A stocks which made 1500% move in a year- What are significant moves

Here is a stock which has gone up around 1500% in last 260 days.That is a significant move.
FRPT,Force Protection Inc (Google  Yahoo  Earnings  Chart) 

What is a significant move in a stock. Assuming you are not a high frequency day trader, then you would define significant move as 5% in a day for individual stock. If you add say another criteria of saying the 5% move should be accompanied by volume increase over yesterday. So lets say 5% move on higher volume is significant. The real reason for this is to find out how many stocks make that kind of a move in a day. Supposing 5% of the total universe of stock on a given day has 5% move, is that significant.Does a one day significant move indicate future returns.

Many of the things which I look at on daily basis and monitor is basically a variation of significant moves on various time frames. A 5% move on individual stock on higher volume with a cut off off 100000 plus volume to me is significant move based on past studies of stock price moves. Similarly a move of 2% on any of the Index is significant. Or a move of 2% on a sector is significant. It is more significant if it happens on higher volume.

Taking the same logic further a 50% move in a stock in a month is extremely significant move. It indicates an aberration. A 25% move in a month in a stock is on a significance scale also very significant.A 25% move in a quarter is significant in a market where the average long term drift is less than two digits. Similarly a move of 100% in a year on a stock is a significant move.

Now if you constantly study significant moves and build an iterative model over a period of time you will probably learn a lot about such moves. A brute force backtesting might give you even greater understanding in to such moves. A combination of backtesting and continuous iteration gives you a live model of what makes a stock make a significant move.

Largely my study of significant moves supplemented by additional insights has helped me understand what kind of stocks are likely to make a significant move for a given time frame. There are factors one can isolate which increase probability of a stock making a significant move. That gives you a significant edge in avoiding the bad or low probability trades.

Here are 25 stocks which have made significant moves in last 260 days. Is there any thing one can learn from them. How many of them are on your radar.
ANGN,Angeion Corp (Google  Yahoo  Earnings  Chart) 
CHDX,Chindex International Inc (Google  Yahoo  Earnings  Chart) 
CLEC,Us Lec Corp Cl A (Google  Yahoo  Earnings  Chart) 
CRVL,Corvel Corp (Google  Yahoo  Earnings  Chart) 
CTDC,China Technology Development Group Corp (Google  Yahoo  Earnings  Chart) 
ENPT,En Pointe Technologies (Google  Yahoo  Earnings  Chart) 
FTGX,FiberNet Telecom Group Inc (Google  Yahoo  Earnings  Chart) 
GVP,Gse Systems Inc (Google  Yahoo  Earnings  Chart) 
HTI,Halozyme Therapeutics Inc (Google  Yahoo  Earnings  Chart) 
INAP,Internap Network Svcs Cp (Google  Yahoo  Earnings  Chart) 
ININ,Interactive Intelligence (Google  Yahoo  Earnings  Chart) 
ISIG,Insignia Systems Inc (Google  Yahoo  Earnings  Chart) 
KNOL,Knology Inc (Google  Yahoo  Earnings  Chart) 
MEMY,Memory Pharmaceuticals (Google  Yahoo  Earnings  Chart) 
MSI,Movie Star Inc (Google  Yahoo  Earnings  Chart) 
NAVI,Navisite Incorporated (Google  Yahoo  Earnings  Chart) 
ONSM,Onstream Media (Google  Yahoo  Earnings  Chart) 
PRGX,Prg-schultz Intl Inc (Google  Yahoo  Earnings  Chart) 
PRH,VitaCube Systems Holdings Inc (Google  Yahoo  Earnings  Chart) 
PTT,Vcg Holding Copr (Google  Yahoo  Earnings  Chart) 
ROHI,Rotech Healthcare Inc (Google  Yahoo  Earnings  Chart) 
SLP,Simulations Plus Inc (Google  Yahoo  Earnings  Chart) 
SMTK,SIMTEK Corp (Google  Yahoo  Earnings  Chart) 
SOFO,Sonic Foundry Inc (Google  Yahoo  Earnings  Chart) 
SVVS,SAVVIS Inc (Google  Yahoo  Earnings  Chart) 

Studying significant moves on daily basis can give you a significant edge in finding stocks likely to make significant moves in the future.

More posts in this series: Significant Moves

Small caps are stirring

Bulk of the action in the market since July was dominated by large caps and mid caps. The small caps had a minor role to play. After a few months of consolidation, a hint of a rally is developing in small caps. In last couple of weeks the large caps have mostly been consolidating or pulling back.The AMEX index is quitely moving up now for few weeks.
Monday was the first day I started finding lots of small caps in scans and yesterday also there were more than 156 stocks up more than 5% on higher volume. The small caps are very good trading vehicles in my scheme of things. Even a small catalyst can propel a small cap stock 25% plus in a quarter. Inefficiencies are more evident in small caps and low float stocks than in large caps.
While two days action might be just a fluke, there are other interesting things showing up in my indicators. The Stock up 50% or more is at 9 by end of yesterday. Levels above 10 indicate a good momentum on individual stocks. Now this indicator is climbing back after making a low last week, which again shows momentum accelerating rather than decelerating. Inference more sectors , stocks breaking out to upside. Similarly my other indicators like number of stocks making 25% move in 65 days and number of stocks up 100% in a year have started climbing back after hitting bottom last week. So tentatively indicating a broadening of rally.
When a market gets stuck in a range, there is lot of churning. Stocks which have gone up go in to correction. While most of the attention gets focused on those stocks, new set of stocks and sectors start their upward march, most of the time the overall weakness in index can mask this. Over a period of time I have developed an overall market monitoring mechanism to try and capture some of these moves earlier. I will have more about it later today......

Breakouts

Looks like another day with 100 plus breakouts. More new sectors and stocks are witnessing high volume breakouts. Earning lead breakouts continue to work. Trucking and shipping are witnessing number of breakouts.

AGIX,Atherogenics Inc (Google  Yahoo  Earnings  Chart) 
ALGN,Align Tech Inc (Google  Yahoo  Earnings  Chart) 
ALTH,Allos Therapeutics Inc. (Google  Yahoo  Earnings  Chart) 
BTJ,Bolt Technology Corp (Google  Yahoo  Earnings  Chart) 
BYI,Bally Technologies Inc (Google  Yahoo  Earnings  Chart) 
CNW,Con-Way Inc (Google  Yahoo  Earnings  Chart) 
CPRX,Catalyst Pharmaceuticals (Google  Yahoo  Earnings  Chart) 
FBNC,First Bancorp Nc (Google  Yahoo  Earnings  Chart) 
FCL,Foundation Coal Holdings (Google  Yahoo  Earnings  Chart) 
FHN,First Horizon Natl (Google  Yahoo  Earnings  Chart) 
GIB,Cgi Group Inc (Google  Yahoo  Earnings  Chart) 
IEX,Idex Corp (Google  Yahoo  Earnings  Chart) 
IFON,Infosonics (Google  Yahoo  Earnings  Chart) 
ISSC,Innovative Solutions (Google  Yahoo  Earnings  Chart) 
ITW,Illinois Tool Works Inc (Google  Yahoo  Earnings  Chart) 
IXYS,Ixys Corporation (Google  Yahoo  Earnings  Chart) 
JDAS,Jda Software Group Inc (Google  Yahoo  Earnings  Chart) 
KRON,Kronos Inc (Google  Yahoo  Earnings  Chart) 
LPSN,Liveperson Inc (Google  Yahoo  Earnings  Chart) 
NBL,Noble Energy Inc (Google  Yahoo  Earnings  Chart) 
OIL,iPath Goldman Sachs Crude Oil TR Idx ETN (Oil) (Google  Yahoo  Earnings  Chart) 
PACT,Pacificnet Inc (Google  Yahoo  Earnings  Chart) 
PIR,Pier 1 Imports Inc (Google  Yahoo  Earnings  Chart) 
RGA,Reinsurance Group Of Am (Google  Yahoo  Earnings  Chart) 
RPRX,Repros Therapeutics Inc (Google  Yahoo  Earnings  Chart) 
RTI,Rti Internat Metal Inc (Google  Yahoo  Earnings  Chart) 
SSTI,Silicon Storage Tech Inc (Google  Yahoo  Earnings  Chart) 
STKL,Sunopta Inc (Google  Yahoo  Earnings  Chart) 
TCHC,21st Century Holdings (Google  Yahoo  Earnings  Chart) 
TSU,Tim Partcipacoes S.A. (Google  Yahoo  Earnings  Chart) 
TWI,Titan Internat Inc (Google  Yahoo  Earnings  Chart) 
UNM,Unumprovident Corp (Google  Yahoo  Earnings  Chart) 
USO,United States Oil Fund ETF (Google  Yahoo  Earnings  Chart) 
USTR,United Stationers Inc (Google  Yahoo  Earnings  Chart) 
X,US Steel Corp (Google  Yahoo  Earnings  Chart) 
YRCW,YRC Worldwide Inc (Google  Yahoo  Earnings  Chart) 
ZMH,Zimmer Holdings (Google  Yahoo  Earnings  Chart) 

Earnings expectations and Cinderella Strategy

Some days back I talked about the importance of overall contextual framework for any strategy. Once the conceptual framework is understood it is easier to implement a strategy. Much of the work on my earnings based modelling has been based on a book by Richard Bernstein.

Merrill Lynch quantitative strategist Richard Bernstein in his book Style Investing: Unique Insight Into Equity Management offers a very useful conceptual framework for understanding the role of earnings and earnings expectations in stocks price growth.

Bernstein's earnings expectations model compares earnings expectations of a typical company on a clock face. When a company is at its pinnacle in growth term it is at 12.00 midnight. In his book he offers a strategy to identify stocks early enough in their growth cycle. The idea is to find growth stocks early enough but not to overstay the party. That is why the name Cinderella strategy- you should not overstay the growth party and must leave the party before midnight.
The strategy basically offers a choice of value investing or growth investing based on how early you identify earnings potential of a stock.

12 to 3
12 o’clock: The company’s earnings are high and expectations are also very high
1 o’clock: Torpedo is a negative earning surprise
3 o’clock: Analysts revise earnings estimates downward. Growth investors abandon the stock.
3 to 6
4 o’clock: Earnings expectations continue to fall dramatically.
6 o’clock: At some stage earnings expectations reach their low point. At this point most of the bad news is priced in. Expectations are at lowest level.
6 to 9
This is where value investors focus. Value investors want to buy stocks neglected by market but which have the potential to surprise on earnings front. They want to buy it before the earning surprise. One of the risk of value approach is if you buy too early, you have to wait a long time.
7 o’clock: Stock has a positive earnings surprise. If it is a genuine turnaround there will be more surprises down the line.
9 o’clock: Market starts to recognise the stock and its earning potential.
9 to 12
This is where primarily growth investors focus. They want companies that have exhibited consistent earnings growth over several quarters. They pay premium for such stocks as the stock has already moved from low expectations to high. The value investors pass on these stocks to growth investors during this transition phase. The risk of growth investing is overstaying the party beyond midnight.
11 o’clock: Everyone becomes aware of the company.
12 o’clock: Earnings and earnings expectations reach peak.

The CANSLIM strategy primarily operates in the 9 to 12 quadrant. That is one of the reason many of the stocks on IBD 100 can break down also after appearing in the list. Earnings lead breakouts operates primarily in the 6 to 9 quadrant. Building a mix of earnings based strategies in the 6 to 12'o clock time frame gives you best of both worlds.

