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This week we mentioned a set-up I was watching, but it wasn’t in a favorable risk/reward area just yet. We wanted to see the rally in cybersecurity play Rubrik above $95 to get that price confirmation of a breakout from its recent trading range. We not only got that Monday, but a follow-through Tuesday as we head into earnings in the afternoon. Normally I advise never to trade a stock into earnings. In fact, as a market maker I made it a point to be flat and trade the reaction. That’s because too many unpredictable things can happen: a negative reaction to a beat and raise, an unexpected rally because the miss wasn’t too bad or a conference call that changes everything. The only thing ever certain is price. In this case, price may be leading the news and sets us up with a favorable risk/reward option into today’s earnings announcement. Rubrick shares were flat after earnings last quarter, but gapped higher by 27% and 20% after the previous two results. In both those cases, the stock rallied the two days heading into the number – price led. If we see a positive reaction to results, then a pop and break above $100 is very likely and should lead to a new leg higher over the coming days and weeks. To the downside use the 50-day moving average as your stop loss. Yes, it could be a quick hit to your portfolio but the upside potential may just be worth the shot. DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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