No rush | stockbee

5/01/2007

No rush

Dip buyers have been active, but still down side breakouts are higher than up side breakouts. Earnings will still continue to dominate the action. This week will be very busy day for earning releases. Large number of companies are scheduled to release earnings. The smaller speculative companies will be the earnings focus now onwards. But so far the small cap earnings have lagged the big caps and if that trend continues we should see some meaningful pullback in small cap index.

FDP from Episodic Pivots might be worth keeping an aye on. It had earnings today.

Double Trouble scan results as of now:

BTJ,Bolt Technology Corp (Google  Yahoo  Earnings  Chart
CLRT,Clarient Inc (Google  Yahoo  Earnings  Chart
DSCO,Discovery Labs Inc (Google  Yahoo  Earnings  Chart
HRSH,Hirsch International Corp Class A (Google  Yahoo  Earnings  Chart
PRKR,Parkervision Inc (Google  Yahoo  Earnings  Chart
TRCR,Transcend Services Inc (Google  Yahoo  Earnings  Chart

29 comments:

Susan said...

FDP had earning and stock went up $4.5 already, you want to watch it to see if the uptrent will continue right? 65 day growth abt 30%, 270 day growth similar. did not have a run up before earning. is this the main analysis you did when mention this stock. anything major i missed? thanks

Pradeep Bonde said...

Earnings up 200% plus. It is a buy on pullback now, it was buy in morning on earnings.

Susan said...

Just checked earning trouble to 89c/share. thanks. In early post "To buy or not buy breakout", you mention you prefer to buy breakout, so according to that theory, doesn't that means its better to buy tomorrow, since breakout happpened, rather than pullback? sorry for the dumb question

Pradeep Bonde said...

You know intra day itself whether it is breakout or not. Buying intra day sometimes gets you the rest of the move, sometime it reverses.
FDP was actually a earnings breakout, based on morning earnings announcement. But its sales growth was not above 5%, but I think there were some adjustment to comparable figures required as they sold some division.
It is Earnings breakout.

Susan said...

gotcha. when you said buy breakout you actually meant buy on the same day. i thought you mean buy on the next day of breakout. thanks again.

Susan said...

last question, your "double trouble" posts means watch for these stock for breakout buy opportunity, and you "double trouble breakout" posts means watch for pull back buy opportunity right?

Pradeep Bonde said...

I have the breakout condition put in Interactive Brokers real time scanner, so when I see a breakout from pre market itself, I buy if I know the catalyst or if I had researched the stock before.
The earnings breakout must be bought same day otherwise your stop becomes too big and you also miss out on 10 to 20 or more % pop on earnings day itself.
That is one of the reason I prefer earnings announced in the evening, as it gives you time to research and plan the trade, and one can buy in pre market itself.
This one I saw early today as it came on my IB screen and I saw the earnings press release. Sometime those press releases are confusing as they do not apply all adjustments.

Pradeep Bonde said...

last question, your "double trouble" posts means watch for these stock for breakout buy opportunity, and you "double trouble breakout" posts means watch for pull back buy opportunity right?

The 100% plus (Double Trouble), breakout means it had a 2 day break. Only those with prior weakness are buy from that list.
Earnings Breakout is separate, event lead trading.I just mixed the two things today, as there was not much of opportunity in market.

JS said...

What is the min earnings surprise you look for before buying? Or is it simply a gap up based on earnings? Eg, RSH had an earnings surprise, the stock moved up some 8% yesterday, while FDP moved up 25% or so today, both surprises, but one dd better than the other. How do you decide, which i=one is a better candidate to buy? In other words, what other research do you do before picking your selection?

Pradeep Bonde said...

1 Earnings growth has to be 100% plus and sales growth around 5% plus. In some industries 5% sales growth is difficult. So I concentrate on earnings. Plus earnings as to be above 5 cents.
2 Earnings surprise of 100% plus if the earnings growth is not 100% and company is covered by analyst. Plus earnings as to be above 5 cents.
3 Prior price action coming in to earnings. Stock should not have rallied coming in to earnings.
4 Where does this number stand in relation to stocks long term earnings cycle. Is this first acceleration, second, or 8 th.
5 Is this stock neglected based on last 2 years price growth, trading volume, analyst coverage, fund holdings.
All the above plus judgment formed by trading earnings for over 25 earnings season.
That should tell you why FDP and why not RSH

Siya said...

Pradeep,
Great Blog!! You mentioned about the breakout condition in Interactive Brokers scanner. Did you mean "Top % Gainer"? What other criteira did you use?

Thanks,
Siya

Pradeep Bonde said...

Thanks
"Top % Gainer" plus 3 criteria
1 Only stocks
2 Price>5
3 volume>100000

I concentrate on top 25 in that list.

JS said...

All of the 5 criteria, seem to fit FDP. But the stock has now come to limelight, at about the same time, I assume you noticed it too, based on the EPS breakout. Do you still buy it on pullback or move on to something else? How does one decide, having not got on the bandwagon intraday?

m said...