Range bound markets and opportunities

The market continues to be range bound. While the rally leaders pullback or breakdown, a broad based sector rotation is at play. The new sectors breaking out offer some very good low risk opportunities for entries.
Yesterday I had over 100 breakouts in my scans. Several of them have the right earnings catalyst and relative strength plus sector fuel to take them higher. If you see the following list, you should find ample opportunities on long side:
Selected breakouts with potential:
AOI,Alliance One International Inc (Google  Yahoo  Earnings  Chart) 
BMRN,Biomarin Pharmaceuticals (Google  Yahoo  Earnings  Chart) 
BPFH,Boston Private Fincl Hld (Google  Yahoo  Earnings  Chart) 
CSIQ,Canadian Solar Inc (Google  Yahoo  Earnings  Chart) 
ESLR,Evergreen Solar Inc (Google  Yahoo  Earnings  Chart) 
FBP,First Bancorp Holding Co (Google  Yahoo  Earnings  Chart) 
FCEL,Fuelcell Energy Inc (Google  Yahoo  Earnings  Chart) 
FLML,Flamel Technologies Sa (Google  Yahoo  Earnings  Chart) 
FSLR,First Solar Inc (Google  Yahoo  Earnings  Chart) 
FSYS,Fuel Systems Solutions Inc (Google  Yahoo  Earnings  Chart) 
GNTX,Gentex Corp (Google  Yahoo  Earnings  Chart) 
GYI,Getty Images Inc (Google  Yahoo  Earnings  Chart) 
HLS,Healthsouth Corp (Google  Yahoo  Earnings  Chart) 
IMCL,Imclone Systems Inc (Google  Yahoo  Earnings  Chart) 
IPSU,Imperial Sugar Company (Google  Yahoo  Earnings  Chart) 
IRM,Iron Mountain Inc (Google  Yahoo  Earnings  Chart) 
JST,Jinpan Internat Ltd (Google  Yahoo  Earnings  Chart) 
LYO,Lyondell Chemical Co (Google  Yahoo  Earnings  Chart) 
OFG,Oriental Financial Group (Google  Yahoo  Earnings  Chart) 
PERY,Perry Ellis Int'l (Google  Yahoo  Earnings  Chart) 
PFBC,Preferred Bank Los Angeles (Google  Yahoo  Earnings  Chart) 
POT,Potash Cp Saskatchewan (Google  Yahoo  Earnings  Chart) 
QLTI,Qlt Inc (Google  Yahoo  Earnings  Chart) 
RGR,Sturm Ruger & Co Inc (Google  Yahoo  Earnings  Chart) 
SBH,Sally Beauty Holdings Inc. (Google  Yahoo  Earnings  Chart) 
SBNY,Signature Bank (Google  Yahoo  Earnings  Chart) 
SIGM,Sigma Designs Inc (Google  Yahoo  Earnings  Chart) 
SILC,Silicom Ltd (Google  Yahoo  Earnings  Chart) 
SIRO,Sirona Dental Systems Inc (Google  Yahoo  Earnings  Chart) 
SOHU,Sohu.Com Inc (Google  Yahoo  Earnings  Chart) 
SPAR,Spartan Motors Inc (Google  Yahoo  Earnings  Chart) 
STLD,Steel Dynamics Inc (Google  Yahoo  Earnings  Chart) 
STP,Suntech Power Holdings Co Ltd (Google  Yahoo  Earnings  Chart) 
TDG,TransDigm Group Inc (Google  Yahoo  Earnings  Chart) 
TRCR,Transcend Services Inc (Google  Yahoo  Earnings  Chart) 
TRID,Trident Microsystems Inc (Google  Yahoo  Earnings  Chart) 
TSCM,Thestreet.Com (Google  Yahoo  Earnings  Chart) 
TSL,Trina Solar Ltd. (Google  Yahoo  Earnings  Chart) 
USAP,Universal Stain & Alloy (Google  Yahoo  Earnings  Chart) 
UTI,Universal Technical Institute (Google  Yahoo  Earnings  Chart) 
WWW,Wolverine World Wide (Google  Yahoo  Earnings  Chart) 
XIDE,Exide Tech (Google  Yahoo  Earnings  Chart) 

What are the sector themes emerging. Solar energy, every single stock related to solar energy is breaking out. Clearly the market seems to like the prospect for solar plays. Steel and metal is another sector witnessing breakouts in last couple of days. These sectors are breaking out after a few quarters of good earnings. Regional Banks are also breaking out. In last couple of weeks Regional Banks have seen large scale breakouts after many months of unerperformance. Other sectors where there are fresh breakouts is large cap biotechs, auto parts and aerospace.
So even though market is stuck in range there are lots of opportunities.

Markets at Crossroads

Last week had all the excitement the short term traders crave. Breakouts to new high on indexes followed by a reversal followed by no follow through. End result, markets are where they are. The month end effect should keep the market in stalemate stage for sometime.

Earnings trends:
So far the earning season has been good. Companies have mastered the art of setting low expectations and beating them. But early trends indicate yet anther double digit growth in earnings. So in absolute terms earnings are good.
The problem is forward guidance. For the first time after a series of good quarters, the forward guidance is uniformly lacklustre. So far the sector picture emerging from the earnings favor insurance, financial brokerage and material sector. Many of the stocks in this sector have already rallied in anticipation of this.

Interest rates and inflation

If you go back few quarters, the market theme was slowdown in US economy. Depending on who you listened to, there were extremists predicting doom and gloom and there were others predicting resilient economy. The bonds were moving in the recession camp. Now with more data coming in inflation seems to be back as the theme. Contrary to the predictions of the gloom and doom camp the world economies have accelerated growth and in countries after countries inflation fighting measures are being taken to slow down growth. Rising interest rates are never good for the markets.

Leading stock action
When the leaders falter be careful. The leaders which lead the rally since July are stalling and in many cases exhibiting signs of blowout moves or reversal. Look at stocks like AAPL, RIMM, GOOG, IAAC, GROW, CSH, MWRK, LCC, AMR, etc. They have stalled and not moving forward.
The Investors Business Daily indicator of distribution days on Indices shows 3 days for Nasdaq and 3 for S&P in last 4 weeks. 4 plus levels are indicative of short term tops.
My own Stocks Up %0% or More in a Month indicator is at 3. That indicates lack of market momentum at individual stock level. In a rising markets the levels are between 10-20. So at individual stock levels there are very few strong moves.

Overall we are at an interesting crossroads and the probability of next move down is high. The only sector which seems to be attracting longer term interest is Technology, where the earnings are not so good but there are number of breakouts post earnings. So probably there is an anticipation of better days ahead in few quarters.

Dilbert portfolio up 1%

I am sure you will have James Altucher adding Dilbert Portfolio to his site and will have a column on TheStreet.com about "How to invest like Dilbert" soon.

Dilbert Portfolio Update
Last year I asked my wise readers to recommend stocks that would be sure winners in the future. I compiled the best and most frequent suggestions into the Dilbert Portfolio. I confidently invested $75K in the portfolio. This seemed like easy money, given the crackling intellect and nearly godlike forecasting powers of my readership.

So how’s that portfolio doing in a market that is way up during the same period?

ADM: -23%
BHP: -16%
IN: -9%
PEIX: -56%

Overall: -26%

Ouch.

Luckily for me, three of the four stocks jumped in value soon after I bought them. I placed my stop orders and they automatically sold for tidy profits in just a few weeks when they changed directions:

ADM: sold for 9% gain
IN: sold for 10% gain
PEIX: sold for 9% gain

Not bad for a few weeks. Unfortunately for me, my largest holding (because I bought 500 shares of each stock regardless of price) was BHP. It never jumped in value and I held it. It’s down 16%. But with a forward P/E of 9.8, and growing demand for their products, it still looks cheap. So I’m keeping it. As with most of my stock picks, they become real bargains sometime AFTER I buy them.

My current overall return, including BHP’s drag, is up 1%. Had I not been too lazy to do the math when I first invested in the portfolio, I would have bought equal dollar values in each company, instead of an equal number of shares, and I would have been up a few percentage points more.

Still, by any measure, the Dilbert Portfolio has been a disappointment despite all of the good thinking that went into it.

Soon, many of you will be asked to cast votes in a major election. Good luck with that.

Big edge or small edge

As I mentioned some days ago, my plan this year is to go through all old books, articles and research which I have previously read instead of new books. One of the recurring theme once you start going through the material is big edge or small edge.
Big edge is structural, it is based on some fundamental understanding of how market works. It is enduring and it is narrow focused. For example take Peter Lynch. His objective was to find ten baggers. His entire edge was based on that key insight as to how to identify stocks early enough with potential to make a ten times move. Everything revolved around building that big edge. That lead him to concentrate on new innovative, young companies and research them thoroughly. In his long career, he found several of them. You will find similar stories of traders who wanted a big edge and found it using several methods.
On the other hand look around, you have proliferation of people claiming they have 25 cents edge or 1% or 5% edge. The meme going around is if you can find 1% everyday then ....... Most of these people use some sort of voodoo science of technical analysis to find such edges. Most of these edges are ephemeral and that is one of the reason you will find they vanish and many of the small edge traders periodically go through existential crisis.
The other problem with small edges is your cost of trading is very high. All those using small edges need several tools to identify their entries and exists. They need real time data, expensive scanning software and multi monitor set ups. Everything in small edges is tactical.If you have large edge you don't need all those fancy and expensive tools to find trades.
Another problem faced by small edge traders is psychological. So much of their results and outcome depend on their state of mind. Unless everyday they are perfectly psychologically aligned, they can not exploit their minuscule edge. Because if your edge is 1%, before you blink that opportunity is over. The psychologist catering to traders have found a receptive audience amongst these small edge traders. There is proliferation of psychological tools, profiles, tapes, 3 things to do kind of talismans being offered to these traders.
Many of these traders who can find 1% or 5% edges would significantly improve their returns, if they changed their focus to finding 10% or 50% edge, but often activity is more alluring than profitability.
As a trader there is a choice whether to pursue small edge or large edge. In a market where bulk of the participants are trying to perfect small edges, as a contrarian strategy itself, you should look at large edge. The paths to acquiring the edge are different depending on the choice you made. Like Peter Lynch if you went around in search of 10 baggers you will find several of them, same way if you look for 1% you will find 1%.

Did the market rally on Wednesday?

Markets have been unable to move to either direction strongly since Thanksgiving. The muddled market action continued yesterday. The indexes reversed their gains. Those who aggressively bought on Wednesday were shaken and stirred. There was no bid for the entire day. Which indicates large scale liquidation of position by some large speculators. They just used the Wednesday strength to dump some supply. When a market starting from morning just keeps going down, generally the market participants know a large seller is around and buyers and bid disappear. Expect a bounce as the dip buyers and bottom fishers go to work.

While the index action looked scary, on actual stock level it is not reflected in number of stocks down 5% or more on high volume. In fact my 5% scan shows 59 up breakout to 72down breaks. When markets really have bad days these numbers would look like 20:200. Also to add intrigue, my trusty stocks up 50% or more in a month has only one stock in the list currently. PRXI, Premier Exhibitions Inc. is the only stock on that list currently, which I highlighted as the earnings breakout few days ago. Levels below 5 on the stocks up 50% or more breakout are normally seen after a sustained weakness. The low number indicates market on individual stock level has had poor momentum. So essentially market is churning. There are 53 stocks on the stocks up 25% or more list.The 65 day bull to bear ration is again deteriorating and is at 763:275. Message of the market is muddled. We are stuck in the range and high probability is that the next leg is going to be down.

Many of my short scans are showing candidates after a long time. Most of my short scans are designed to give signal only rarely, because shorts work rarely. When I see 11 stocks on the list, may be the season for shorts might be around the corner.

Stocks showing up on short scans
ACXM,Acxiom Corp (Google  Yahoo  Earnings  Chart) 
BSC,Bear Stearns Companies (Google  Yahoo  Earnings  Chart) 
CHIC,Charlotte Russe Hldg Inc (Google  Yahoo  Earnings  Chart) 
FXI,iShares FTSE/Xinhua China 25 Index Fund ETF (Google  Yahoo  Earnings  Chart) 
GOOG,Google (Google  Yahoo  Earnings  Chart) 
GS,Goldman Sachs Group Inc (Google  Yahoo  Earnings  Chart) 
IKN,Ikon Office Solutions (Google  Yahoo  Earnings  Chart) 
MEOH,Methanex Corporation (Google  Yahoo  Earnings  Chart) 
MIPS,Mips Technologies Inc (Google  Yahoo  Earnings  Chart) 
PLXS,Plexus Corp (Google  Yahoo  Earnings  Chart) 
TGIC,Triad Guaranty Inc (Google  Yahoo  Earnings  Chart) 

All the recent earnings play highlighted here PRXI, ELY, TDG,ATI have continued to act well and many of them are due for correction. ATI is the one which I was worried about most so I took off that position for a nice few points gain. On PRXI stops have been moved to protect the gain.  Like PRXI, there will be more earnings plays during this season.TRCR is another earnings play which looks to be shaping up well. There are couple of more from yesterdays earnings breakout list which look promising.HLYS, which I talked about few days back got moving again after few days breakout. It was blessed by the Trading Goddess

Coming in to this earnings season, I had low expectations for finding many plays as against last few earning season, but the earning season is not yet over and I am pretty confident of finding around 20 plays which will make 25% plus moves in the quarter, even if the market takes a dive from here, I am not very worried. If there is a strong earning catalyst nothing can stop a stock from making 25% kind of move in a quarter. There are over 6000 stocks yet to announce their earnings, so opportunities will be there if you understand how to play the earnings game. Earnings related strategies are my bread and butter. I play various variations of the earnings strategy, earnings lead breakout is just one of them. They give you the biggest bang for your bucks.  My exhaustive study of all those who had triple digits kind of returns in a year at various time in their career shows that earnings was one of the basic foundation of their strategy. Mastering earnings is one of the best ways to beat the market handily.

