Articles from Mar 2007

How to trade earnings Part 2

A variation of the earnings trade is also an useful addition to your trading arsenal. There are a handful of companies which have at any given time very high sales growth. They may or may not have earnings. This happens in biotech, pharma and high technology field. In these kind of companies the sales acceleration acts as a catalyst, kicking off multi month rallies post earnings.

So in addition to 100% plus earnings , I track companies which had a 100% plus sales/revenue growth and recent quarter sales/revenue are above 10 million. Now some of these might have good earnings growth, but the hyper sales growth alone acts as a catalyst in such cases. Now if these companies had no rally prior to the earnings season and show sudden revenue acceleration, you will notice they immediately jump. Again the rallies in such companies last for few quarters or years.

The biggest winners in a year typically come from such hyper growth companies.


Related posts :
How to trade earnings
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

How to trade earnings

The earning season is fast approaching. Earning season offers some of the best opportunities for profitable trading. PEAD or post earnings announcement drift is a well studied and proven market anomaly. Stocks which have significant earnings surprise or acceleration, breakout post earnings and rally for next 3-6 months as market reacts to this new earnings power. Sometimes these rallies last years.

So if you are looking for a profitable strategy to trade, you might be interested in putting together a working plan for next earning season.

  • Earnings Data Sources: You need a reliable source for earnings. I use the Investors Business Daily and Wall Street Journal for this. Besides these two there are many other sources of earnings. When choosing a source I look at how they adjust earnings for one time events. Overall IBD does a better job on this.
  • Three types of earnings announcements: Earnings announcements are made after close, before close and in some rare set of companies during market hours. I concentrate on the earnings announced after market close. They appear in the IBD daily edition under 'Company Earnings Report' section.
  • What to look for in earnings: To narrow the set of companies to track and trade for this strategy, based on my prior experience, I only track companies whose earnings are up 100% or more quarter over quarter and the earnings should be at least 5 cents. Sales/revenue should be up 5% or more. Doubling of earnings is significant. Few companies meet that criteria. So I put all the stock meeting this criteria in a list. Now what one is looking for is earnings acceleration. IBD will have those stocks with up arrow to indicate earnings acceleration. Besides that I look for price action on that stock by looking at how much they are up in last 65 days or so. I am looking for stocks which have not rallied in anticipation of earnings. Even better is stock which has no analyst coverage and is neglected. Stocks with less than 100% plus earnings also breakout, but to prioritize, I only focus on above 100.
  • Breakout: An earnings surprise on stock which has not rallied significantly will lead to breakout next day. Most of the time I will enter in the morning and add to position later if the volume climbs above average volume. Many times such stocks will gap up 5 to 300% on day of earnings and still make further moves of 20 to several hundred percent in next 3 to 12 months. I look to capture such moves. Most of these breakouts will have minor pullback at best and just go up for 2 to 6 weeks before having a reaction. So if you don't enter on the earnings day you will be just a observer.
  • Stops: I put stops 1 dollar below the gap low if it is gap up or at 2 days low and trail with stop. In these trades I move my stops quickly once it makes 20% move. Objective in such method is to capture several 20% moves.
  • Watchlist: I maintain a watch list of stocks which respond with a high breakout on earnings day of 4% plus for next one year. These stocks often have several more breakouts during the year and make multi month or multi year moves. All major movers like NTRI, HANS, TIE, AAPL, ICE, GROW and several others had series of 100% plus earnings growth during their entire rally period. The oil stocks which had a stellar rallies for last couple of years or the steel stocks also had several triple digit earnings.
  • How many opportunities: Even in bear markets you will find opportunities using this strategy. If you set up your system properly, you should find 20-25 opportunities like this in every earnings season. When market expectations are low, or market has had several months of correction, you will find 50 to 100 opportunities in an earning season.
So if you are looking for making gang buster returns in this coming earning season, just get your databases and information sources in place and you will find several opportunities. This is one trade which is easiest to trade as there is clear identifiable catalyst. Plus in a year there are 4 earnings season.

Season of profitable opportunities starts next week. You will be pleasantly surprised by the results you get. Carpe diem.



Related posts :
How to trade earnings Part2
How to trade earnings Part3
Earnings and Bulkowski
Improving odds in earnings breakout

Related posts from last earnings season:
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

Shorts battle a tricky market

It is currently a difficult environment to trade in. The best long entries were couple of weeks ago when the market looked most vulnerable and the bears were dancing on the street. That was an ideal panic buy set up for quick profit. Now putting on long is tricky.

