Stock Behavior before Bad Earnings
Stocks often sag before announcing bad earnings, primarily because word
leaks out and the “smart money” bails out of their positions. When they also
announce their earnings late, it is usually a signal the news has taken
management by surprise and they are in damage control mode. The rule of thumb
in these situations is, “Look out below!”
—from
The TradingMarkets.com Guide to Conquering the Markets (1999 M.
Gordon Publishing Group, Malibu, Calif.).