The logic is simple, to look at best performing stock in a month. The threshold for that is the stock should make 50% or plus move in a month. The model building is about finding out what kind of things trigger such moves. While datamining is ridiculed by most for hind sight bias, you can learn a lot from doing such analysis and build profitable strategies around the market understanding.
Having tracked this information for years four things are most critical factor to a stock making such moves a) earning surprise (it has to be an earning surprise/earning acceleration of significance) b) float c) new or neglected stocks d)trading volume acceleration. Besides that some news triggers have a higher probability of triggering a move than other things.
Not all factor may be tradable out of that but one which consistantly happens every quarter is earnings and tracking it gets you in to not all but some of these moves. Now if you capture few moves like this in a year, your year is made if you bet enough on such moves.That is why I bet a larger amount on my earning plays.
I am not able to capture every big move in earnings because I might be invested in something else but I capture enough out of this list in a year. I keep a goal of capturing atleast 20 such big moves in a year. Some earning periods you get lots and in some few, but you always find 20% to 100% plus moves within a month of earning announcement.That is why the first thing I look at in the morning is the earnings announcement data. Some I trade for just a days move. But there is always free money in those earning trades once you understand how it works.
You can see for yourself in this list, how many of these moves were triggered by earnings. This list has following characters
C20 >= 5 (Price 20 days ago was 5 or more)
(AVGC20* AVGV20) >= 2500 (The average dollar volume traded for last 20 days was more than 250000)
100 * (C - C20) / C20 >= 50 (The price change in 20 days was 50% or more)
The grey colored stocks have merger/buyout as trigger.
AMKR,Amkor Technology Inc
AMPX,Ampex Corp Class A
CTRX,Cotherix Inc
DAKT,Daktronics Inc
DVAX,Dynavax Tech
EFUT,E-Future Info Tech Inc Ord
EMBX,Embrex Inc
GROW,U.S. Global Invest Inc A
IGLD,Internet Gold-Golden
IOC,Interoil Corporation
JST,Jinpan Internat Ltd
KOSP,Kos Pharmaceuticals Inc
NRMX,Neurochem
PNTR,Pointer Telocation Ltd Ord
SNCR,Synchronoss Technologies Inc
SRSL,Srs Labs Inc
SVNT,Savient Pharmaceuticals Inc
TRMS,Trimeris Inc
The other use of this list is it tells you about momentum extremes, when market becomes very frothy the number of stocks jump through the roof, at bottoms you have very few candidates in the list.
Similar to this list I have another list which I monitor and datamine regularly of stocks making 10 dollar or more move in a month. You can learn a lot from it to capture the 10 dollar plus kind of moves in a month. By continuously looking at such data you get a understanding of characters of the stock making such moves and what triggers them. It also tells you about big money flows in sectors or stocks. Probably the elephants love high prices. The mom and pop is enamored by low prices( nothing wrong with it as low prices have higher leverage).
These stocks had 10 dollars or more move in last one month the thinly traded ones are omitted.
AAPL,Apple Computer Inc
AMAG,Advanced Magnetics Inc
ASEI,American Science & Engineering Inc
ATI,Allegheny Technologies
AXR,Amrep Corp
BIDU,Baidu.com Inc
BOT,CBOT Holdings Inc
BXP,Boston Properties Inc
CLB,Core Laboratories N.V.
CME,Chicago Mercantile Exchange
CRDN,Ceradyne Inc
CRVL,Corvel Corp
DAKT,Daktronics Inc
DE,Deere & Co
EFUT,E-Future Info Tech Inc Ord
ELK,Elkcorp
FFH,Fairfax Financial Holdings
FMCN,Focus Media Holding Ltd ADR
FS,Four Seasons Hotels Inc
GROW,U.S. Global Invest Inc A
HYDL,Hydril
ICE,Intercontinental Exchange Inc
IOC,Interoil Corporation
IPS,Ipsco Inc
KOSP,Kos Pharmaceuticals Inc
LFC,China Life Insurance Company
LVS,Las Vegas Sands
MA,MasterCard Inc
MGM,MGM MIRAGE Inc
MIDD,Middleby Corporation
MLM,Martin Marietta Material
NVR,Nvr Inc
NYX,NYSE Group Inc
OIH,HOLDRS Oil Service ETF
PD,Phelps Dodge Corp
POT,Potash Cp Saskatchewan
PTR,Petrochina Co Ltd Ads
RIMM,Research In Motion Ltd
RTI,Rti Internat Metal Inc
RVBD,Riverbed Technologies Inc
SLG,Sl Green Realty Corp
SLV,iShares Silver Trust ETF
SNP,China Petro & Chem Ads
SQM,Sociedad Quimica Chile
VIP,Vimpel Communication Ads
WYNN,Wynn Resorts Ltd
ZOLL,Zoll Medical Corporation
Similar to this I track and datamine stocks making 100% plus move in a year. Studying the out liner or the long tail constantly gives you some idea of finding them earlier before they make such moves. If you notice focus of all these efforts is to find fast moving vehicles. If I find enough of them some day I might buy the fastest car in the world- Bugatti Veyron.
252mph, 1001PS, 16 cylinders, four turbos, 8.0-litres... the Veyron's numbers are staggering. It can hit 60mph in 2.5 seconds thanks to four-wheel-drive traction, shoots to 125mph in 7.3 seconds and reaches 200mph in less than 20. The Veyron 16.4 is the most powerful, most expensive, and fastest street-legal production car in the world , with a proven top speed of over 400 km/h.There can be no commercial logic behind such a crazy machine, even with the Veyron's price tag of one million euros more...
7 comments:
how's the gas mileage?
todays Paul Krugman peice tackles a lot of stuff regarding the economy
http://welcome-to-pottersville.blogspot.com/2006/12/paul-krugman-economic-storm-signals.html
Paul Krugman has been consistantly wrong on the economy and everything in general. Just go and see his NYT articles hidden behind the paid wall during 2002, 2003, 2004, 2005. He has been crying wolf with such regularity that it is hard to take anything he says seriously.
His only claim to fame is that the loony left idiolises him because of his anti Bush tirades.
Another good article. One question about your earnings plays. You say you look for big moves over the prior month and that you bet big on these earnings surprises. Are you getting into these plays before the surprise (upholding the philosophy that surprises are in the direction of the trend)? If so, how do you reconcile this contrarian methodology with the widely accepted mantra "don't own any stocks prior to earnings". My own studies have shown many pre-earnings run ups in stocks that negatively surprise.
Indeed, the Bugatti W-16 is a monster.
I buy post earning and some of them make 50% plus moves in a month post buying them.
When a stock is already up majorly like say 200 to 500% before earning, then holding it in to earning is a problem.
Bugatti mileage is 8 to 15 MPG depending on the road conditions. When you can afford to own it, fuel cost is just beer money!!!!
Call me crazy but I just bought a few hundred QQQQ 43 and 44 December calls for a quick flip into next week. What do you think?
Post a Comment