Trading Strategies For Virgin Galactic Stock (SPCE) Following Post-Q2 Earnings Beat

Virgin Galactic Holdings, Inc SPCE surged more than 35% at one point on Thursday, receiving a bullish reaction to its second-quarter financials after beating expectations and showing strong growth.

For the quarter, Virgin Galactic printed an earnings loss of 28 cents per share on revenue of $1.73 million, coming in ahead of the estimate for a loss of 43 cents per share on booking growth of $1.07 million.

The space tourism stock showed a high level of growth year-over-year, doubling its top-line results.

The positive reaction to Virgin Galactic’s print may have been anticipated by technical traders because the stock had recently negated its downtrend with the formation of a higher high.

Bullish traders and investors looking to play the possible continued upside in Virgin Galactic stock but with a diversified approach may choose to take a position in the Procure Space ETF UFO.

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UFO is a thematic ETF that invests in companies powering the space sector, which has garnered commercial attention to an unprecedented extent.

The space economy has become heavily commercial as companies expand into the skies to provide services –from the internet to space tourism.

UFO also holds companies that are directly involved in the current crisis in the Middle East, such as Planet Labs PBC PL, which has helped provide high-quality imaging to news organizations and governments involved and Globalstar, Inc GSAT, which has helped power satellite communications in the region.

From a technical analysis perspective, UFO broke bullishly from a falling channel pattern on Nov. 2, which Benzinga noted was a likely possibility on Oct. 23. When a stock or ETF breaks up from a descending channel, it can indicate a longer-term move toward the skies.

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The Virgin Galactic Chart: Virgin Galactic negated its downtrend on Nov. 3 by printing a higher high at the $1.88 mark, which was above the Oct. 17 lower high of $1.85. On Thursday, Virgin Galactic gapped up above the 50-day simple moving average (SMA) and was working to print a bullish kicker candlestick.

• If Virgin Galactic closes the trading session near its high-of-day, the stock’s bullish kicker candlestick will indicate Virgin Galactic may trade higher on Friday. If the stock closes the trading day with a significant upper wick, a shooting star candlestick will form, indicating consolidation is likely to occur.
• Eventually, a retracement will take place and bullish traders want to see the stock hold above the 50-day SMA and bounce up from that area. If that happens, it could provide a solid entry for traders who aren’t already in a position.
• Bearish traders want to see big bearish volume come in and knock Virgin Galactic back down under the 50-day, which could accelerate downside pressure.
• Virgin Galactic has resistance above at $2.46 and at $3.10 and support below at $1.86 and at $1.38.

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