Blue Apron (APRN) releases its first quarterly earnings report before the open on Thursday and based on the price action of the stock since coming public in June, it will not be a good one. The gourmet meal-kit company is down 40% from its IPO price of $10.00, but some traders believe the report might be not as bad as most analysts expect, and they are stepping up and buying.

Blue Apron has only been trading for about two months, so there is not enough data on the daily chart to do a thorough technical analysis, but there is enough information on the intraday chart to take a shorter-term look at stock's recent price action ahead of the report. The one month 30-minute chart shows the stock gapping higher in the last week of July above its 50 period moving average.

It was unable to hold those highs and quickly retreated back under the average and began trading lower in a declining channel pattern. This pattern is the defined by periods of consolidation and decline, and this week the stock has been undergoing another period of consolidation. Early in today's session, however, it broke above the channel down trend line, its 50-period average, and former support-turned-resistance in the $6.00 area, and in the last half hour of trading jumped up to touch the 38% retracement level of the plotted range. The relative strength index is tracking higher and is above its centerline, and moving average convergence/divergence has made a bullish crossover and is above its centerline. These are signs of the improving positive price momentum, but what is more important than short-term price momentum is the direction of money flow. The accumulation/distribution line crossed above its signal average on Tuesday and Chaikin money flow moved into positive territory.

Overall volume has weak but there was a huge jump at the close today that powered the final ramp-up. The trajectory of these indicators in the last week before earnings suggests that some traders are taking a bullish position ahead of the report, and, of course, there could be some short covering. In either case, the implication is that the company's first quarterly earnings report may be more palatable than the market expects.

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This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned. 

 

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