TC2007 scans:
Stocks up 50% or more in a month
C20 >= 5 AND (AVGC20 * AVGV20) >= 2500 AND 100 * (C - C20) / C20 >= 50
Stocks up 25% or more in a month
C20 >= 5 AND (AVGC20 * AVGV20) >= 2500 AND 100 * (C - C20) / C20 >= 25
Stocks down 5% or more on high volume
( 100 * (C - C1) / C1) <= ( - 5) AND V >= 1000 AND V > V1
Stocks up 5% or more on high volume
( 100 * (C - C1) / C1) >= 5 AND V >= 1000 AND V > V1

IBD 200 New Members

There are around 14 new additions to the IBD 200 list. Media, metals and leisure stocks dominate new additions. While many traders continue to trade last bull markets leader, the technology stocks, you would notice most of the big movers in this list are little known stocks from non technology sectors. For example take GEO, The Geo Group which is up 185% in a year and it is prison and security operator.
ANF,Abercrombie & Fitch Co (Google  Yahoo  Earnings  Chart) 
ASCA,Ameristar Casinos Inc (Google  Yahoo  Earnings  Chart) 
CBUK,Cutter & Buck Inc (Google  Yahoo  Earnings  Chart) 
CCK,Crown Holdings Inc (Google  Yahoo  Earnings  Chart) 
CNH,Cnh Global Nv (Google  Yahoo  Earnings  Chart) 
CRYP,Cryptologic Incorporated (Google  Yahoo  Earnings  Chart) 
EXP,Eagle Materials Inc (Google  Yahoo  Earnings  Chart) 
GEO,Geo Group (The) (Google  Yahoo  Earnings  Chart) 
JADE,Lj Internat Inc (Google  Yahoo  Earnings  Chart) 
LINTA,Liberty Media Interactive Class A (Google  Yahoo  Earnings  Chart) 
LR,Lafarge Sa Adr (Google  Yahoo  Earnings  Chart) 
LTM,Life Time Fitness (Google  Yahoo  Earnings  Chart) 
LXU,Lsb Industries Inc (Google  Yahoo  Earnings  Chart) 
MCO,Moody's Corporation (Google  Yahoo  Earnings  Chart) 
MDP,Meredith Corp (Google  Yahoo  Earnings  Chart) 
MEOH,Methanex Corporation (Google  Yahoo  Earnings  Chart) 
NCTY,The9 Limited (Google  Yahoo  Earnings  Chart) 
NTES,Netease.com Inc (Google  Yahoo  Earnings  Chart) 
RIN,Rinker Grp Ltd Adr (Google  Yahoo  Earnings  Chart) 
SBGI,Sinclair Broadcast Gp A (Google  Yahoo  Earnings  Chart) 
USAP,Universal Stain & Alloy (Google  Yahoo  Earnings  Chart) 
VIVO,Meridian Bioscience Inc (Google  Yahoo  Earnings  Chart) 
VMC,Vulcan Materials Co (Google  Yahoo  Earnings  Chart) 
X,US Steel Corp (Google  Yahoo  Earnings  Chart) 

The one constant about market is leadership comes from unknown , little followed, out of favor companies. Unless you are trading billions, one of the best way to beat the market is to just forget about well known, over hyped, large float stocks followed by analyst and large group of traders. The gems are always in the market's dustbin.

Whipsaw Territory

While there is lot of excitement in technology stocks, the market is essentially stuck in whipsaw territory for long time since Thanksgiving. The market is crawling at a slow pace.
Many of the technology stocks which are bouncing on earnings news are not likely to immediately start rallying vigorously. Most of them have poor relative strength. So for most rallies in them will offer better entry options somewhere down the road.So unless the holding period is long better opportunities still are in stocks with high relative strength breaking out or unknown stocks breaking out on earnings. TDG, TransDigm Group Inc. was one stock which I had on my morning radar and traded it.
TDG,TransDigm Group Inc (Google  Yahoo  Earnings  Chart) 



Unlike the other earning related plays I like it has higher float of 44 million plus I guess it is going to use the good news to do some financial restructuring in terms of loan or secondary. That is one of the reason it might have pre announced the results. So I took lot off the position off at the end of the day but kept an extremely small tracking position. Many times companies use the earning good news to immediately come out with secondary and increase float, so you have to keep that thing in mind while playing earnings. Like TDG there were couple of other good lays for 2 plus point moves based on earning.
The most important thing in playing earning is to find unknown, neglected stock with low float or a blow out move. Many of you trying to learn the strategy (going by the email I have gone through) are picking well known stocks and stocks which have already moved a lot before earning. There is no surprise or discovery on them post earnings. Perfecting the earnings strategy takes around two quarters, so patience and systematic way to identify the candidates is the way to find those 20% plus post earning movers.

Technology and large cap lead

The bulk of the action today was concentrated in technology and large cap stocks. There was hint of a short squeeze. There is no shortage of candidates to buy. The IBD200 list had 70 stocks up 2% or more. Besides that there were large number of earnings lead breakouts.
While there is lot of overextended stuff which is rallying, there are also number of fresh breakouts and number of sectors like media and advertising should see fresh breakouts. The metals sector also had fresh set of breakouts and they are all coming in from 2 quarters weakness.
The month end dynamics should also help this rally extend its life span. Many of the stocks which are up 100% plus since July are vulnerable to sell offs but the trick is to find the fresh sectors and stocks breaking out with catalyst.

All the recent earnings plays PRXI, ELY,and CCF have done well and today offered lot of opportunities to get in to more earnings play which are already up few points post entry.

S&P 500 stocks up 5% or more on high volume

One of the things I monitor daily is the number of stocks up 5% or more on high volume in S&P. These large cap stocks behave differently from the small cap and other stocks. There are lot of anti trend entries in these stocks, so sometime you get good entries on these stocks near their 52 week low. But again most of the stocks in this list which do well over a period have superior earnings.
There are 7 stocks up 5% or more on higher volume today in this list. Most of the action is linked to earnings.
ABC,AmerisourceBergen Corp (Google  Yahoo  Earnings  Chart) 
CTXS,Citrix Systems Inc (Google  Yahoo  Earnings  Chart) 
GLW,Corning Inc (Google  Yahoo  Earnings  Chart) 
LSI,Lsi Logic Corp (Google  Yahoo  Earnings  Chart) 
PMTC,Parametric Technology Cp (Google  Yahoo  Earnings  Chart) 
SUNW,Sun Microsystems Inc (Google  Yahoo  Earnings  Chart) 
YHOO,Yahoo! Inc (Google  Yahoo  Earnings  Chart) 

IBD 200 Stocks up 2% or more

It is a good week so far for IBD200 list followers. Today again there are number of breakouts in the list. Many of the stocks which broke out in last week had had follow through. TRCR again shows the power of following earnings.It has only 5 million float, so that helps. CCF, PRXI,ELY and many the other earnings plays continue their slow march upwards.
ADVNB,Advanta Corp Cl B (Google  Yahoo  Earnings  Chart) 
ATRS,Altiris Inc (Google  Yahoo  Earnings  Chart) 
BRCD,Brocade Communications (Google  Yahoo  Earnings  Chart) 
CBG,Cb Richard Ellis Svcs (Google  Yahoo  Earnings  Chart) 
CCF,Chase Corp (Google  Yahoo  Earnings  Chart) 
CSH,Cash America Internat (Google  Yahoo  Earnings  Chart) 
CTRP,Ctrip.com International (Google  Yahoo  Earnings  Chart) 
DAKT,Daktronics Inc (Google  Yahoo  Earnings  Chart) 
DRIV,Digital River Inc (Google  Yahoo  Earnings  Chart) 
EZPW,Ezcorp Inc Cl A (Google  Yahoo  Earnings  Chart) 
FFIV,F5 Networks Inc (Google  Yahoo  Earnings  Chart) 
FMCN,Focus Media Holding Ltd ADR (Google  Yahoo  Earnings  Chart) 
GOOG,Google (Google  Yahoo  Earnings  Chart) 
GROW,U.S. Global Invest Inc A (Google  Yahoo  Earnings  Chart) 
ICE,Intercontinental Exchange Inc (Google  Yahoo  Earnings  Chart) 
KYPH,Kyphon Inc (Google  Yahoo  Earnings  Chart) 
MSTR,Microstrategy Inc (Google  Yahoo  Earnings  Chart) 
NTGR,Netgear (Google  Yahoo  Earnings  Chart) 
NVDA,NVIDIA Corporation (Google  Yahoo  Earnings  Chart) 
NYX,NYSE Group Inc (Google  Yahoo  Earnings  Chart) 
POT,Potash Cp Saskatchewan (Google  Yahoo  Earnings  Chart) 
PTI,Patni Computer Systems Ltd ADR (Google  Yahoo  Earnings  Chart) 
SDX,Sodexho Alliance Sa Ads (Google  Yahoo  Earnings  Chart) 
SIMO,Silicon Motion Technology Corp (Google  Yahoo  Earnings  Chart) 
SVNT,Savient Pharmaceuticals Inc (Google  Yahoo  Earnings  Chart) 
SYX,Systemax Inc (Google  Yahoo  Earnings  Chart) 
TRCR,Transcend Services Inc (Google  Yahoo  Earnings  Chart) 
UCTT,Ultra Clean Holdings (Google  Yahoo  Earnings  Chart) 
VSEA,Varian Semiconductor Equipment Associates Inc (Google  Yahoo  Earnings  Chart) 
WAT,Waters Corp (Google  Yahoo  Earnings  Chart) 
WFR,Memc Electronic Material (Google  Yahoo  Earnings  Chart) 

Besides the IBD 200 list there are number of earnings lead breakout and many of them have legs to go further.

Concept and execution

99% of the time, in my experience, the hard part about creativity isn't coming up with something no one has ever thought of before. The hard part is actually executing the thing you've thought of

.
Seth Godin

Today morning I spent some time answering number of emails about both the IBD200 and earnings lead breakouts which I have been discussing for sometime. Much of the discussions involved how to make the concept work. The actual execution of any concept is the key.

Supposing you get convinced that earnings drive long term stock price growth(for many it is the most difficult thing to believe), the next step is to translate that concept in to a strategy. There are number of options to do that. You might want to follow a strategy of earnings anticipation or a strategy of earnings reaction. You can follow a strategy of earnings announcement as a buy catalyst.There are several strategic options which one must look at and be convinced about. If that hurdle is overcome then comes the tactical part of entries, exits, position sizing, portfolio building, risk management etc.

Many traders start with the tactical part first without spending enough time thinking through the larger concept, that is why they get disillusioned fast and conclude this thing does not work. Backtesting alone without a larger context is waste of time.

One of the most critical thing to making any thing work in the market is to understand the larger context. That is difficult task because as a beginner trader many times your knowledge and context is so limited that unless you are willing to put significant effort it just does not work.

The problem is even bigger for experienced traders because many have firmly established beliefs and a contextual framework to look at markets. Changing that is extremely difficult. Changing paradigms is never easy in trading as well as in real life. That is why you will find very few change agents in real life. That is one of the reason why few can make a concept which works for someone make work for themselves.

The other difficulty is in motivation level of both parties, the part trying to learn the context and party trying to impart the context. Many times the transaction is not motivating enough for the imparting party to spend enough time on or commit the necessary long term effort required to impart the context.

I have been working and revising a larger post about the context to the earnings strategy to better answer many of the questions and hopefully will have it ready by this weekend. I have the title for the post ready- Earnings Expectation Cycle and the Cinderella Strategy

Metals are back

All kinds of mining and metal stocks are back in play. You name a sector in metal group, gold, silver, platinum, titanium,uranium, aluminium,steel and everything else is back in play. Commodity and inflation theme seems to be back in favor. Sector rotation continues.

