Fluor Corp. (FLR) is in rally mode ahead of tomorrow's pre-open earnings report. Positive comments from FBR Capital Markets sparked a 3% jump to $64.74 this afternoon. Analysts there have placed FLR on its list of Top Picks a day before the release of second-quarter results. The bullish response has reversed last week's sell-off, lifting the stock back up to July highs.
Last month, and in early July, FLR held key support near the $57.70 area. A huge earnings-inspired breakout gap was left behind on May 3 following the company's first-quarter results. This support area held multiweek lows as the pullback from the June peak ended. The rally off the early July low of $57.50 stalled out just shy of the June high. FLR is bumping up against this supply zone again today.
Fluor is managing to hold onto the bulk of its early gains despite a more negative market tone this afternoon. With a relatively high short interest ratio of 5.25, the bears are feeling the heat as well. FLR bulls are also anticipating an upbeat report tomorrow. Positive news will provide big upside potential for a stock that appears to have left behind a significant double bottom at its June/July lows. If FLR clears $64, the stock will be in breakout mode and headed for a major retest of its 52 week highs. This area, just below $67, has capped the first five months of this year. FLR will need quite a bit of momentum to clear this resistance zone. On the downside, a close below $60 will change the short-term picture to neutral from bullish.
I am not in the stock but I believe the pre-earnings points to an upside move.
At the time of publication, Morrow had no positions in the stocks mentioned.