Even more tricky thing is shorts. Yesterday provided a good lesson in why you need to be very patient to put your shorts. The last two days action had shorts excited. The hypothesis is that this move is fated for failure. That is my hypothesis also, but timing is the issue. So overeager Index shorts were a very good fodder for the last 45 minutes rally. Part of the rally was quarter end effect and large part of it was again panicky shorts getting squeezed. The game always remains the same on the street.

Market Monitor
Total 4% plus bullish breakouts=99
Total 4% plus bearish breakouts=54
65 day bullish/bearish ratio= 727/319
Stocks up 50% or more in a month=7
Stocks up 25% or more in a month=53
Number of stocks with 100% plus move =320
Number of stocks up 200% or more = 64
4% plus signals for 100plus universe=8
4% plus signals for 200plus universe=3


Select stocks which had Episodic Pivot moves today. Unusual price and volume move often kick start a long duration rallies. Identifying the catalyst behind such one day move can help determine the likelihood of the move continuing. Short term momentum often translates in to long term momentum.

Episodic Pivots
GOL,Gollinhas Aereas Inteligentes (Google  Yahoo  Earnings  Chart
IPS,Ipsco Inc (Google  Yahoo  Earnings  Chart
PBR,Petroleo Brasileiro S.A. Petrobras ADS (Google  Yahoo  Earnings  Chart
PBR.A,Petroleo Brasileiro S.A. Petrobras ADS Class A (Google  Yahoo  Earnings  Chart
PKX,Posco (Google  Yahoo  Earnings  Chart


Select stocks which had 100% plus move in last 260 days from the low and which are up more than 4% on higher volume. Today's minimum volume is above 100000. To understand how to trade this see the post "How to find a stock which makes a 1500% plus move in a year".



Force Protection Inc, is a Iraq war play and stock is up 886% from 260 days low. I have had two very profitable trades in this stock in last 6 month and now in to third trade on this one. SPAR, Spartan Motors is a related company in this category and is up 238% from 260 days low.

BPA,Biosante Pharmaceuticals (Google  Yahoo  Earnings  Chart
CCC,Calgon Carbon Corp (Google  Yahoo  Earnings  Chart
FRPT,Force Protection Inc (Google  Yahoo  Earnings  Chart
GMO,Idaho General Mines Inc (Google  Yahoo  Earnings  Chart
HMB,Homebanc Corp (Google  Yahoo  Earnings  Chart
TGX,Theragenics Corp (Google  Yahoo  Earnings  Chart
TSL,Trina Solar Ltd. (Google  Yahoo  Earnings  Chart
WBD,Wimm Bill Dann Foods Ojsc (Google  Yahoo  Earnings  Chart

Strange volume spikes.......

In next couple of days you will see strange volume and price spikes related to Index changes.

Standard & Poor's Announces Changes to U.S. Indices

NEW YORK, March 27 /PRNewswire-FirstCall/ -- Standard & Poor's will
make the following changes to the S&P 500, S&P MidCap 400, S&P SmallCap
600, and S&P REIT Composite indices:
-- S&P MidCap 400 constituent Abercrombie & Fitch Co. (NYSE: ANF) will
replace Univision Communications Inc. (NYSE: UVN) in the S&P 500, S&P
SmallCap 600 constituent Phillips-Van Heusen Corp. (NYSE: PVH) will
replace Abercrombie & Fitch in the S&P MidCap 400, and Blackbaud Inc.
(Nasdaq: BLKB) will replace Phillips-Van Heusen in the S&P SmallCap
600 after the close of trading on Wednesday, March 28. Univision is
being acquired by an investor group including Madison Dearborn
Partners, Providence Equity Partners, Texas Pacific Group, Thomas H.
Lee Partners and Saban Capital Group in a deal expected to close on or
about that date, pending final approvals.

-- S&P SmallCap 600 constituent NVR Inc. (Amex: NVR) will replace New
Plan Excel Realty Trust Inc. (NYSE: NXL) in the S&P MidCap 400, Arris
Group Inc. (Nasdaq: ARRS) will replace NVR Inc. in the S&P SmallCap
600, and One Liberty Properties Inc. (NYSE: OLP) will replace New Plan
Excel Realty Trust in the S&P REIT Composite after the close of
trading on Wednesday, April 4. New Plan Excel Realty Trust is being
acquired by S&P Global 1200 constituent Centro Properties Group in a
deal expected to close on or about that date, pending final approvals.

