When Earnings News Matters
When do I care about earnings reports?
When the stock has confirming technicals, both in its relative strength and in
pattern formation. M.D.C. Holdings is a case in point.
Before Wednesday’s open, M.D.C.
Holdings
(
MDC |
Quote |
Chart |
News |
PowerRating) said it expects Q1 profits to surpass the high end of Wall
Street estimates. The Denver-based homebuilder cited higher real estate prices.
Analysts estimates averaged 95 cents per share for the first quarter, with the
range from 86 cents to $1.01, according to Thomson Financial/First Call.
The stock put in a fine accumulation
day, surging 8.4% on a sharp expansion in daily volume of average daily volume
and volume on the prior session. The stock enjoys 12- and six-month relative
strength scores in the 90s on the TradingMarkets StockScanner.
The stock has produced a strong
uptrend, confirmed by its relative strength line and support along the 50-day
moving average. Shares closed 6.6% below their Feb. 7 high. The stock is seven
weeks into a sideways correctional pattern.
How well is the rare breakout faring
in the current market? I’m watch a number of breakout bellwethers at any given
time (assuming there are breakouts to watch!). Two examples that I’m watching
are Lennar
(
LEN |
Quote |
Chart |
News |
PowerRating), Stericycle
(
SRCL |
Quote |
Chart |
News |
PowerRating) and AdvancePCS
(
ADVP |
Quote |
Chart |
News |
PowerRating).
For an introduction to combining price stops
with position sizing, see my lesson,
Risky Business. For further treatment of these and related topics,
check out the Money
Management area of TradingMarkets’ Stocks Education section.