Prqdeep said. "That is one of the reason I prefer earnings announced in the evening, as it gives you time to research and plan the trade, and one can buy in pre market itself."

So what are your thoughts about stock:Mall being up almost 19% in after market hours?

Siya said...

I'm not able to locate any post where "Double Trobule" strategy is described in detail. Could someone post a link, please?

Thanks,
Siya

m said...

Siya, here is one article I read before http://stockbee.blogspot.com/2007/02/how-to-find-stock-which-makes-1500-move.html

Susan said...

compare MALL with Pradeep's 5 criteria:
- satisfy point 1 and 2. earning growth > 100% plus, sales growth 10%. Earnings > 5 cents.
- 3. did not rally into earning, price actually fall leading to earning in the last 65 days.
- 4: this is the 2nd acceleration after the breakdown
- 5. stock is neglected until oct/2006. then heavy volume. afterhour trading overcame previous resistance at previous $12 level

So pradeep, would this be a buy for you?

m said...

Susan...did u gather the data for MALL from one source? If so, which one? Thanks!

Susan said...

hi m,
I got the earning/growth data from google chart. it points out important events and news that sparked the event. that's my only use for it.
I got all other data, from my brokers candle chart. i think any broker would be able to provide you that.

My big uncertainty about MALL is that this has been gapped down a few times in past 60 days and havent fully assumed the uptrend. i havent played earning b4, so pradeep might have different idea

m said...

Susan, Thanks! I am still getting down the chart thing.

Pradeep Bonde said...

Susan
See my morning post.

M
http://stockbee.blogspot.com/2007/02/how-to-find-stock-which-makes-1500-move.html

Pradeep Bonde said...

Siya
That is why earnings breakouts are best bought on earnings day itself within few hours, ideally by 11 A. M.
To get a hang of Earnings Strategy it takes around 2 earnings season, then one gets good feel for what works.
Now in FDP case you will have to wait to buy a pullback or earnings flag after many weeks.

Susan said...

MALL sent up after opening, so it looks like my guess/analysis was right. or was it just beginners luck?

Pradeep Bonde said...

It was correct, I like MALL kind of set ups where there is some weakness going in to earnings, plus low float of 8 million. But it did not really catch fire as the opening print was too high. So I am scratching this trade.
Same with JLL where it has not taken out morning high. I got out with small 3 dollar profit in it.

Siya said...

Pradeep,
Ref MALL and JLL trades: It seems you've another rule to exit the trade on the same day if the price/volume action is not favorable. Could you please provide a little more insight how do you manage this?

Thanks,
Siya

Pradeep Bonde said...

If a stock cannot close at top of range on earnings day, it probably indicate, not a very strong demand or the stock is likely to pullback from this level. So why stay in it. You can enter later.
The market being in rally mode coming in to this earnings season, what is happening is a stock which would normally gap up 1 dollar is gapping up 3 dollars, which is leading to reversal, if you have noticed it has happened on lot of earnings candidates. Plus so far there have not been any major pure neglect kind of stocks, as small cap earnings have not been so stellar. But earnings of small caps is declared later in earning season, so more wil show up.

Siya said...

Thanks, Pradeep!! This is a very useful advice. I always struggle how to play the breakouts as I don't have privilege to watch the market throughout the day as I've a day time job. I can not watch price / volume action as often as I would like. I put bracketed buy stop order in IB before market open. Now if I can watch the quality of filled trade at least once near the market close, I can decide if it is worth staying in or bailing out.

Pradeep, do you've any other advice how one can manage such earning breakout trades for people like us having day time job?

Thanks,
Siya

Pradeep Bonde said...

If you are trading end of day, the best thing to trade is Episodic Pivots and 100% plus method.

The good earnings breakouts with possibility of multi day or multi week moves, will all show up on the Episodic Pivots scan. Then , you can prioritize and enter based on certain rules.

I would suggest given 10 breakout chose using following criteria
1 Take the one with lowest float
2 Take the one with 1st or second earnings acceleration
3 Take the one with neglect.To define this mathematically use

100*(c-minl750)/(maxh750-minl750)

Using this take the one with low scores as that indicates where the stock is trading in relationship to its 3 year trading range.

In tc2007 you can use the "Price 3 year range" to sort the list or use 3 or 5 year growth rate.Stocks scoring lower on these parameters show neglect.

In essence you will select stocks which are out of favor but has recent catalyst ( earnings acceleration)

So basically use the earnings breakout to find long term trades rather than short term trades.

Same logic applies to 100% plus universe. But in them look for some prior weakness of 5 to 65 days to time entry.

Or alternatively marry technical analysis with 100% plus, only taking the cup with handle, flat bases, or minor pullback to trend lines.

Siya said...

Thanks, Pradeep!!
I need to digest and internalize these concepts.

Thanks,
Siya