closed just below it. Yeti’s stock is trading above the 21-day EMA and the 200-day simple moving average, which are both bullish indicators.

The eight-day EMA is still trending above the eight-day EMA and Yeti looks poised to recapture the eight-day EMA with a bullish move into or following earnings.

Bulls want to see a bullish reaction to Yeti’s earnings to push it back up towards all-time highs. If Yeti can break to a new all-time high, with bullish momentum, it has no price history to act as resistance above.

Bears want to see a bearish reaction to Yeti’s earnings and for the stock to drop down and lose support at $84.58. If the stock was unable to hold the support level it has room to drop down to the $80 level.

YETI Price Action: Shares of Yeti traded down 2.8% to $85.07 at publication time.

Photo credit: Zachary Collier, Flickr