Splunk Tanked After Earnings, Here’s The Trade

Leading software and data stock, Splunk Inc (SPLK), sold off sharply after reporting earnings late last week. The stock tumbled by more than 20.0% after the earnings report disappointed investors. Splunk Inc (SPLK) had reported two consecutive quarters of losses due to the pandemic, analysts had been expecting a return to profitability in Q3. Management did not provide EPS guidance for Q4. The stock is now trading below its important 200-day moving average. This puts the stock in a weak technical position on the charts in the near term.

One level that traders should watch for support would be around the $145.00 level. That is still another 10.0 points lower than where the shares trade today. This major support level is a major retrace area from the March 2020 lows to the 2020 top. It is also a major breakout level from early May 2020. These factors should be enough for a solid bounce level for Splunk Inc (SPLK) stock when tested. I will be looking to be a buyer around that key support area.

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