Trading Strategies For Plug Power Heading Into Q2 Earnings

Plug Power, Inc PLUG is set to print its second-quarter earnings after the markets close Wednesday. The stock was trading slightly lower heading into the event. 

When Plug Power printed mixed first-quarter earnings on May 9, the stock plunged about 15% intraday and continued to fall over the three trading days that followed before finding a bottom at the $7.39 mark on May 12. 

For the first quarter, Plug Power reported a loss of 35 cents per share, missing a consensus estimate of a loss of 26 cents per share. The hydrogen company beat on revenues, posting $210.29 million, which came in above the $205.14-million consensus estimate. 

For the second quarter, analysts, on average, estimate Plug Power will report a loss of 26 cents per share on revenues of $242.24 million. 

Traders and investors will be watching closely to see if Plug Power provides positive guidance and forecasted growth for the third quarter. 

From a technical analysis perspective, Plug Power's stock looks bearish heading into the event, trading in a steep downtrend. It should be noted that holding stocks or options over an earnings print is akin to gambling because stocks can react bullishly to an earnings miss and bearishly to an earnings beat. 

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The Plug Power Chart: Plug Power started trading in an inside bar pattern on Wednesday, briefly broke up above Tuesday's high-of-day and then fell back into the mother bar's range. If Plug Power falls following its earnings print, Wednesday's high-of-day will serve as a lower high, which would confirm the downtrend remains intact. 

• If Plug Power receives a bullish reaction to its earnings print, bulls will want to see the stock regain support at the 200-day simple moving average, which would indicate Plug Power may enter a bull cycle. The stock tested the 50-day SMA as support on Tuesday and Wednesday and held above the area, which is a positive sign. 
• If Plug Power receives a muted reaction to its news, the stock may form a bear flag pattern, with the pole formed between Aug. 1 and Tuesday and the flag forming since then. If the pattern becomes recognized over the next few trading sessions, the measured move is about 21%, suggesting the stock could plunge toward $8.70. 
• Plug Power has resistance above at $11.50 and at $13.28 and support below at $9.13 and at $7.39. 

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