-- Spartan Stores Inc. (Nasdaq: SPTN) will replace Carreker Corp.
(Nasdaq: CANI) in the S&P SmallCap 600 after the close of trading on
Friday, March 30. Carreker is being acquired by S&P MidCap 400
constituent Checkfree Corp. (Nasdaq: CKFR) in a deal expected to close
on or about that date, pending final approvals.

-- Education Realty Trust Inc. (NYSE: EDR) will replace The Mills Corp.
(NYSE: MLS) in the S&P REIT Composite after the close of trading on
Wednesday, March 28. Mills is being acquired by S&P 500 and S&P REIT
Composite constituent Simon Property Group Inc. (NYSE: SPG) in a deal
expected to close on or about that date, pending final approvals.
Standard & Poor's will monitor these transactions, and post any
relevant updates on its website: http://www.standardandpoors.com.
Abercrombie & Fitch operates as a specialty retailer in the United
States. Headquartered in New Albany, OH, the company will be added to the
S&P 500 GICS (Global Industry Classification Standard) Apparel Retail
Sub-Industry index.
Phillips-Van Heusen engages in the design and marketing of various
apparel products. Headquartered in New York, NY, the company will be added
to the S&P MidCap 400 GICS Apparel, Accessories & Luxury Goods Sub-Industry
index.
Blackbaud provides software and related services for nonprofit
organizations. Headquartered in Charleston, SC, the company will be added
to the S&P SmallCap 600 GICS Application Software Sub-Industry index.
NVR Inc. operates as a homebuilder in the United States. Headquartered
in Reston, VA, the company will be added to the S&P MidCap 400 GICS
Homebuilding Sub-Industry index.
Arris Group operates as a communications technology company.
Headquartered in Suwanee, GA, the company will be added to the S&P SmallCap
600 GICS Communications Equipment Sub-Industry index.
One Liberty Properties is a REIT that engages in the acquisition,
ownership, and management of commercial real estate properties in the
United States. Headquartered in Great Neck, NY, the company will be added
to the S&P REIT Composite Diversified REITs sub-industry.
Spartan Stores engages in the distribution and retailing of groceries.
Headquartered in Grand Rapids, MI, the company will be added to the S&P
SmallCap 600 GICS Food Distributors Sub-Industry index.
Education Realty Trust is a REIT that engages in the acquisition,
ownership, leasing, and management of student housing communities near
university campuses in the United States. Headquartered in Memphis, TN, the
company will be added to the S&P REIT Composite Residential REITs
sub-industry.
Following is a summary of the changes:


S&P 500 INDEX - March 28, 2007
COMPANY GICS ECONOMIC GICS SUB-INDUSTRY
SECTOR
ADDED Abercrombie & Consumer Apparel Retail
Fitch Discretionary
DELETED Univision Consumer Broadcasting & Cable TV
Discretionary


S&P MIDCAP 400 INDEX - March 28, 2007
COMPANY GICS ECONOMIC GICS SUB-INDUSTRY
SECTOR
ADDED Phillips-Van Consumer Apparel, Accessories &
Heusen Discretionary Luxury Goods
DELETED Abercrombie & Consumer Apparel Retail
Fitch Discretionary


S&P MIDCAP 400 INDEX - April 4, 2007
COMPANY GICS ECONOMIC GICS SUB-INDUSTRY
SECTOR
ADDED NVR Inc. Consumer Homebuilding
Discretionary
DELETED New Plan Excel Financials Retail REITs
Realty Trust


S&P SMALLCAP 600 INDEX - March 28, 2007
COMPANY GICS ECONOMIC GICS SUB-INDUSTRY
SECTOR
ADDED Blackbaud Information Application Software
Technology
DELETED Phillips-Van Consumer Apparel, Accessories &
Heusen Discretionary Luxury Goods


S&P SMALLCAP 600 INDEX - March 30, 2007
COMPANY GICS ECONOMIC GICS SUB-INDUSTRY
SECTOR
ADDED Spartan Stores Consumer Staples Food Distributors
DELETED Carreker Information Data Processing &
Technology Outsourced Services


