Pinterest Stock Soars on Earnings Report - Here's the Trade

Pinterest stock is ripping higher, rallying more than 40% at one point on better-than-expected earnings. Here's how to trade it now.
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First it was Snap  (SNAP) - Get Report with the explosive earnings rally. Now it’s Pinterest’s  (PINS) - Get Report turn in the spotlight.

The graphics-focused social-media company's shares are up 28% on the day, after sporting gains as large as 40% at one point.

Better-than-expected earnings and revenue combined with robust guidance gave bulls motivation to pay up for the stock immediately after the print on Wednesday after the close.

Investors are hoping that Facebook  (FB) - Get Report can keep up the good times for social-media stocks after it reports on Thursday after the bell.

Until then, let’s look at Pinterest stock more closely.

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Trading Pinterest Stock

Daily chart of Pinterest stock.

Daily chart of Pinterest stock.

The post-earnings rally in Pinterest is remarkable, not simply for the stock’s one-day move thus far in a difficult investing environment. The rally is even more impressive given how well the stock has been trading over the past few months.

In mid-September, the shares broke out of a two-month trading range. In October, the stock again gapped higher into a trading range of $48 to $53.

Now we have an interesting candlestick to watch on the daily chart.

On the downside, investors should keep a close eye on the session low, at $61.36. Nearby is the three-times range extension at $61.55. If Pinterest stock loses this area, it opens to a decline below $60.

Should that happen, bulls should look to see if the shares can find some stability around the 10-day moving average.

On the upside, let’s see if the shares can take out the post-earnings high at $68.93. Above that area will put the 361.8% extension in play near $72, followed by a push toward $75.

Surprisingly, the stock isn’t all that overbought, so if some pressure comes off the market and volatility cools a bit, Pinterest could make a push to new highs. 

On the flip side, should the market remain under pressure, it could sap some of the stock's post-earnings momentum.