Metal Stocks up 5% or more on high volume

AEM,Agnico-Eagle Mines Ltd (Google  Yahoo  Earnings  Chart) 
AKS,Ak Steel Holding Corp (Google  Yahoo  Earnings  Chart) 
AU,Anglogold Ashanti Ltd (Google  Yahoo  Earnings  Chart) 
AUY,Yamana Gold Inc (Google  Yahoo  Earnings  Chart) 
BMD,Birch Mountain Resources Ltd (Google  Yahoo  Earnings  Chart) 
BQI,Oilsands Quest Inc (Google  Yahoo  Earnings  Chart) 
BW,Brush Engineered (Google  Yahoo  Earnings  Chart) 
DROOY,DRD Gold Ltd Adr (Google  Yahoo  Earnings  Chart) 
FRG,Fronteer Development Group Inc (Google  Yahoo  Earnings  Chart) 
GFI,Gold Fields Ltd Adr (Google  Yahoo  Earnings  Chart) 
GG,Goldcorp Inc (Google  Yahoo  Earnings  Chart) 
GLE,Glencairn Gold Corp (Google  Yahoo  Earnings  Chart) 
GSS,Golden Star Resources (Google  Yahoo  Earnings  Chart) 
MDG,Meridian Gold Inc (Google  Yahoo  Earnings  Chart) 
MNG,Miramar Mining Corp (Google  Yahoo  Earnings  Chart) 
PAAS,Pan Amer Silver Cp (Google  Yahoo  Earnings  Chart) 
PAL,North American Palladium (Google  Yahoo  Earnings  Chart) 
PCP,Precision Castparts Corp (Google  Yahoo  Earnings  Chart) 
PMU,Pacific Rim Mining Corp (Google  Yahoo  Earnings  Chart) 
RIO,Companhia Vale Do Rio Doce (Google  Yahoo  Earnings  Chart) 
RNO,Rio Narcea Gold Mines Ltd (Google  Yahoo  Earnings  Chart) 
SLW,Silver Wheaton Corp (Google  Yahoo  Earnings  Chart) 
SSRI,Silver Standard Resource (Google  Yahoo  Earnings  Chart) 
STTX,Steel Technologies Inc (Google  Yahoo  Earnings  Chart) 
SWC,Stillwater Mining Co (Google  Yahoo  Earnings  Chart) 
TGB,Taseko Mines Ltd (Google  Yahoo  Earnings  Chart) 
USAP,Universal Stain & Alloy (Google  Yahoo  Earnings  Chart) 
UXG,US Gold Corporation (Google  Yahoo  Earnings  Chart) 
VGZ,Vista Gold Corp (Google  Yahoo  Earnings  Chart) 
WPSC,Wheeling-pittsburgh Corp (Google  Yahoo  Earnings  Chart) 
ZEUS,Olympic Steel Inc (Google  Yahoo  Earnings  Chart) 

IBD 200 Stocks up 2% or more

Problem of plenty. Today there are as of now over 50 stocks up 2% or more. So how to chose between them. You can look at the one breaking out 5% or more on high volume, which will reduce the universe to PTI, PCP, and PCCC. Between the three you can chose the one with least 65 day growth. So PTI could be a long term buy.

5% breakout scan TC2007
( 100 * (C - C1) / C1) >= 5 AND V >= 1000 AND V > V1
65 Day Growth Scan TC2007
100 * ((C + .01) - ( MINC65 + .01)) / (MINC65 + .01)

Stocks up 2% or more IBD 200
ALGT,Allegiant Travel Co (Google  Yahoo  Earnings BW  Chart) 
ARCAF,Arcadis Nv (Google  Yahoo  Earnings BW  Chart) 
ATI,Allegheny Technologies (Google  Yahoo  Earnings BW  Chart) 
ATNI,Atlantic Tele-Network (Google  Yahoo  Earnings BW  Chart) 
BLK,Blackrock Incorporated (Google  Yahoo  Earnings BW  Chart) 
BRCD,Brocade Communications (Google  Yahoo  Earnings BW  Chart) 
CCF,Chase Corp (Google  Yahoo  Earnings BW  Chart) 
CHL,China Mobile Ltd (Google  Yahoo  Earnings BW  Chart) 
COGO,Comtech Group Inc (Google  Yahoo  Earnings BW  Chart) 
COL,Rockwell Collins Inc (Google  Yahoo  Earnings BW  Chart) 
CSH,Cash America Internat (Google  Yahoo  Earnings BW  Chart) 
DAKT,Daktronics Inc (Google  Yahoo  Earnings BW  Chart) 
DLB,Dolby Laboratories Inc (Google  Yahoo  Earnings BW  Chart) 
ELE,Endesa Sa (Google  Yahoo  Earnings BW  Chart) 
EZPW,Ezcorp Inc Cl A (Google  Yahoo  Earnings BW  Chart) 
FTEK,Fuel Tech Inc (Google  Yahoo  Earnings BW  Chart) 
GEF,Greif Brothers Corp A (Google  Yahoo  Earnings BW  Chart) 
GEF-B,Greif Brothers Corp Class B (Google  Yahoo  Earnings BW  Chart) 
GLDN,Golden Telecom Inc (Google  Yahoo  Earnings BW  Chart) 
GRMN,Garmin Ltd (Google  Yahoo  Earnings BW  Chart) 
GROW,U.S. Global Invest Inc A (Google  Yahoo  Earnings BW  Chart) 
HLT,Hilton Hotels Corp (Google  Yahoo  Earnings BW  Chart) 
ICE,Intercontinental Exchange Inc (Google  Yahoo  Earnings BW  Chart) 
ININ,Interactive Intelligence (Google  Yahoo  Earnings BW  Chart) 
JST,Jinpan Internat Ltd (Google  Yahoo  Earnings BW  Chart) 
KNOT,The Knot Inc (Google  Yahoo  Earnings BW  Chart) 
MBT,Mobile Telesys Ojsc Ads (Google  Yahoo  Earnings BW  Chart) 
MGM,MGM MIRAGE Inc (Google  Yahoo  Earnings BW  Chart) 
MICC,Millicom Intl Cellular Sa (Google  Yahoo  Earnings BW  Chart) 
MIDD,Middleby Corporation (Google  Yahoo  Earnings BW  Chart) 
PCCC,Pc Connection Inc (Google  Yahoo  Earnings BW  Chart) 
PCP,Precision Castparts Corp (Google  Yahoo  Earnings BW  Chart) 
PCU,Southern Copper Corp (Google  Yahoo  Earnings BW  Chart) 
PHI,Philippine Lg Dst Tel (Google  Yahoo  Earnings BW  Chart) 
PHLY,Philadelphia Consolidated Holding Corp (Google  Yahoo  Earnings BW  Chart) 
PKTR,Packeteer Inc (Google  Yahoo  Earnings BW  Chart) 
POT,Potash Cp Saskatchewan (Google  Yahoo  Earnings BW  Chart) 
PTI,Patni Computer Systems Ltd ADR (Google  Yahoo  Earnings BW  Chart) 
PTNR,Partner Communications (Google  Yahoo  Earnings BW  Chart) 
RIMM,Research In Motion Ltd (Google  Yahoo  Earnings BW  Chart) 
RMD,Resmed Inc (Google  Yahoo  Earnings BW  Chart) 
SORL,SORL Auto Parts Inc (Google  Yahoo  Earnings BW  Chart) 
SPIL,Siliconware Precision Industries Company Ltd ADS (Google  Yahoo  Earnings BW  Chart) 
STLD,Steel Dynamics Inc (Google  Yahoo  Earnings BW  Chart) 
TATTF,Tat Technol Ltd (Google  Yahoo  Earnings BW  Chart) 
TS,Tenaris Sa (Google  Yahoo  Earnings BW  Chart) 
UA,Under Armour Inc (Google  Yahoo  Earnings BW  Chart) 
VCLK,Valueclick Inc (Google  Yahoo  Earnings BW  Chart) 
VDSI,Vasco Data Security Intl (Google  Yahoo  Earnings BW  Chart) 
VIP,Vimpel Communication Ads (Google  Yahoo  Earnings BW  Chart) 
WCG,Wellcare Health Plans Inc (Google  Yahoo  Earnings BW  Chart) 

Supposing you want to anticipate breakouts on handful of selected stocks and enter as fast as possible once they meet the breakout criteria. The easiest way to do this if you have real time scan is to divide your volume condition by 6 (for number of trading hours in day) and then calculate the minimum volume requirement based on that. If that condition is fulfilled in first hour you can buy. Or you can buy end of day, only difference it makes it is on your stop size.

Paying someone to under perform the market

One link amongst several links at The Kirk Report is worth going through in detail, where James Altucher talks about how hedge funds are setting up long only funds.

Long-only is the new black in quest for ‘alpha’
By James Altucher

Published: January 22 2007 21:10 | Last updated: January 22 2007 21:10

In the past three weeks I had two funds of hedge funds and one $10bn family office based in Geneva call me and essentially say the exact same thing: We’re starting to look at long-only hedge funds.

“We’re tired of paying management fees to people who are guaranteed to lose money over time,” one of them told me, referring to investing in shortselling funds, or even long-short funds that have primarily lost money on the short side.
Another good friend of mine who has been an arbitrageur his whole career is looking at setting up a hedge fund focused on long-only in the energy space. “Long-only” is the new black. What’s the basic idea and is it a bearish sign on the markets if suddenly everyone cares about only going long?
First off, it’s not bearish at all. It’s smart. It’s very difficult to create alpha from shorting. In other words, when someone invests in a skilled shortseller they are hoping for two things: 1) when the markets are down the shortseller is up, and 2) when the markets are up, the shortseller is not down as much as the markets are up. This last condition is the “alpha”.
But here’s the problem: 99 per cent of shortsellers are incapable of doing it. As an example, the Dedicated Short Bias Index of the CSFB/Tremont hedge fund index was negative in 2001. What this tells us is that in a year with terrorist attacks, a dotcom bust, a recession and negative returns in nearly every market index, the shortsellers still couldn’t make money.

While most experienced traders know short selling is difficult way to make money, I am always surprised by the enormous popularity of bearish blogs and bearish commentators.The Ticker Sense prominent blogger sentiment Index has since its inception only had bullish sentiments couple of times. Some of these blogger even have newsletters and instituional services and they are subscribed to by hundreds. Imagine paying someone to underperform the market.

BusinessWeek Links

Some of you have emailed pointing out the 'BW Earning' link is not working on the stock symbols. I am aware of the problem. Business Week has on 17th January discontinued lot of features on their web site and hence those links are not working. I am rewriting the HTML scripting programme to add Moneycentral for earnings. But that will take some time and the old links will not work.

BusinessWeek FAQ

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Earnings and expectations

We came in to this earning season with high expectations. Market had rallied for almost 6 month coming in to earnings with most stock at top of range with earnings priced in. As the earnings season is progressing the earnings trend so far are not as impressive as in the last couple of earnings season. But things will become clearer by next week. While there has been a slowdown, it is not as dramatic as some perma bears are claiming it to be. Remember same perma bears had same thing to say about earnings coming in to July earnings season.

Not as Positive as in the Past

With 14% of the S&P 500 reported, the fourth quarter earnings season is ramping up fast. This week over 400 companies in the Zacks database (125 are in the S&P 500 index) are scheduled to report making it the busiest earnings week of the season so far. While positive surprises are handily exceeding disappointments, the ratio pales in comparison to what we saw in the first three quarters of the year. But with the bulk of reports still ahead, it’s still anybody’s game. At this point median fourth quarter growth stands at 12.4% and the surprise ratio is hovering around 2.2:1. At a similar point in the previous three quarters, the surprise ratios stood at 6.2x, 8.0x, and 7.3x, in the first through third quarters, respectively. The median expected growth rate for all the firms in the S&P 500, reported and unreported, is 9.8%.

The Financials sector, with nearly 35% of firms reported, has the most useful data out thus far. Here, median fourth quarter earnings growth sits at a healthy 15.3% and positive surprises outnumber negatives by over 2 to 1. However, while over one third might seem like a decent sample, the early reporters are concentrated in different industries (brokers) than those yet to report. The median surprise for the sector has been an impressive 2.4%. To get some forward guidance on possible disappointing sectors, we turn to Tech and the Industrials. Both of these sectors have relatively low positive to negative surprise ratios and this could potentially lead to choppy results. Again, these are just preliminary predictions. By the end of next week, we will have quite a bit more data to work with.

Coming later:
Earnings Expectation Cycle and the Cinderella Strategy

IBD 200 Stocks up 2% or more

While the bulk of the market corrected, there were 21 stocks up 2% or more from the IBD 200 list. Not all of them had qualifying volume. The recent earnings breakout CCF made another 5% move today. When you buy an earnings breakout on neglected stocks the catalyst lasts for few weeks and so pullbacks of few days should not shake you out.Also if you noticed it came in to IBD 200 post earnings. That is why following earnings gets in in to many of the stocks which go in to IBD 200 and IBD 100 much before they are discovered by majority. In fact you should plot earning dates on the stock charts of IBD 100 and see what triggered off their major moves( www.bigcharts.com allows you to do this). See these HRT and MICC charts with earnings plotted on it.