S&P SMALLCAP 600 INDEX - April 4, 2007
COMPANY GICS ECONOMIC GICS SUB-INDUSTRY
SECTOR
ADDED Arris Group Information Communications
Technology Equipment
DELETED NVR Inc. Consumer Homebuilding
Discretionary


S&P REIT COMPOSITE INDEX - March 28, 2007
COMPANY GICS ECONOMIC GICS SUB-INDUSTRY
SECTOR
ADDED Education Financials Residential REITs
Realty Trust
DELETED Mills Financials Retail REITs


S&P REIT COMPOSITE INDEX - April 4, 2007
COMPANY GICS ECONOMIC SECTOR GICS SUB-INDUSTRY
ADDED One Liberty Financials Diversified REITs
Properties
DELETED New Plan Excel Financials Retail REITs
Realty Trust

Rally runs out of steam

The counter trend rally from the panicky bottom seems to have run out of steam. The longevity of the rally was always a question mark because it was happening to quickly after the correction. But the few weeks offered lots of opportunities and number of new stocks like BTJ, DXPE, WFR, JSDA, ROCM, ACAD, CPHD, PRGX, etc. had a quick 25 to 50% move within that time period. There still might be another attempt at bounce , driven by month end and quarter end dynamics.

The next phase of down move is likely to be characterized by steady systematic selling. That kind of steady selling can be enduring. Panics are always of short duration and good opportunities for long.

Long opportunities will still continue to offer better options. Especially the episodic pivot scans will work, even if we go in to a down move. Only thing is greater selectivity will be required. As bulk of my focus is on Episodic Pivots, I have added that scan information to this post and hence forth will shift attention to it rather than 100% plus moves.

Market Monitor
Total 4% plus bullish breakouts=67
Total 4% plus bearish breakouts=61
65 day bullish/bearish ratio= 707/328
Stocks up 50% or more in a month=7
Stocks up 25% or more in a month=51
Number of stocks with 100% plus move =322
Number of stocks up 200% or more = 59
4% plus signals for 100plus universe=16
4% plus signals for 200plus universe=5


Select stocks which had Episodic Pivot moves today. Unusual price and volume move often kick start a long duration rallies. Identifying the catalyst behind such one day move can help determine the likelihood of the move continuing.

Episodic Pivots

ACPW,Active Power Inc (Google  Yahoo  Earnings  Chart
ANF,Abercrombie & Fitch Co (Google  Yahoo  Earnings  Chart
BDCO,Blue Dolphin Energy Co (Google  Yahoo  Earnings  Chart
BLKB,Blackbaud Inc (Google  Yahoo  Earnings  Chart
CYCC,Cyclacel Pharmaceuticals Inc (Google  Yahoo  Earnings  Chart
CYTK,Cytokinetics (Google  Yahoo  Earnings  Chart
DIO,Diomed Holdings Inc (Google  Yahoo  Earnings  Chart
DNDN,Dendreon Corporation (Google  Yahoo  Earnings  Chart
DVSA,Diversa Corporation (Google  Yahoo  Earnings  Chart
FUL,H.b. Fuller Co (Google  Yahoo  Earnings  Chart
GHCI,Genesis Healthcare Corp (Google  Yahoo  Earnings  Chart
GRZ,Gold Reserve Inc (Google  Yahoo  Earnings  Chart
HAYZ,Hayes Lemmerz International Inc (Google  Yahoo  Earnings  Chart
HWCC,Houston Wire & Cable Company (Google  Yahoo  Earnings  Chart
IDSA,Industrial Svcs Of Amer (Google  Yahoo  Earnings  Chart
KRY,Crystallex Internat Corp (Google  Yahoo  Earnings  Chart
LMRA,Lumera Corporation (Google  Yahoo  Earnings  Chart
LNDC,Landec Corporation (Google  Yahoo  Earnings  Chart
NCST,NUCRYST Pharmaceuticals Corp (Google  Yahoo  Earnings  Chart
NOIZ,Micronetics Inc (Google  Yahoo  Earnings  Chart
NYMX,Nymox Pharmaceutical Corp (Google  Yahoo  Earnings  Chart
PVH,Phillips-Van Heusen Corp (Google  Yahoo  Earnings  Chart
SYPR,Sypris Solutions Inc (Google  Yahoo  Earnings  Chart
TECUA,Tecumseh Products Cl A (Google  Yahoo  Earnings  Chart
VYYO,Vyyo Incorporated (Google  Yahoo  Earnings  Chart


