Learn To ‘Read Between The Lines’ On Earnings Reports
Let’s Examine This Call
I’ve had the pleasure of writing the Nightly Daytrader’s Report for
just over a week now, while Kamada has been out of town. It’s been a lot of fun.
Fortunately for all of us, he’ll be back on Tuesday. Anyway, I want to
point out a “good call” I made last night–not for adulation, but for the
purposes of education. Here is Thursday night’s
Nightly Daytrader’s Report. Pay particular attention to TiVo. Let’s go
through how I came up with this one: The company reported earnings after the
bell on Thursday night–and they also guided lower. Now I know that people get
excited when a company beats earnings, and in this case TiVo beat by 0.10, which
isn’t bad. I also know that a lot of investors/traders don’t bother to take the
guidance into consideration, and in this case, TiVo guided lower. Also, I know a
lot of traders like low-priced stocks and jump all over them on “good news.” All
I did was put this information together and came up with a possible scenario.
Let’s see what happened:
This is a five-minute chart of TiVo for Friday. Looks like the stock followed
the game plan fairly well. The stock opened at an all-time high and was pretty
much done for the day. So where’s the entry on this one? Here’s the thing: the
stock gapped up 11%, which you know automatically makes the upside somewhat
suspect (yes, it could go higher, but usually not before some kind of pullback).
If you bought into the scenario I presented, you could have tried to get short
right away. I really had no clue where this stock would end the day, but I made
an educated guess as to what might happen on the open.
The purpose of this entire exercise is to get you to ‘read between the lines’ on
these earnings reports. A good trader will look at the beat or miss, a better
trader will know that the guidance is what really matters, and a great trader
with a lot of screen time will have a pretty good idea what the other traders
are going to do with the information and trade accordingly. (No, I am not
putting myself into the ‘great trader’ category–I didn’t take the trade myself;
plus, if you look at the other picks in that report linked above, you’ll see
that they don’t all work out). So, the next time you see an earnings report,
analyze it just a little more closely and try and ‘read between the lines.’
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Big Cap Earnings
Announcements for the Week of
May
30th
| color=#ffffff size=2 Helvetica>Company | color=#ffffff size=2 Helvetica>Symbol | color=#ffffff size=2>Date |
| Frontline ltd | FRO | Tuesday, May 31 |
| Hovanian Enterprises | HOV | color=#000000 size=2 Helvetica>Tuesday, May 31 |
| Ryanair Holdings | RYAAY | color=#000000 size=2 Helvetica>Tuesday, May 31 |
| Comverse Technology | CMVT | Wednesday, Jun 1 |
| Engineered Support Systems | EASI | color=#000000 size=2 Helvetica>Wednesday, Jun 1 |
| Joy Global | JOYG | color=#000000 size=2 Helvetica>Wednesday, Jun 1 |
| SkillSoft | SKIL | color=#000000 size=2 Helvetica>Wednesday, Jun 1 |
| Kellwood Company | KWD | Thursday, Jun 2 |
| Smithfield Foods | SFD | Friday, Jun 3 |
Scheduled Stock
Splits for the Week of May
30th
| size=2>Company | size=2>Symbol | size=2>Ratio | size=2>Payable | size=2>Ex-Date |
| Precision Drilling | PDS | 2-1 | May 31 | Jun 1 |
| FNB Financial Services | FNBF | 5-4 | May 31 | Jun 1 |
| Wellpoint | WLP | 2-1 | May 31 | Jun 1 |
| Delta Apparel | DLA | 2-1 | May 31 | Jun 1 |
| Gildan Activewear | GIL | 2-1 | May 31 | Jun 1 |
| Greene County Bancorp | GCBC | 2-1 | May 31 | Jun 1 |
| ConocoPhillips | COP | 2-1 | Jun 1 | Jun 2 |
| Respironics | RESP | 2-1 | Jun 1 | Jun 2 |
| Sterling Financial | SLFI | 5-4 | Jun 1 | Jun 2 |
| Energen | EGN | 2-1 | Jun 1 | Jun 2 |
| Pennichuck | PNNW | 4-3 | Jun 1 | Jun 2 |
| BeBe Stores | BEBE | 3-2 | Jun 3 | Jun 6 |
| NStar | NST | 2-1 | Jun 3 | Jun 6 |
| Amerstar Casinos | ASCA | 2-1 | Jun 3 | Jun 6 |
| Murphy Oil | MUR | 2-1 | Jun 3 | Jun 6 |
| SW Energy | SWN | 2-1 | Jun 3 | Jun 6 |
color=#0000FF size=2>
color=#0000FF size=2>
Upcoming Economic Events for the Week ofcolor=#000000 size=2 Helvetica>
May 30thcolor=#000000 size=2 Helvetica>
color=#000000 size=2 Helvetica>
| size=2>Date | size=2>ET | size=2>Release | size=2>For | size=2>Consensus | size=2>Prior |
xmlns:user=”urn:www.briefing.com” xmlns:msxsl=”urn:schemas-microsoft-com:xslt”>
May
31
Chicago
PMI
May
62.0
Consumer
Confidence
96.0
Auto
Sales
May
5.7M
Truck
Sales
May
7.8M
Apr
0.7%
ISM
Index
52.2
Q1
3.0%
Initial
Jobless Claims
05/28
NA
Factory
Orders
Apr
0.7%
Unemployment
Rate
May
5.2%
Hourly
Earnings
May
0.2%
Average
Workweek
May
33.8
Nonfarm
Payrolls
May
180K
ISM
Services
May
60.5
Have a great
long weekend!
Brice