Many rallies of significant magnitude both in price terms and number of months or years term are triggered by earnings announcements.
In this 2% plus list see how many were triggered by earnings.
ARCAF,Arcadis Nv (Google  Yahoo  Earnings BW  Chart) 
BWP,Boardwalk Pipeline Partners LP (Google  Yahoo  Earnings BW  Chart) 
CCF,Chase Corp (Google  Yahoo  Earnings BW  Chart) 
CHL,China Mobile Ltd (Google  Yahoo  Earnings BW  Chart) 
CTRP,Ctrip.com International (Google  Yahoo  Earnings BW  Chart) 
DHIL,Diamond Hill Investment Group Inc (Google  Yahoo  Earnings BW  Chart) 
DLB,Dolby Laboratories Inc (Google  Yahoo  Earnings BW  Chart) 
DSW,DSW Inc (Google  Yahoo  Earnings BW  Chart) 
ELK,Elkcorp (Google  Yahoo  Earnings BW  Chart) 
FTEK,Fuel Tech Inc (Google  Yahoo  Earnings BW  Chart) 
HMIN,Home Inns and Hotels Management (Google  Yahoo  Earnings BW  Chart) 
HRT,Arrhythmia Research Tech (Google  Yahoo  Earnings BW  Chart) 
IGLD,Internet Gold-Golden (Google  Yahoo  Earnings BW  Chart) 
MBT,Mobile Telesys Ojsc Ads (Google  Yahoo  Earnings BW  Chart) 
MICC,Millicom Intl Cellular Sa (Google  Yahoo  Earnings BW  Chart) 
MS,Morgan Stanley (Google  Yahoo  Earnings BW  Chart) 
PRFT,Perficient Inc (Google  Yahoo  Earnings BW  Chart) 
PSPT,Peoplesupport Inc (Google  Yahoo  Earnings BW  Chart) 
SORL,SORL Auto Parts Inc (Google  Yahoo  Earnings BW  Chart) 
VIP,Vimpel Communication Ads (Google  Yahoo  Earnings BW  Chart) 
WFR,Memc Electronic Material (Google  Yahoo  Earnings BW  Chart) 


You can look at chart patterns or you can look at event triggers. Event triggers are more objective and quantifiable. But to understand that you have to first escape from the technical analysis jungle.

Earlier posts in this series:
How to beat the market for $1.25 per week- Part3
How to beat the market for $1.25 per week- Part2
How to beat the market for $1.25 per week

What happens after a sell off

Market go up, correct, go up. So this sell off is good. As the rally progresses fresh long side opportunities become rarer or more risky. A sell off like this washes out some of the excesses. New sectors , new stock emerge post sell off. More than that most of the time intense sell off phases involve a cluster of down days where most of the damage happens, after which again long strategies work.
So I am excited by this sell off. All the strategies I follow work best when there has been a correction in market. When earning expectation is low , earnings lead breakout work best. So by middle of this quarter again the earning expectations for next quarter will become the market theme for some stock and pre earning drift and post earning drift strategies will work.
On momentum side also sell offs are good. While long term momentum or relative strength is good, short term relative strength is not. That is one of the reason for the CANSLIM approach to insist on buying breakout post corrections (Cup and handle, double bottom, flat bases). So you must find a stock with high yearly relative strength but short term that is 60 to 30 days relative strength being low, plus it is within a certain percent of its yearly high (you can do this mathematically as against following chart patterns). Those kinds of set ups you will find only after a market correction. The top 2% momentum scans also will show lot of those kinds of plays later in correction.
The really strong stock with potential to go up a lot, just hang in to the top of their range (usually within 25% of top of range). They are the real resilient ones which just dart out once the intense selling phase is over. So corrections are good as long as you are ready to capitalise on the post correction action.

Note:
This is also one of the reason the 65 day number of stock up/down 25% or more indicator works well. It indicates extreme momentum at levels below 200 and those levels are as a rule not sustainable.

Education of A Speculator

In the last five years , I have read hundreds of books on trading and speculation and looked at virtually every bit of academic research on the market.I have over the years researched and built several trading systems and discarded lots of them. While I continue to look at new books and new research and new systems , this year I decided to change focus and decided to reread lot of the old books, articles, academic research and my working files of system development once again.

Experience changes your perspective. Lot of time what you discard in the beginning , you figure out has lot of value if you revisit the same stuff after actual trading experience. Lot of stuff I might have dismissed at first glance, I find now has lot of value. Revisiting it with a much deeper understanding of how market works gives you a different insight which can be implemented in to current models.

This weekend I spent time trying to plan out the reading and group the readings so as to attack it systematically. While I was going through them here are couple of things I thought about and will be fodder for next series of posts:

• Why there are less than 10 books on short selling
• Do books that sell for $30 plus have more profitable ideas
• Theories do not matter in practical life
• Why there are 10000 books on technical analysis
• Psychologist have cure for everything
• Books by traders
  
• Books by non traders
• Learning from those who had triple digit returns
• The wonderful world of academic research in stock market

How to beat the market for $1.25 per week- Part3

Besides the comments on the previous post, there are couple of people with whom I have been exchanging emails so I thought I will summarise some of the things discussed in emails, which might help others.

How much can I make:
Answer to this is very clear. It depends on your risk management. If you risk higher proportion of equity on single trade than what I suggested(1% of equity at risk), you may get higher returns but chances are also that you can blowup. The stocks in this list have high beta, so they move in either direction very fast.
There are some ways to significantly improve your returns, all of them involve either pyramiding or phased exits. One method which I employ often is to take a higher position and flip portion of it for immediate 10 to 20% gain. So for example if I risk 2% instead of 1% on some position and buy 4000 shares then I will flip the 2000 for 10% and next 1000 for next 10% and hold rest of the 1000 for longer move. But all these are only for very experienced traders and when the market conditions are right.
To answer it another way, out of around 1600 stocks which appeared in this list over last 1 year 112 made 300% plus move before reversing, 487 made 100% plus move before reversing,1064 made 40% move before reversing.

Can I day trade this list:
Yes, as long as you have a sound working methodology. Even though day trading is extremely popular, in terms of complexity and skills involved it is much difficult than long term trading. That is one of the reason failure rate is so high in high frequency trading.If you intent to use the list for day trading an anticipatory entry will give you much better results. One of the ways to do it is to rank stocks in the list by ratio of todays volume by 50 day average volume (v/avgv50) and select the 10 stocks with lowest volume ratio to watch for next day entry. There are many other ways I can think of day trading it, but that is not my area of expertise.
You will get best result from this list for swing trades or for holding periods of 3 months plus .


What if I follow top 200 stocks daily:
This is for those who do not want to follow the weekly cycle and want to track the list daily, the logic being to get on to some of the stocks before it appears on the list. The assumption here is you have access to daily Investors Business Daily. The simplest way to do this is by every day looking at stocks with composite rating of 96 plus. The IBD 200 contains the top 4% of the stock ranked by IBD SmartSelect Composite Rating. This will still not get you in to stock below 10 as IBD stock tables are only for stock priced 10 and above.If you have Daily Graph subscription you can get this list daily easily, but it costs 1200 for a year.

What about shorting:
You may want to look at the IBD's Bottom 200 Composite Stocks list for this. It appears in the same Thursday paper.

What about stocks which are not on IBD 200:
The stocks in IBD 200 are not the only one which rally. Sometime stocks with no earnings make major moves, so by focusing on this list alone will I not be missing out on those opportunities. Valid concern, but majority of stocks making major moves in the long run have earning as the single most important catalyst.
If you want to ensure that you do not miss out on other stocks rallying besides this list, see my previous discussion about trading momentum and my Waste of My MBA (WOMBA) method.

All methods have limitations. The idea behind the IBD 200 methods is to use a very simple focused approach to stock selection and significantly outperform the market. It is based on statistically proven anomalies(earning effect, momentum effect, sector effect). If you can not make money from the leading stocks and from proven anomalies, you are not likely to make money in the overall market.
Earlier posts in this series:
How to beat the market for $1.25 per week- Part2
How to beat the market for $1.25 per week

IBD 200 New Members

The new members to Investors Business Daily Top 200 stocks list are always worth keeping a close eye on. Most of the time they are early in their price rise cycle. Also the sectors they come from have probably seen recent gain in relative strength.Or they might have had recent earnings, which changed their EPS rating pushing them in to top 200 stock.
BIIB,Biogen Idec Inc (Google  Yahoo  Earnings BW  Chart) 
CCF,Chase Corp (Google  Yahoo  Earnings BW  Chart) 
NGPS,Novatel Inc (Google  Yahoo  Earnings BW  Chart) 
POPEZ,Pope Resources Udr L.P. (Google  Yahoo  Earnings BW  Chart) 
PTI,Patni Computer Systems Ltd ADR (Google  Yahoo  Earnings BW  Chart) 
PVH,Phillips-Van Heusen Corp (Google  Yahoo  Earnings BW  Chart) 
QGEN,Qiagen Nv (Google  Yahoo  Earnings BW  Chart) 
SINA,Sina Corp (Google  Yahoo  Earnings BW  Chart) 
SYNT,Syntel Inc (Google  Yahoo  Earnings BW  Chart) 
TATTF,Tat Technol Ltd (Google  Yahoo  Earnings BW  Chart) 
TRCR,Transcend Services Inc (Google  Yahoo  Earnings BW  Chart) 
TSS,Total System Services (Google  Yahoo  Earnings BW  Chart) 
WAT,Waters Corp (Google  Yahoo  Earnings BW  Chart) 


Earlier posts in this series:
How to beat the market for $1.25 per week- Part2
How to beat the market for $1.25 per week

A dash of insight

Jeffrey A. Miller's blog has a series of posts since beginning of year laying out his current perspective on the economy and market. He takes some of the perma bears and thestreet.com commentators to task today in his post about inflation. Read the entire series, very interesting.

Understanding Inflation Data

There is probably no single piece of data that is less respected and more misunderstood than inflation reports. It is the one subject where the entire Street.com gang, bulls and bears alike, can agree. Doug Kass, Barry Ritholtz, Ed Stavetski, and Cody Willard have all disparaged government efforts to measure increases in the cost of living. There is even a website where a guy with an econ degree from a top school (meaning he should know better) spends a lot of words creating a conspiracy theory about this number. Maybe he has a different agenda. They also have strong support from Bill Gross.

I promised six months ago (so many issues, so little time) to explore this topic. It is too complicated for a short post, but let me try to cover the basics -- a review of the accepted wisdom on the Street, some obvious points they have missed, and a couple of examples showing why the the reasoning is wrong.

Earnings trade - ELY , Callaway Golf Co.

ELY,Callaway Golf Co (Google  Yahoo  Earnings BW  Chart) 

The stock gapped up and got going. It might have a pullback but this is likely headed higher till next earnings season. This is what I saw last night.

Callaway Sees Surge in 2006 Profit
Thursday January 18, 5:16 pm ET
Callaway Sees Adjusted Earnings for 2006 Exceeding Wall Street Projections

CARLSBAD, Calif. (AP) -- Callaway Golf Co. said Thursday it expects to report adjusted 2006 earnings exceeded Wall Street estimates as expenses fell and sales of its core Callaway and Odyssey brands rose sharply.
Callaway anticipates adjusted earnings between 50 cents and 52 cents per share, excluding a charge of 8 cents per share for stock-based compensation, versus 38 cents per share a year ago. Analysts polled by Thomson Financial are looking for earnings of 39 cents per share, including stock-options charges.

Related posts in this series:
Earnings Season- Time to be very careful...
Earnings and Dan Zanger
Earning Surprise System for $1495
Trading Earnings Breakouts
Earnings Acceleration- Long Term Impact
Trading Earnings Breakout -Part1
Trading Earnings Breakouts -Part2
Trading Earnings Breakouts -Part3

Limited sell off

The markets behaved as expected. Sell the news was the predominant theme in technology sector. The sector had risen since July and number of stocks had gone up in anticipation of good earnings. Now that actual earnings have started coming in, the chips are being cashed in. The sell off was contained and restricted to tech stocks and small caps. S&P and Dow Jones barely budged. Stocks leading lower were the stocks leading the rally.