Select stocks which had 100% plus move in last 260 days from the low and which are up more than 4% on higher volume. Today's minimum volume is above 100000. To understand how to trade this see the post "How to find a stock which makes a 1500% plus move in a year".
BPA,Biosante Pharmaceuticals (Google  Yahoo  Earnings  Chart
BRLC,Syntax-Brillian Corp (Google  Yahoo  Earnings  Chart
CDY,Cardero Resource Corp (Google  Yahoo  Earnings  Chart
CNST,Constar Internatl (Google  Yahoo  Earnings  Chart
CTCH,Commtouch Software Ltd (Google  Yahoo  Earnings  Chart
CYNO,Cynosure Inc (Google  Yahoo  Earnings  Chart
GMO,Idaho General Mines Inc (Google  Yahoo  Earnings  Chart
GOT,Gottschalks Inc (Google  Yahoo  Earnings  Chart
HAYZ,Hayes Lemmerz International Inc (Google  Yahoo  Earnings  Chart
HOKU,Hoku Scientific Inc (Google  Yahoo  Earnings  Chart
MFW,M&F Worldwide Corp (Google  Yahoo  Earnings  Chart
NTY,Nbty Inc (Google  Yahoo  Earnings  Chart
NXST,Nexstar Broadcasting Group (Google  Yahoo  Earnings  Chart
NYMX,Nymox Pharmaceutical Corp (Google  Yahoo  Earnings  Chart
SPTN,Spartan Stores Inc (Google  Yahoo  Earnings  Chart
VYYO,Vyyo Incorporated (Google  Yahoo  Earnings  Chart

Low Volume Pause

Market has been churning after the FOMC induced big move. The down days have been on lower volume. The month end and quarter end effect will provide a support for this move at this stage. After that market attention will again focus on earnings season. The real next move would reassert itself after the earning season or midway through it once the earnings picture become clearer. On individual stock price moves will be driven by pre earning drift and pre announcements.

As usual the earnings season is a season of opportunity and I look froward to it for profit making opportunities. I will later have a series of my customary pre earning season posts on how to profit from the " Post Earnings Announcement Drift (PEADS)" strategy.

Notice the dramatic increase in stocks up 25% or more in a month within few days of rally after the down move.So there were 64 opportunities to make 25% plus in individual stocks. If you could not find much of an opportunity, you must go through those 64 stock list to find what you are missing. A well designed strategy should have you invested in some of them and capturing part of the move on some. 57 of the 64 stocks in that list had a Episodic Pivot in last 6 months or less. Around half of the members in that 64 had already moved 100% plus before they made the 25% plus move in last one month. More than half of them had the 25% plus move triggered by earnings announcements.

Market Monitor
Total 4% plus bullish breakouts=61
Total 4% plus bearish breakouts=63
65 day bullish/bearish ratio= 751/305
Stocks up 50% or more in a month=6
Stocks up 25% or more in a month=64
Number of stocks with 100% plus move =334
Number of stocks up 200% or more = 59
4% plus signals for 100plus universe=18
4% plus signals for 200plus universe=5


Select stocks which had 100% plus move in last 260 days from the low and which are up more than 4% on higher volume. Today's minimum volume is above 100000. To understand how to trade this see the post "How to find a stock which makes a 1500% plus move in a year".

ACAD,Acadia Pharmaceuticals (Google  Yahoo  Earnings  Chart
AKRX,Akorn Inc (Google  Yahoo  Earnings  Chart
AVCI,Avici Systems (Google  Yahoo  Earnings  Chart
BWLD,Buffalo Wild Wings (Google  Yahoo  Earnings  Chart
CHRK,Cherokee Intl (Google  Yahoo  Earnings  Chart
CIMT,Cimatron Ltd (Google  Yahoo  Earnings  Chart
GRIL,Grill Concepts Inc (Google  Yahoo  Earnings  Chart
HAYZ,Hayes Lemmerz International Inc (Google  Yahoo  Earnings  Chart
HRT,Arrhythmia Research Tech (Google  Yahoo  Earnings  Chart
LNET,Lodgenet Entertainment (Google  Yahoo  Earnings  Chart
LTS,Ladenburg Thalmann Finl (Google  Yahoo  Earnings  Chart
ORCH,Orchid Cellmark Inc (Google  Yahoo  Earnings  Chart
SLP,Simulations Plus Inc (Google  Yahoo  Earnings  Chart
SMSI,Smith Micro Software Inc (Google  Yahoo  Earnings  Chart
SPEX,Spherix Inc (Google  Yahoo  Earnings  Chart
VYYO,Vyyo Incorporated (Google  Yahoo  Earnings  Chart
WHT,Westside Energy Corp (Google  Yahoo  Earnings  Chart
WRSP,WorldSpace Inc (Google  Yahoo  Earnings  Chart

