Intuit (INTU) has had a rough stretch and stands as one of the hardest-hit names in the software selloff. Over the past 52 weeks it is down 44%, sitting near the bottom of the major software names in the S&P 500. By contrast, the S&P 500 is up 18.8% and the tech sector fund XLK is up 37.5% over the same period. INTU is down more than 40% year to date, hurt by worries that AI will disrupt its business.
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The 44% loss already includes a 46% rally off the lows, which came near the 250 to 284 area. From there the stock broke above a downward sloping trend line that had formed after a gap lower. That trend line connected the high points reached during the decline. INTU has now cleared it and built an upward sloping channel.
Heading into earnings the setup is interesting. There was an old gap to the downside that formed shortly before an earnings event, and that gap has now roughly filled. The level near 373 looks like a notable breakout point to the upside. Above that, 417 is a repeated high in a range-bound area, then another gap, then a high near 485. To the downside, there is a low near 330 and a series of highs near 300.
Moving averages: the 5-day EMA sits at 362, and the 21-day EMA sits at 337.60. RSI is 69, just under the 70 level that marks overbought. Bulls would want a push past 70 to signal more strength. The volume profile shows a node near 355 that the stock has crossed above, and a pocket of heavy trading activity between 380 and 411.
Example trade: iron condor
Based on the options market, the August 28th weekly expiration (3 days out, this Friday) prices an expected move of about plus or minus 8%, so implied volatility is high. That high volatility makes an iron condor worth looking at. An iron condor is a neutral trade that profits if the stock stays inside a set range.
The example: a minus one August 28th 390/400/340/330 iron condor for a 4.25 credit. The outlook is neutral, wanting INTU to stay between the break evens. Max profit is the 425 credit received; max loss is 575. The expected move is about 7.9%. The two break evens are 335.75 and 394.25, both slightly outside the expected move range. To lose money, the stock would need a bigger than expected move in either direction. The idea is that a beaten-up stock that has staged big rebounds comes in within earnings expectations and stays range-bound.