Leading stocks going down:

AAPL,Apple Inc (Google  Yahoo  Earnings BW  Chart) 
CAI,Caci International Inc (Google  Yahoo  Earnings BW  Chart) 
GOOG,Google (Google  Yahoo  Earnings BW  Chart) 
LRCX,Lam Research Corp (Google  Yahoo  Earnings BW  Chart) 
LVS,Las Vegas Sands (Google  Yahoo  Earnings BW  Chart) 
MA,MasterCard Inc (Google  Yahoo  Earnings BW  Chart) 
NVEC,Nve Corp (Google  Yahoo  Earnings BW  Chart) 
NYX,NYSE Group Inc (Google  Yahoo  Earnings BW  Chart) 
RIMM,Research In Motion Ltd (Google  Yahoo  Earnings BW  Chart) 
VSEA,Varian Semiconductor Equipment Associates Inc (Google  Yahoo  Earnings BW  Chart) 


Bubble Burst:
There is another bubble bursting at the same time. The oil bubble. Now everyday they find new oil supply or inventory and today the Wall Street Journal explains :

Oil consumption fell in the developed world last year for the first time in more than 20 years, possibly portending an end to the multiyear rise in crude prices.

The oil sector is a classic case study in how a sector moves and tops out but hope does not recede. In fact the oil stocks will bounce now that everyone has realised the oil story is over. Those following earning strategy should study the oil sector and look at individual stocks earning and price reaction to get good grip on how the earning lead breakout work and why following it gives you early indication of sector moves.

Earnings and sector trends:

If you study the sector over last 4 years you will also find out, the best performers in that sector were unknown or new stocks like GMXR, ARD, ATPG etc. which were discovered by market after good earnings.Several oil stocks made 300% moves in last 3 years after being discovered post earnings. If you go through oil sector stock earnings you will find several with triple digit earning and sales growth quarter after quarter. Ultimately the most important thing which moves stocks is earning. Anyone who tells you otherwise is clueless about the market or has a newsletter to sell.


Sector Rotation:

Sector rotation is still alive and active. Drugs, health care, railways,and retail continues to attract investors. So let us watch if the sell off spreads to other sectors. It is very critical to keep a close eye on sector rotation at such junction where leadership is changing. You need to be alert to sector rotation much faster before it becomes apparent. If you can identify sector trends very early, you can ride a long ride.

Waiting for market to set up:

Coming in to this earning season , I had low expectations as market had rallied in to earning season. This sell off is good as it sets us up for next earning season. The earning and the IBD 200 and the momentum strategies work best when expectations are low. So I am excited about long opportunities once this sell off or correction plays itself out. Earning lead breakout on individual stocks will continue to work , PRXI is already up 20% plus after earning, CCF is up and has pulled back and is likely headed higher, USAP broke out yesterday on earnings , like these 2--25 plays will still work in earning season giving 10 to 100% plus returns in few weeks as long as the losses on those that do not work are kept contained.

Market will again set up for rally soon and then long strategies work and compensate for staying out of the correction phase.

A short opportunity:
STX,Seagate Tech Hldgs (Google  Yahoo  Earnings BW  Chart) 

Decent sell off

Looks like a decent sell off. Let us see if the buyers step in before close. After defying gravity and washing out both bears and bulls finally this looks like the much anticipated correction.

AEIS,Advanced Energy Ind Inc (Google  Yahoo  Earnings BW  Chart) 
BRLC,Syntax-Brillian Corp (Google  Yahoo  Earnings BW  Chart) 
CAI,Caci International Inc (Google  Yahoo  Earnings BW  Chart) 
COGO,Comtech Group Inc (Google  Yahoo  Earnings BW  Chart) 
GGR,Geoglobal Resources Inc (Google  Yahoo  Earnings BW  Chart) 
GOOG,Google (Google  Yahoo  Earnings BW  Chart) 
GROW,U.S. Global Invest Inc A (Google  Yahoo  Earnings BW  Chart) 
INAP,Internap Network Svcs Cp (Google  Yahoo  Earnings BW  Chart) 
KOSN,Kosan Biosciences Inc (Google  Yahoo  Earnings BW  Chart) 
LRCX,Lam Research Corp (Google  Yahoo  Earnings BW  Chart) 
LVS,Las Vegas Sands (Google  Yahoo  Earnings BW  Chart) 
MA,MasterCard Inc (Google  Yahoo  Earnings BW  Chart) 
NITE,Knight Capital Group Inc Cl A (Google  Yahoo  Earnings BW  Chart) 
NVEC,Nve Corp (Google  Yahoo  Earnings BW  Chart) 
SMTS,Somanetics Corp (Google  Yahoo  Earnings BW  Chart) 
VSEA,Varian Semiconductor Equipment Associates Inc (Google  Yahoo  Earnings BW  Chart) 

Where are the dip buyers

Sell the news was the theme of the day in tech land. Number of tech stocks have been reversing in last couple of days. But so far the sell off is pretty orderly. The dip buyers should jump in on some stocks soon. Profit taking is hitting groups which were on the run so far. Tech has been hit the hardest but other sectors are holding on well. I am watching to see if this weakness spreads to other sector.
The task is cut out for dip buyers. So expect them to be at work soon.
There are many stocks which have not been participating in this rally so far and they are the one to keep an eye on during the earning season. Some sectors like steel and iron look pretty attractive.

Sell the news

A large number of stocks have set themselves up for sell-the-news. AAPL demonstrated that in after hours. Let us see what happens during the regular session, but here is a stock which has rallied from 53 to 95 since the start of July rally. The stock has so much of expectations built in and has been gapping up on large volume for past few days.When I see a stock running in gaps after a long rally, no matter what the news is, it is time to be careful and expect a reversal. Usually this kind of behaviour is accompanied by a pullback or severe correction as the late stage and sometimes clueless and emotional traders get sucked in to such rallies.
The airlines is another sector which should witness similar reaction. The airline stocks have been in rally mode for some years now and had accelerated rallies in the July advance. Now with earnings coming in its time for sell-the-news.
The overall market continues to churn at this level and new sets of sectors continue to find buying interest. The railroads have had nice breakouts couple of days ago. The defense sector continues to witness new breakouts. Identifying price trends early in their price cycle is the key to getting in to some long term trends. Similarly if you are a long term holder you get good low risk entries in to earnings play if you can identify the earning acceleration very early in the cycle. Pay close attention if it is a first earning acceleration after a long time.

How to beat the market for $1.25 per week

Now those following the list, the list as a whole is up 2% for the week. 39 stocks are up 5% or more and 10 stocks down 10% or more.
Here is the answer to most of the questions being asked about why the IBD 200 list.

Equity Selection is the key:
Stock selection is the key to success in trading. If the selected stock has a very high probability of going up, entry criteria, charts, technical analysis and many other things play a very small role.While most traders spend lot of time on the entry criteria and exit criteria and trying to determine best strategy for market timing, most of the time very little attention is paid to stock selection. If you are looking for superior returns and really outstanding returns, the most important thing to concentrate on is equity selection.
We know some of the critical factors which lead to stock price appreciation are earnings and earning momentum, one year relative strength,and favorable sector.Given a choice of 8000 stock , you must put your money behind the best stocks selected based on these criteria.

How is IBD 200 selected:
The IBD 200 selects stocks with a high probability of going up and which are currently favored by market. Now go back and look at how theIBD 200 stocks are selected. They are selected based on Investor Business Daily's proprietary SmartSelect Composite Rating. Now look at what goes in to that rating:

From IBD:
Composite Rating, SmartSelect®
# Earnings Per Share (EPS) Rating
# Relative Price Strength (RS) Rating
# Industry Group Relative Strength Rating
# Sales+Profit Margins+ROE (SMR) Rating
# Accumulation/Distribution Rating

The IBD SmartSelect Composite Rating combines all 5 SmartSelect Ratings into one easy-to-use rating. More weight is placed on EPS and RS Rating, and the stock's percent off its 52-week high is also included in the formula. Results are then compared to all other companies, and each company is assigned a rating from 1-99 with 99 being the best. A 90 rating means that the stock has outperformed 90% of all other stocks in terms of its combinedSmartSelect Ratings.

Why IBD 200 and not IBD 100:
Many stocks going in to IBD 100 have better part of their rally over by the time they are in top 100. The other problem is IBD 100 only focuses on stocks above a certain price level. Now price growth is not a function of its starting price. Sector and stock rotation means many times by the time stocks reachIBD 100 the sector is peaking. So the IBD 200 offers you a better universe to get in to stocks likely to make move and before they make the move Many of these stocks will not make it toIBD100 but before that they might make 200 to 300% or more price growth. Look at PTT a member of IBD 200 it meets all the CANSLIM criteria and has been up around 400% in last one quarter. Or TSTC or CHINA or SVNT and many others which have doubled in last one quarter but because they are below the thresh hold price for IBD 100 they are not in it.

What other entry criteria can be used:
Look at variety of entry criteria based on your risk preference and how much effort you are willing to put in.

* Look at entering on 2% breakout only if the earlier day was negative
* Enter only if last 4-6 week price growth is less than 25%
* Enter based on chart patterns
* Enter based only on 5% plus breakout
* Enter using techniques pioneered by Thomas R Demark

One of the biggest advantage of using this list is you are focusing on a very small number of stocks. You can anticipate good entry points, you can plan your entries and you can be assured that you will never miss a major rally. If you can not make money from these leading stocks, there is very low probability of you making money in the market as a whole. Don't take my word for it go back and test this list for several years. All the stocks which make a major move in a year are on this list. So if you want to beat the market just grab tomorrow's Investors Business Daily for $1.25

The earlier post:
How to beat the market for $1.25 per week

Early earnings trends look weak

The market is pricing in lot of earning growth and the latest Zacks Earning trend are not as explosive as last quarter. Plus last quarter the market was weak coming in to earnings.

Fourth-quarter earnings season has arrived and 6% of the S&P 500 have reported so far. A quick look below shows a mediocre start. Positive surprises outnumber negatives by 2:1 and median EPS growth thus far has been 12.9%. Compared to the third-quarter’s initial metrics, this isn’t very impressive. Then, surprise ratios hovered around 6:1 and initial growth rates were closer to 15%. With only 30 companies having reported, however, it is difficult to begin extrapolating trends. As more numbers arrive, they will shed light on the degree of overall analyst surprises and earnings performance. For now, we are expecting a 2-3% median surprise and 12-14% quarter-over-quarter EPS growth.

Good Earnings Are Priced In

After a few days of rally as expected the market action was lackluster on Tuesday. As large cap earnings com in to play, market participants are in a holding mood to wait and watch what happens.

The earning game works very differently on large caps. In case of large caps there is intense scrutiny of their every move and earnings are priced in much early. The only way to play earnings in them is to buy much before earnings or buy on earning related weakness if the stock reacts negatively. The strong moves coming in to earning season in the major indices was driven in large part by expectation of a very good earnings season. Now when expectations are high any disappointment or surprise or just meeting expectations is simply not good enough.

The price moves in many closely followed stocks are primarily an exercise in expectations. The actual numbers that are reported must be compared with how they measure up to those expectations. In case of established companies the market does a good job of pricing good news into shares by buying ahead of earnings. So following a pre earning drift strategy using analyst earning changes is a good strategy.That is the crux of many systems like Starmine, Value Line and Zacks Rank.

So coming in to this earning season, if the market is expecting good news, only exceptional news will attract more buyers. This is setting up the stage for a sell-the-news reaction when an earnings report is in line, or even slightly better than, analyst estimates. So look at the price drift pre earning in individual stocks before earnings are reported. If a stock is up already in anticipation and at top of its range, the next move will likely be down. So watch stocks like AAPL, GT, COH and NVDA and many others up majorly in last few quarters.


Obviously the real earning opportunty in every earning season is always in unloved, un followed stocks. Surprises by defination are more common in them.

Earnings in focus

The day to day gyration in markets in next couple of weeks will be completely driven by earnings season. Pre announcements will be in focus. When markets are in rally mode coming on to the earning season, lot of positive is priced in unlike last earning season. So expect market to sell off or correct on earnings.

The out of favor sectors are the one to keep an eye on during earning season, as low expectations on them lead to any surprise on upside resulting in rallies. The auto parts sector is one recent example of this. High flying stocks have the highest risk of reversion on earnings.

As I have said earlier, the real money making opportunity during earning season is in neglected, low float stocks with no analyst coverage and very low institutional holdings. Any surprise on these leads to quick 25% plus moves lasting till next earnings.

