Will Your Stock Surprise To The Upside? Here’s A Tipoff…
The
market held support and moved up a little bit today. The move up was
once again on lighter volume. Today’s action has done nothing to get me to move
from the bear camp. Long/short traders should still maintain their focus on the
short side.
The big news over the next few
weeks will likely be earnings related. I can’t stress enough how important it
is for you to be aware the earnings dates of the stocks you hold (long and
short). Don’t be caught by surprise and mistakenly take on more risk than you
are comfortable with just before an earnings release.
I would suggest that you either
keep an extra column on your list of stocks with the earnings date next to it,
or have a calendar with all your stocks listed on the date of their release (my
preference). Be sure to note whether earnings are due before or after the
bell. For those looking for an easy way the create their own earnings calendar,
you may want to check out
www.earnings.com Simply enter your portfolio and click “calendarâ€.
You should also make sure
you’re aware if a stock you are purchasing (or shorting) is about to release
earnings. Many times a stock may break out or break down in anticipation of
their earnings release.
Frequently by watching the
action of a stock as it approaches its earnings release, you may get tipped off
if that stock is going to surprise to the upside or downside. It’s especially
important to watch for unusual activity the day before the release.
In general, stocks that make
unusual moves just before earnings are released will then often surprise in the
direction of the move. (i.e. a breakout will portend an upside earnings
surprise.)Â Beware though, when the opposite occurs, the resulting gap down (or
up if you shorted a breakdown) will be especially vicious.
Sector Action
The most notable moves I’m
noticing over the last few days are the strength in Oil and Internets, and the
weakness in Retail, Semis, and Biotechs. Of the groups, Internets appear to be
the most overdone, and are just about back to their 50-day moving average, so
watch for reversal short opportunities there. The Biotechs and Semis did dip
beneath recent support today before bouncing back. They are both in danger of
breaking down.
Best of luck with your trading,
Rob
Click here for the Hanna ETF Money Flow System.
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