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Where to Buy Uber if the Stock Falls on Earnings

Shares of Uber have broken below recent support. If earnings cause a further decline, here’s the level to watch.

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Shares of Uber have broken below recent support. If earnings cause a further decline, here's the level to watch.

Uber  (UBER) - Get Report finds itself in an interesting position ahead of its earnings report on Wednesday.

The company is in the midst of positioning itself ahead of what should be a massive reopening catalyst. As the U.S. continues to vaccinate its population, more and more people are looking to get back out into the world.

That means more traveling, more dining and more trips across town, all of which are a positive for Uber.

However, we can’t forget that the company has a global reach as well and the world hasn’t recovered as quickly as the U.S. has from COVID-19.

While the operating environment remains difficult, it’s hard to argue that a recovering global economy is bad for Uber, Lyft  (LYFT) - Get Report, Southwest Airlines  (LUV) - Get Report and other travel and transportation companies.

Of course, it doesn’t help when there is chatter about reclassifying gig workers as employees. That may be a discussion that doesn’t go away in the future, either.

Regardless, let’s look at the charts.

Trading Uber 

Daily chart of Uber stock.

Look at the way that Uber stock has been trading over the past several months. Shares were rocked during the COVID selloff, but recovered nicely and chopped sideways.

In the fourth quarter, shares exploded higher, hitting a new all-time high of $64.05.

Since then though, Uber has had an immense struggle trying to push through the $60 to $62 zone. All year, this level has rejected the stock, with the exception of its pre-earnings rally that caused a short-term breakout to the aforementioned high.

Since then, the stock hasn’t been able to maintain momentum.

It recently lost the support of all of its meaningful daily moving averages, with the exception of its 200-day. It also lost uptrend support (blue line) and the April low at $53.11.

It’s not a particularly pretty setup for the bulls, although earnings could go a long way when it comes to improving — or worsening — the situation.

On a bullish reaction, bulls need to see Uber stock close above the 50-day moving average. That will put it back above uptrend support and the April low, as well as help it recover some of its more meaningful moving averages.

The concern would be a rally toward this area that ends up getting rejected. That would leave Uber vulnerable to a continued correction.

On a bearish reaction, keep an eye on the March low at $50.82. That’s also close to where the February low comes into play. Should the stock lose that area, it opens up the stock’s prior all-time high near $47, as well as a potential test of the 200-day moving average.

That would seem like a potential buying opportunity, should it arise. 

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