China contrarian indicator

The hot Chinese market should head lower.

Chinese Stock list from Bullsector.

ACH,Aluminum Corp China (Google  Yahoo  Earnings BW  Chart) 
ASIA,Asiainfo Holdings Inc (Google  Yahoo  Earnings BW  Chart) 
ASTTD,Asat Holdings Ltd (Google  Yahoo  Earnings BW  Chart) 
ASX,Advanced Semicondctr Ads (Google  Yahoo  Earnings BW  Chart) 
ATS,Apt Satellite Hldgs Ltd (Google  Yahoo  Earnings BW  Chart) 
AUO,Au Optronics Corp (Google  Yahoo  Earnings BW  Chart) 
BIDU,Baidu.com Inc (Google  Yahoo  Earnings BW  Chart) 
BNSO,Bonso Electronics Int'l (Google  Yahoo  Earnings BW  Chart) 
CBA,Brilliance Ch Auto Hldgs (Google  Yahoo  Earnings BW  Chart) 
CEA,China Eastern Airlines (Google  Yahoo  Earnings BW  Chart) 
CEO,CNOOC Ltd Adr (Google  Yahoo  Earnings BW  Chart) 
CHA,China Telecom (Google  Yahoo  Earnings BW  Chart) 
CHDX,Chindex International Inc (Google  Yahoo  Earnings BW  Chart) 
CHINA,CDC Corp Class A (Google  Yahoo  Earnings BW  Chart) 
CHL,China Mobile Ltd (Google  Yahoo  Earnings BW  Chart) 
CHN,China Fund Inc (Google  Yahoo  Earnings BW  Chart) 
CHNR,ChinaNatural Resources (Google  Yahoo  Earnings BW  Chart) 
CHT,Chunghwa Telecom (Google  Yahoo  Earnings BW  Chart) 
CHU,China Unicom Ltd Ads (Google  Yahoo  Earnings BW  Chart) 
CMED,China Medical Technologies Inc (Google  Yahoo  Earnings BW  Chart) 
CMQ,Cathay Merchant Group Inc (Google  Yahoo  Earnings BW  Chart) 
CN,China Netcom Grp Corp Ltd (Google  Yahoo  Earnings BW  Chart) 
CNTF,China Techfaith Wireless Communication Technology Limited (Google  Yahoo  Earnings BW  Chart) 
CRGID,Corgi International Ltd ADR (Google  Yahoo  Earnings BW  Chart) 
CTEL,City Telecom Hk Ltd Ads (Google  Yahoo  Earnings BW  Chart) 
CTRP,Ctrip.com International (Google  Yahoo  Earnings BW  Chart) 
CYD,China Yuchai Int Ltd (Google  Yahoo  Earnings BW  Chart) 
DSWL,Deswell Industries Inc (Google  Yahoo  Earnings BW  Chart) 
FXI,iShares FTSE/Xinhua China 25 Index Fund ETF (Google  Yahoo  Earnings BW  Chart) 
GAI,Global-Tech Appliances (Google  Yahoo  Earnings BW  Chart) 
GRR,Asia Tigers Fund (Google  Yahoo  Earnings BW  Chart) 
GRVY,Gravity Co (Google  Yahoo  Earnings BW  Chart) 
GSH,Guangshen Railway Co (Google  Yahoo  Earnings BW  Chart) 
HIHO,Highway Holdings Limited (Google  Yahoo  Earnings BW  Chart) 
HNP,Huaneng Power Intl Inc (Google  Yahoo  Earnings BW  Chart) 
HRAY,Hurray! Holding Co (Google  Yahoo  Earnings BW  Chart) 
ICAB,I-Cable Cmmunctns Ads (Google  Yahoo  Earnings BW  Chart) 
IMOS,Chipmos Technologies Bermuda (Google  Yahoo  Earnings BW  Chart) 
INTN,Intac International (Google  Yahoo  Earnings BW  Chart) 
JADE,Lj Internat Inc (Google  Yahoo  Earnings BW  Chart) 
JOBS,51job Inc Ads (Google  Yahoo  Earnings BW  Chart) 
JRJC,China Finance Online Co Ltd (Google  Yahoo  Earnings BW  Chart) 
KONG,Kongzhong Corporation  (Google  Yahoo  Earnings BW  Chart) 
LFC,China Life Insurance Company (Google  Yahoo  Earnings BW  Chart) 
LONG,Elong Inc (Google  Yahoo  Earnings BW  Chart) 
LTON,Linktone Ltd (Google  Yahoo  Earnings BW  Chart) 
NINE,Ninetowns Digital World (Google  Yahoo  Earnings BW  Chart) 
NTE,Nam Tai Electronics Inc (Google  Yahoo  Earnings BW  Chart) 
NTES,Netease.com Inc (Google  Yahoo  Earnings BW  Chart) 
NWD,New Dragon Asia Corp (Google  Yahoo  Earnings BW  Chart) 
PACT,Pacificnet Inc (Google  Yahoo  Earnings BW  Chart) 
PCW,Pccw Limited Adr 1:10 Ord (Google  Yahoo  Earnings BW  Chart) 
PEAK,Peak Internat Ltd (Google  Yahoo  Earnings BW  Chart) 
PTR,Petrochina Co Ltd Ads (Google  Yahoo  Earnings BW  Chart) 
SAT,Asia Satellite Telecomm (Google  Yahoo  Earnings BW  Chart) 
SHI,Shanghai Petrochemical (Google  Yahoo  Earnings BW  Chart) 
SINA,Sina Corp (Google  Yahoo  Earnings BW  Chart) 
SMI,Semiconductor Manufacturing (Google  Yahoo  Earnings BW  Chart) 
SNDA,Shanda Interactive Ent Ltd (Google  Yahoo  Earnings BW  Chart) 
SNP,China Petro & Chem Ads (Google  Yahoo  Earnings BW  Chart) 
SOHU,Sohu.Com Inc (Google  Yahoo  Earnings BW  Chart) 
SPIL,Siliconware Precision Industries Company Ltd ADS (Google  Yahoo  Earnings BW  Chart) 
SSPI,Spectrum Signal Proc (Google  Yahoo  Earnings BW  Chart) 
TOMO,Tom Online (Google  Yahoo  Earnings BW  Chart) 
TSM,Taiwan Semicond Mnfcg Co (Google  Yahoo  Earnings BW  Chart) 
UMC,United Microelectronics (Google  Yahoo  Earnings BW  Chart) 
UTSI,UTStarcom Inc (Google  Yahoo  Earnings BW  Chart) 
UUU,Universal Security Instruments (Google  Yahoo  Earnings BW  Chart) 
XING,Qiao Xing Univ Telephone (Google  Yahoo  Earnings BW  Chart) 
YZC,Yanzhou Coal Mining Co (Google  Yahoo  Earnings BW  Chart) 
ZNH,China Southern Airlns Co (Google  Yahoo  Earnings BW  Chart) 

CCF,Chase Corp- The earnings effect

CCF,Chase Corp (Google  Yahoo  Earnings BW  Chart) 



CCF volume before breakout day 0. Yes it traded 0 shares on Thursday before the breakout on earning news. Earnings announced mid day and see what happened. Stock has a float of 3.5 million. Good earnings on neglected stocks lead to explosion.

Chase Corporation Announces Record Revenue and Net Income for First Quarter of Fiscal Year 2007

BRIDGEWATER, Mass.--(BUSINESS WIRE)--Chase Corporation (AMEX:CCF) today reported revenues of $31,245,000 for the three months ended November 30, 2006, representing an increase of 26% or $6,394,000 from revenues of $24,851,000 in the same period last year. Net income in the first quarter of fiscal 2007 was $2,548,000, an increase of $1,530,000 compared to $1,018,000 in the prior year period. Diluted earnings per share increased $0.36 or 138% to $0.62 per diluted share compared to $0.26 in fiscal 2006.

If you have systematic way to track earnings everyday, you would not miss such opportunities. More opportunities like this show up everyday during earning season.

Related posts in this series:
Earnings Season- Time to be very careful...
Earnings and Dan Zanger
Earning Surprise System for $1495
Trading Earnings Breakouts
Earnings Acceleration- Long Term Impact
Trading Earnings Breakout -Part1
Trading Earnings Breakouts -Part2
Trading Earnings Breakouts -Part3

Rally for nimble few

The suspense is over and the market has tipped its hand for next couple of weeks. There are opportunities on long side for nimble traders. Possible ways to play it if you are short term trader is to buy in anticipation of earnings. Or buy on pre announcement.

The power of following earnings was evident yesterday in the auto parts group. Upward guidance by BWA lead to nice rallies not only in BWA but in other group stock. The sector looks out of favor and there was virtual scramble to get on board. Some of these stocks have potential to make 25% plus moves in couple of quarters. I am picking up lots of earning anticipation trades in my scan. But you need to be nimble to play them.

Similarly the large cap biotech group is stirring and number of them have started early phase of their possible rallies. That should not surprise most readers as I was anticipating a move in large cap biotech for some time.

Obviously the AMD profit warning has my calls in water currently. But I am adding to that trade. Most of the time companies put out as much bad news as possible in one quarter. So that they can handily beat in next quarter. That is the reason most of the time in large caps buying on bad news works. GLW is another stock I am going to play with options.

Some recent IPO's are attractive buys here. I am finding lots of things to buy not for short trade but also for long term trades. The trick is to find things which have potential but not overextended and have wheels to move further.

Real-time quotes for free

Google Finance planning free real time qutes.

At Google, we get excited about making all kinds of information accessible to everyone. The more up-to-date the information, the more valuable it is. This is particularly true in the world of finance; information, and timing of that information, is money. Today, real-time quotes are not freely and easily available on the web. Some websites offer one real-time quote at a time, but typically only after you have enrolled in a service and/or signed a complicated legal agreement. Other sites approach the problem differently and show you streaming delayed data, but that doesn't solve the problem either -- it masks it. What's really important is getting free, easy and fast access to real-time quotes so you know how the market or your company is doing now, not as of twenty minutes ago.

As a result, we've worked with the SEC, the New York Stock Exchange (NYSE) and our D.C. trade association, NetCoalition, to find a way to bring stock data to Google users in a way that benefits users and is practical for all parties. We have encouraged the SEC to ensure that this data can be made available to our users at fair and reasonable rates, and applaud their recent efforts to review this issue. Today, the NYSE has moved the issue a great step forward with a proposal to the SEC which if approved, would allow you to see real-time, last-sale prices across all Google properties including Google Finance, Personalized Google, Mobile, and of course, Google.com. It won't matter if you're on Wall Street or Main Street -- you'll have free, easy and fast access to real-time prices from NYSE on Google.

So stay tuned on our progress with this. We're excited that financial data as we know it is about to change. In the meantime, set up your portfolio on Google Finance today.

How to beat the market for $1.25 per week

The majority of emails I get are of three types, first is about how to find good stocks, second is do you have a newsletter and the third is some newsletters or their followers excitedly touting their stock picking skills, . Most of these newsletters have below market returns but they have vast followings.Newsletter writers are good marketers not necessarily good traders.
So to answer the question about how to pick good stocks here is a very simple system which will beat most newsletters and all it costs is $1.25 per week.

How to beat the market for $1.25 per week

Difficulty: Moderately challenging
One of the most important parts of 'playing the market' is finding companies likely to go up.

Instructions

* STEP 1: Obtain Investor Business Daily for Thursday for $1.25
* STEP 2: Go to page B5. Look at the list of IBD's Top 200 Composite Stocks
* STEP 3: Put this list in watchlist.
* STEP 4: Everyday identify companies from this list which had price increase of 2%, minimum volume for the day of 100000 and volume for the day is above yesterdays volume.If you are using TC2007 use this scan-
( 100 * (C - C1) / C1) >= 2 AND V >= 1000 AND V > V1 or ( 100 * (C - C1) / C1) >= 4 AND V >= 1000 AND V > V1
* STEP 5: Buy next day with 1% risk
* STEP 6: Trail with a stop
* STEP 7: Enjoy your profits

Tips & Warnings

* Keep the stocks in watchlist for 4 weeks
* Look at the new additions to the list every week. Keep a close watch on them.
* All major winners in a year appear on this list. Stocks that go on to IBD 100 first appear here.

