7/11/2007

Episodic Pivot Catalysts

Couple of days back someone asked about various catalyst used for shortlisting Episodic Pivot candidates. So here is a list of catalyst which most often lead to profitable trades on EP.

  • Earnings acceleration
  • Sales Acceleration
  • New Contracts or new orders
  • New Product Launch or news
  • Sector Runaway move
  • Biotech/drug approvals
  • Biotech/drug tie ups with large companies
  • Earnings guidance raised by company
  • Inside buying>1 million
  • IBD Rating/ IBD 100 Addition/IBD highlighting a stock
  • Barron's / Business Week mention ( low success rate)
  • James Crammer mention ( one day phenomenon)
There is some skills involved in identifying good Episodic Pivot candidates. Once you acquire the skills, the rewards can surprise you. EP is more profitable per trade and also for a given holding period it outperforms any other method I trade . So if you buy say a IBD 200 or Double Trouble 4% breakout and hold till you get stopped out for say 20 days, and the stocks made 10% move in 20 days, A EP candidate is likely to make 20% or more move in comparable period.

The small number of candidates which the EP scans generate, allows one to thoroughly analyze them for catalyst. If you can do real time analysis of EP candidates and enter as they appear intra day, you can further improve your returns as most of them go on to make further gains during the day and many time gap up next day. Just see the EP list from yesterday. If velocity of money making is what interests you, EP might be a worthwhile method to study and adopt.

6 comments:

Tom T. said...

Pradeep - where is yesterday's list of EP candidates? If you are referring to the list of 4% breakouts, I thought you needed a 20% or 30% one day price increase to qualify? I see no list of your 7/10 EP candidates - thanks - Tom T.

Pradeep Bonde said...

Most regular readers have replicated the scans in Telechart or in Amibroker. So I don't post the list.

Editor said...

what about an announcement that it's getting listed on a major exchange, from a minor one or being offered at say an overseas exchange? I think LNVGY(.pk or .OTC) was announced that it was set to open on Hong Kong or Bejing exchange or something, and it went up like 50% or something in like the next 2-3 months after that announcement...

I think there may have been one awhile back that got upped from the OTC to the Nasdaq or something that had a major run as well.

Have you noticed this?
Definately seems like a more speculative catalyst especially if you're betting on a pink sheet or over the counter, but it might be something to look into.

Pradeep Bonde said...

These are too speculative for my taste. I do not look at them. There are more than enough opportunities in rest of market.

Tom T. said...

Let me quote your 3/23/07 comment, in part, under the post, "Episodic Pivots":

in actual practice, my scans are on my custom designed software which also looks at things like days between EPs, number of EPs in stocks history, past price move past EPs, last 2 year price before EP,float, and so on.

I have two questions. First, you suggest either getting in intraday as the pivots are occurring or you suggest waiting for a pullback - yet, elsewhere you say your holdings may be weeks - how do you know whether to get in the day of the pivot or wait until the next day or days? I think I found only one EP on your list that would have made money entering 7/12 and exiting 7/13. Second - what has your research shown as referenced above about the numbers of prior EP's, or days between EP's influencing your entry decision? I hope my questions are not too convoluted - I think the quote I just listed referenced a lot of missing information that might make this strategy more predictable. Basically, I have been tracking EP's for a couple of weeks now and find it difficult to predict a nice return within a week, for example.

Barry said...

Tom
If you want to learn EP, you have to be part of special Episodic Pivot blog which Mr Bonde runs for select few members.I don't know what criteria he uses for selecting members.
Alternatively you have to motivate him to part with some of his secrets. For that you have to talk to him or travel to New Jersey and demonstrate extra ordinary commitment.
I have picked his brain on phone and can only tell you one thing, this guy knows his stuff.I have learned more in 3 months of one on one interaction with him than I learned in several years of trading. More than that I have made more money in 3 months than I made in last 3 years.