How These 7 Stocks Reacted To Earnings

  • October 22, 2003
  • Rob Hanna

Ahhh…earnings
season, the most frantic period of every quarter. With each new
day, there is batch of reports that can seemingly make or break a portfolio. While
the market got whacked on relatively high volume, individual stocks were all over
the place. Here’s a few:


(
JBSS |
Quote |
Chart |
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PowerRating) beat earnings and everyone rejoiced! Up 17.7%.



(
TRCI |
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PowerRating) also had a good report and was up 17.9%



(
CACS |
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PowerRating) blew them all away with its report and subsequent
35.7% rise. This was a great way to follow up its recent breakout around $5.10
a couple of weeks ago.


As you could probably tell by the major averages, not all the
news was good.
(
LF |
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PowerRating) disappointed and got taken down by 25%.



(
AAI |
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PowerRating), the top airline stock over the last several months,
beat by a penny. That apparently wasn’t enough and the Street didn’t
like what they had to say, so they got hammered by 15%. When a stock reacts
poorly to what seems to be good news, that’s normally a very bad thing.
AAI did close right at its 50-day moving average, so there is still a chance
it could find support here and rebound. If you own it, keep a close eye on it.


Some stocks didn’t even wait for their earnings to disappoint
before breaking down on huge volume.
(
TRDO |
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PowerRating) and
(
VMSI |
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News |
PowerRating) are two examples.
Both are due to release earnings in the next couple of days. This means someone
with a big stake in these companies thinks they know something, and they’re
getting out before it all hits the fan. More often than not, they are right,
earnings disappoint, and a further selloff may ensue. If they are wrong, and
earnings come out better than expected, look out for a big gap to the upside
as those that sold will be forced to pay up if they want back in.



As far as the market goes, today was blatant distribution.
This is the second distribution day for the S&P 500 in the last six sessions,
and the third distribution day of six for the Nasdaq (although last Friday was
borderline). Any more action like this and it may be time to tighten some stops,
take some profits, and play the long side close to the vest. So keep a close
watch over the next few days, and if the selling gets ugly, make sure not to
give back TOO much of those hard earned profits.

Until Monday…

Good Trading,

Rob Hanna

robhanna@rcn.com