These are the kind of stocks you would have found using this in last 65 days. All of them up more than 20% since appearing on the list, many are up over 100% in one quarter.
AFAM,Almost Family Inc (Google  Yahoo  Earnings BW  Chart) 
AOB,American Oriental Bioengineering Inc (Google  Yahoo  Earnings BW  Chart) 
ATNI,Atlantic Tele-Network (Google  Yahoo  Earnings BW  Chart) 
AXR,Amrep Corp (Google  Yahoo  Earnings BW  Chart) 
CHINA,CDC Corp Class A (Google  Yahoo  Earnings BW  Chart) 
CPA,Copa Holdings S.A. (Google  Yahoo  Earnings BW  Chart) 
CRVL,Corvel Corp (Google  Yahoo  Earnings BW  Chart) 
DAKT,Daktronics Inc (Google  Yahoo  Earnings BW  Chart) 
DLB,Dolby Laboratories Inc (Google  Yahoo  Earnings BW  Chart) 
FTEK,Fuel Tech Inc (Google  Yahoo  Earnings BW  Chart) 
GLDN,Golden Telecom Inc (Google  Yahoo  Earnings BW  Chart) 
GRC,Gorman-Rupp Co (Google  Yahoo  Earnings BW  Chart) 
GROW,U.S. Global Invest Inc A (Google  Yahoo  Earnings BW  Chart) 
GSOL,Global Sources Ltd. (Google  Yahoo  Earnings BW  Chart) 
HMIN,Home Inns and Hotels Management (Google  Yahoo  Earnings BW  Chart) 
HRT,Arrhythmia Research Tech (Google  Yahoo  Earnings BW  Chart) 
HXM,Homex Development Corp (Google  Yahoo  Earnings BW  Chart) 
ICE,Intercontinental Exchange Inc (Google  Yahoo  Earnings BW  Chart) 
IGLD,Internet Gold-Golden (Google  Yahoo  Earnings BW  Chart) 
MFW,M&F Worldwide Corp (Google  Yahoo  Earnings BW  Chart) 
MGM,MGM MIRAGE Inc (Google  Yahoo  Earnings BW  Chart) 
MICC,Millicom Intl Cellular Sa (Google  Yahoo  Earnings BW  Chart) 
MR,Mindray Medical Intl Ltd (Google  Yahoo  Earnings BW  Chart) 
ROCM,Rochester Medical Corp (Google  Yahoo  Earnings BW  Chart) 
STEC,Simple Technology Inc (Google  Yahoo  Earnings BW  Chart) 
SVNT,Savient Pharmaceuticals Inc (Google  Yahoo  Earnings BW  Chart) 
SYX,Systemax Inc (Google  Yahoo  Earnings BW  Chart) 
TTEC,Teletech Holdings Inc (Google  Yahoo  Earnings BW  Chart) 
UCTT,Ultra Clean Holdings (Google  Yahoo  Earnings BW  Chart) 
UUU,Universal Security Instruments (Google  Yahoo  Earnings BW  Chart) 
VOL,Volt Info Sciences Inc (Google  Yahoo  Earnings BW  Chart) 

In last one year I told about this to 38 people who asked for newsletter or asked about finding good stocks. Only 2 people religiously follow it week after week. I gave away this information free, so that might be the reason no one followed it.

Coming next: How to sell a newsletter to thousands without beating the market......

Other posts in this series:

How to beat the market for $1.25 per week- Part3
How to beat the market for $1.25 per week- Part2
How to beat the market for $1.25 per week

How to beat the market for $1.25 per week

Discover how you can find little-known winners like these, before they make these kind of moves ..........







How would you identify stocks like these on weekly basis. What is the pattern to all these stocks.How can you design a system to find stocks like these without actually watching the market on intra day basis. Think about it. If you can answer it you can find a profitable ideas for $1.25 per week. And it not a newsletter for $1.25 per week.......

I have talked about this system before....

Buy the dips

When the market opened weak on Wednesday morning as overseas markets fell sharply on the continued descent in crude oil and commodities, buy the dip trade was kicked in and we ended the day up. The breadth was flat on the Nasdaq and negative on the NYSE which indicates that the afternoon's rally was led by a narrow group of stocks.For a change the market reacted positively to falling oil prices. The alternative hypothesis is that the lower energy and commodity prices are pointing towards a slowing global economy.

So we are setting up for post earning sell the new reaction. The obvious trade in this is to look for stock which are breaking out in anticipation of earnings and don't overstay the party. I saw a couple of earnings anticipation trades showing up. Playing the pre earning drift higher or lower is another way to play the earnings game.

Many of the stocks rallying vigorously at top of the range like ICE, LVS, RIMM, BIDU and few others look to be getting in to a territory where they will exhaust themselves and have pullback soon.Entering them at this stage is for only nimble traders wh understand the game well.

The most important factor which will determine market fate in next few weeks is earnings.

Coming later today "How to beat the market for $1.25 per week"

Earnings trade example

PRXI,Premier Exhibitions Inc (Google  Yahoo  Earnings BW  Chart) 



Earnings came out last night. Look at the earnings. The float is 12.01M. Stock up 17%. Institution ownership only 13. Neglect return all over.No analyst coverage.

Premier Exhibitions, Inc. Reports Record Results for Its Third Quarter and Nine Months Ending November 30, 2006

Last Update: 9:05 PM ET Jan 9, 2007
ATLANTA, Jan 09, 2007 /PRNewswire-FirstCall via COMTEX/ --
FOR THE QUARTER:
* $7.9 MILLION IN REVENUE
* $3.7 MILLION IN INCOME BEFORE TAXES OR $0.12 PER SHARE
* $0.08 AND $0.07, BASIC AND DILUTED EPS
FOR THE NINE-MONTHS:
* $20 MILLION IN REVENUE
* $7.7 MILLION IN INCOME BEFORE TAXES OR $0.25 PER SHARE
* $0.17 AND $0.15, BASIC AND DILUTED EPS
PRXI ) today reported its earnings and results of operations for its third quarter and nine-months ended November 30, 2006. Revenue for the third quarter totaled $7.9 million as compared to $2.8 million in the same prior year period. For the nine-month period, revenue totaled $20 million as compared to $9 million in the prior year period.
In the third quarter net income was $2.2 million, or $0.07 per share as compared to $.09 million, or $0.00 per share, in the same prior year period. Net income for the nine-month period was $4.6 million, or $0.15 per share as compared to $2 million, or $0.08 per share, in the same prior year period.
For comparability to the prior year period, which had no provision for income taxes, the third quarter income before taxes was $3.7 million, or $0.12 per share as compared to $.09 million, or $0.00 per share. Income before taxes for the nine-month period was $7.7 million, or $0.25 per share as compared to $2.0 million, or $0.08 per share, in the same prior year period.

If you have systematic way to track earnings everyday, you would not miss such opportunities. More opportunities like this show up everyday during earning season.

Related posts in this series:
Earnings Season- Time to be very careful...
Earnings and Dan Zanger
Earning Surprise System for $1495
Trading Earnings Breakouts
Earnings Acceleration- Long Term Impact
Trading Earnings Breakout -Part1
Trading Earnings Breakouts -Part2
Trading Earnings Breakouts -Part3

Suspense

The suspense in market continues. Neither side is making an aggressive move. So buying a bullish breakout or selling short a breakdown results in chop. If this is correction, it is yet to play itself out and too early to be bullish. If it is "the top", then it is too early to short. So enjoy the action and wait for the next move in this suspense movie.

The real revealing action in the market was in the oil complex. Playing the geopolitical poker is fun game as long as you don't act on your bluster. Like George Bush learnd it in Iraq, Putin is learning it in oil market. Threat of supply disruption works to your advantage as long as it is just threat, when you actualy do it, the oil prices go down not up. Once a market or commodity tops out it is very difficult to get it up and running again unless suficient time passes. Keep a close eye on XOM and other oil stocks. XOM is the 800 pound gorilla in this oil complex and in the portfolio of all mutual funds, when it starts sliding, it will be smooth well oiled move down. It will take other oil stocks along with it.

The other excitement yesterday was Apple. It had highest volume in one year. We will see where it goes from here. The products are going to hit the market six month down the line. So the overzealous reaction might have a sharp pullback before it goes up. But currently even the gradmas in Timbuktu are excited about Apple.

Watch the breakout list carefully, the defense sector and economicaly sensitive retailers are getting bid up. DLTR and NDN are going to lead market higher. Is their message in those moves. The suspense continues.

Short Breakouts

Most stocks at top of range are currently vulnerable. There is clear distribution in momentum names. Everyday sector or stock previously leading the rally is breaking down.
ALXA,Alexza Pharmaceuticals Inc (Google  Yahoo  Earnings BW  Chart) 
BMA,Banco Macro S A (Google  Yahoo  Earnings BW  Chart) 
CDE,Coeur D'alene Mines Corp (Google  Yahoo  Earnings BW  Chart) 
CELL,Brightpoint Inc (Google  Yahoo  Earnings BW  Chart) 
CHU,China Unicom Ltd Ads (Google  Yahoo  Earnings BW  Chart) 
EMAG,Emageon (Google  Yahoo  Earnings BW  Chart) 
EMKR,Emcore Corporation (Google  Yahoo  Earnings BW  Chart) 
FWLT,Foster Wheeler Ltd (Google  Yahoo  Earnings BW  Chart) 
GCH,Greater China Fund (Google  Yahoo  Earnings BW  Chart) 
GGAL,Grupo Financiero Galicia (Google  Yahoo  Earnings BW  Chart) 
GRZ,Gold Reserve Inc (Google  Yahoo  Earnings BW  Chart) 
HELE,Helen Of Troy Ltd (Google  Yahoo  Earnings BW  Chart) 
IAAC,Internat Asset Holdg Cp (Google  Yahoo  Earnings BW  Chart) 
KOP,Koppers Holdings (Google  Yahoo  Earnings BW  Chart) 
LEAP,Leap Wireless International Inc (Google  Yahoo  Earnings BW  Chart) 
LFC,China Life Insurance Company (Google  Yahoo  Earnings BW  Chart) 
LHCG,LHC Group (Google  Yahoo  Earnings BW  Chart) 
LTON,Linktone Ltd (Google  Yahoo  Earnings BW  Chart) 
LWSN,Lawson Software Inc (Google  Yahoo  Earnings BW  Chart) 
MLS,Mills Corporation The (Google  Yahoo  Earnings BW  Chart) 
MXWL,Maxwell Technologies Inc (Google  Yahoo  Earnings BW  Chart) 
NAK,Northern Dynasty Minerals Ltd (Google  Yahoo  Earnings BW  Chart) 
OMCL,Omnicell Inc (Google  Yahoo  Earnings BW  Chart) 
OMNI,Omni Energy Services Cp (Google  Yahoo  Earnings BW  Chart) 
PALM,Palm Inc (Google  Yahoo  Earnings BW  Chart) 
PSMT,Pricesmart Inc (Google  Yahoo  Earnings BW  Chart) 
RIMM,Research In Motion Ltd (Google  Yahoo  Earnings BW  Chart) 
S,Sprint Nextel Corp (Google  Yahoo  Earnings BW  Chart) 
SCSC,Scansource Inc (Google  Yahoo  Earnings BW  Chart) 
SPEC,Spectrum Control Inc (Google  Yahoo  Earnings BW  Chart) 
SRSL,Srs Labs Inc (Google  Yahoo  Earnings BW  Chart) 
TWB,Tween Brands Inc (Google  Yahoo  Earnings BW  Chart) 
TWGP,Tower Grp Inc (Google  Yahoo  Earnings BW  Chart) 
WST,West Pharmaceutical Svcs (Google  Yahoo  Earnings BW  Chart) 
XRIT,X Rite Inc (Google  Yahoo  Earnings BW  Chart) 

Breakouts

New leadership is slowly emerging as many previous leaders continue to breakdown. Obviously some of the action in this list is clearly driven by earnings announcements and pre announcements. The new leaders offer better opportunities than chasing breakouts at top of range.

AAPL,Apple Computer Inc (Google  Yahoo  Earnings BW  Chart) 
AH,Armor Holdings Inc (Google  Yahoo  Earnings BW  Chart) 
ALNY,Alnylam Pharmaceuticals (Google  Yahoo  Earnings BW  Chart) 
AOB,American Oriental Bioengineering Inc (Google  Yahoo  Earnings BW  Chart) 
APAC,Apac Customer Services (Google  Yahoo  Earnings BW  Chart) 
ARIA,Ariad Pharmaceuticals (Google  Yahoo  Earnings BW  Chart) 
AUY,Yamana Gold Inc (Google  Yahoo  Earnings BW  Chart) 
BBNK,Bridge Cap Hldgs (Google  Yahoo  Earnings BW