Never underestimate the strength of a bounce after a panicky move to the downside

Momentum is cyclical and long side momentum takes some time to play itself out. Things are different on short side. Markets often turn on dime on short side. Yesterday's action is a classic example of this market observation. The market rebounded from the weak open and ended at top of range.

In few weeks the market has rebounded sharply and erased the effect of the China induced down move. If you look at the numbers below and compare them to the numbers just a few weeks ago, you would notice very impressive recovery. It is not yet clear if this rally has more legs, but the learning is clear, never underestimate the strength of a bounce after a panicky move. That is the way markets work.

Market Monitor
Total 4% plus bullish breakouts=108
Total 4% plus bearish breakouts=39
65 day bullish/bearish ratio= 789/297
Stocks up 50% or more in a month=6
Stocks up 25% or more in a month=38
Number of stocks with 100% plus move =355
Number of stocks up 200% or more = 68
4% plus signals for 100plus universe=34
4% plus signals for 200plus universe=11

Month end would be bullish

Month end and quarter end dynamics should help push the market higher. New sectors are emerging to take on leadership and lot of stocks in transport sector are attracting buy interest.

Market Monitor
Total 4% plus bullish breakouts=103
Total 4% plus bearish breakouts=26
65 day bullish/bearish ratio= 792/304
Stocks up 50% or more in a month=5
Stocks up 25% or more in a month=36
Number of stocks with 100% plus move =342
Number of stocks up 200% or more = 63
4% plus signals for 100plus universe=20
4% plus signals for 200plus universe=4


Select stocks which had 100% plus move in last 260 days from the low and which are up more than 4% on higher volume. Today's minimum volume is above 100000. To understand how to trade this see the post "How to find a stock which makes a 1500% plus move in a year".

ACAD,Acadia Pharmaceuticals (Google  Yahoo  Earnings  Chart
AFAM,Almost Family Inc (Google  Yahoo  Earnings  Chart
AMSC,American Superconductor (Google  Yahoo  Earnings  Chart
EGHT,8x8 Inc (Google  Yahoo  Earnings  Chart
EGR,Commerce Energy Group (Google  Yahoo  Earnings  Chart
FTGX,FiberNet Telecom Group Inc (Google  Yahoo  Earnings  Chart
HAYZ,Hayes Lemmerz International Inc (Google  Yahoo  Earnings  Chart
HMB,Homebanc Corp (Google  Yahoo  Earnings  Chart
HOKU,Hoku Scientific Inc (Google  Yahoo  Earnings  Chart
IMMU,Immunomedics Inc (Google  Yahoo  Earnings  Chart
IOC,Interoil Corporation (Google  Yahoo  Earnings  Chart
LJPC,La Jolla Pharmaceutical (Google  Yahoo  Earnings  Chart
LNOP,Lanoptics Ltd (Google  Yahoo  Earnings  Chart
MFB,Maidenform Inc (Google  Yahoo  Earnings  Chart
OMR,Odyssey Marine Exploration Inc (Google  Yahoo  Earnings  Chart
ROCM,Rochester Medical Corp (Google  Yahoo  Earnings  Chart
SOFO,Sonic Foundry Inc (Google  Yahoo  Earnings  Chart
SPIL,Siliconware Precision Industries Company Ltd ADS (Google  Yahoo  Earnings  Chart
VNDA,Vanda Pharmaceuticals Inc (Google  Yahoo  Earnings  Chart
WFR,Memc Electronic Material (Google  Yahoo  Earnings  Chart

How to find shorts on stocks which are not overextended on the downside

Similar to the concept of How to find breakouts on stocks which are not overextended , you can develop set of scans to find short breakouts on stocks which are probably just about to start a short move.

Again essentially you are looking at stocks which had rallied majorly in last one year and now running out of steam. Some minor adjustments are needed in the scans to achieve this.

Now this set of scans have been created using TC2000, but you can recreate the same in any other software once you understand the logic.

