IBD 85-85 and earnings
Every Friday the Investors Business Daily publishes 85-85 list. Which basically is a list of stocks with RPS rating of 85 and EPS rating of 85 and which are within certain percentage of 52 weeks high. Some of the stocks have black border and that indicates their chart pattern as per IBD philosophy is ideal for entry.
Now if you are motivated enough to understand the role played by the earnings in these stocks, what you can do is, go back and plot the past earnings dates on these set of stocks. Many charting programs allow you to do this. Bigcharts is one free program which has this feature. However I have observed that sometime Bigcharts dates are 2-3 days late.
If you plot the earnings data on charts, what you will find is many of the chart patterns are predated or post dated by few days of earnings. So chart patterns which happen few days or before earnings or few days after earnings are more successful. In essence a cup and handle which forms pre earnings will often breakout on earnings day.
Earlier I use to do this plotting regularly every week. Now I do not do this. But if you are technical analysis and chart pattern junkie and if you study this in detail, you can significantly improve your chances of success by picking chart patterns only during certain time. You will also find patterns like a stock reacting to earnings one quarter, not reacting next corner and then breaking out just before or after third earnings.
Now if you are motivated enough to understand the role played by the earnings in these stocks, what you can do is, go back and plot the past earnings dates on these set of stocks. Many charting programs allow you to do this. Bigcharts is one free program which has this feature. However I have observed that sometime Bigcharts dates are 2-3 days late.
If you plot the earnings data on charts, what you will find is many of the chart patterns are predated or post dated by few days of earnings. So chart patterns which happen few days or before earnings or few days after earnings are more successful. In essence a cup and handle which forms pre earnings will often breakout on earnings day.
Earlier I use to do this plotting regularly every week. Now I do not do this. But if you are technical analysis and chart pattern junkie and if you study this in detail, you can significantly improve your chances of success by picking chart patterns only during certain time. You will also find patterns like a stock reacting to earnings one quarter, not reacting next corner and then breaking out just before or after third earnings.
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4 comments:
> Earlier I use to do this plotting regularly every week. Now I do not do this.
Why have you stopped doing it?
What do you do now?
if you look up rimm in bigcharts,,you'll see that the triangle indicating earnings, is always pointing upwards, although it should point down when the results are negative. o'neil mentions in his book, a paid chart service which provides this reports.the name escapes me, but it is not free. know of any other free services?.
partially related to this, a while back you wrote that you were going to do a compilation of trading methods and all useful comments. is that coming or are these comments it?. thanks
James
I did it to study earnings effect. Now I don't see a need for it. Now most of my trades are from Episodic Pivots and Double Trouble. Most IBD 200 candidates also appear in Double Trouble.
Leon
I don't know earlier Yahoo charts also used to allow this, I have not checked Yahoo for ages.
Leon
There are no major new addition to what I have said before. The method is as laid out in my first post. Most peoples questions have been answered in comments.
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