1 We are looking for long term strength. So the first scan will give you a way to rank stocks based on price change from 260 days low.
100 * ((C + .01) - ( MINC260 + .01)) / (MINC260 + .01) ( One year Growth)
We will take top 20% stock ranked by this scan. So in TC2000 you will take stocks ranked 80 or above on above scan.

2 We are looking for near term weakness. Near term I am defining as one quarter weakness. That is 1/4 th of 260, or 65 trading days.
(100 * (C1 - C65.1) / C65.1 <= 10)and C >= .80 * MAXC65 (quarter growth)
Which gives you stocks which have less than 10% price growth in last 65 days. Plus it is within 20% of its 65 day high price. Here the change is 20% of 65 high as against 10% for long scan.
So this condition gives you a pause/ consolidation within a high relative strength stock. Stocks with high relative strength can break in either direction. All high relative strength stocks at some stage reverse or have significant pullback. This happens mostly after everyone gets excited about a sector.

3 Breakdown condition. Now to above two scans we will add our breakdown condition of 4% down move for today on high volume.
( 100 * (C - C1) / C1) <= ( - 4) AND V >= 1000 AND V > V1

Now see the stocks meting this set of scan. Under good circumstances for short selling, you will find very good candidates in these set of scans. This gives shorts which are just about to breakdown after a long up move.

There are always opportunities in market for those who know how to find them. Enjoy your profits.........

Many good short sell set ups

The bounce has created number of god short sell set ups in sectors like Airlines, investment banks and many other sectors which were leading sectors few months ago.

The individual stocks which broke out in last couple of weeks like BTJ,RRI,ALJ,WNR,ADBL,GLBL,METH, HTC,UCTT,JSDA,EVEP,JAV, DXPE,FFH,TRCR, PRGX, WFR, etc., have been moving up. Most of them are up 25% or more since then breakout. All of these stocks broke out post market correction. More than 70% of them had a Episodic Pivot breakout in last 20-30 days.

While such stocks and more stocks from the Episodic Pivot list and 100% list and IBD200 list will have such moves, overall I am skeptical of the bounce. The main reasons being, it has come too soon. It takes certain amount of time, ideally 40 to 60 days from start of correction for a tradable and sustainable bounce to develop. I am anticipating the current move to fail. Number of individual stocks which had rallied till now in the up move from July onwards are showing signs of breaking down.So the move might lead to failure or long sideways move. In such environment, individual stock selection is the key. The best method for that in my current scheme of things is Episodic Pivots.


Market Monitor
Total 4% plus bullish breakouts=139
Total 4% plus bearish breakouts=44
65 day bullish/bearish ratio= 773/310
Stocks up 50% or more in a month=2
Stocks up 25% or more in a month=32
Number of stocks with 100% plus move =343
Number of stocks up 200% or more = 66
4% plus signals for 100plus universe=24
4% plus signals for 200plus universe=7


Select stocks which had 100% plus move in last 260 days from the low and which are up more than 4% on higher volume. Today's minimum volume is above 100000. To understand how to trade this see the post "How to find a stock which makes a 1500% plus move in a year".

ASTI,Ascent Solar Technologies Inc (Google  Yahoo  Earnings  Chart
AVCI,Avici Systems (Google  Yahoo  Earnings  Chart
BTJ,Bolt Technology Corp (Google  Yahoo  Earnings  Chart
CECE,Ceco Environmental Corp (Google  Yahoo  Earnings  Chart
CMGI,CMGI Inc (Google  Yahoo  Earnings  Chart
CTIB,Cti Industries Corp (Google  Yahoo  Earnings  Chart
DSTI,Daystar Technologies Inc (Google  Yahoo  Earnings  Chart
EGR,Commerce Energy Group (Google  Yahoo  Earnings  Chart
FSLR,First Solar Inc (Google  Yahoo  Earnings  Chart
FTGX,FiberNet Telecom Group Inc (Google  Yahoo  Earnings  Chart
GMO,Idaho General Mines Inc (Google  Yahoo  Earnings  Chart
HGO,Houston American Energy Corp (Google  Yahoo  Earnings  Chart
OFI,Overhill Farms Inc (Google  Yahoo  Earnings  Chart
PAE,Peace Arch Entmt Grp Inc (Google  Yahoo  Earnings  Chart
PRXI,Premier Exhibitions Inc (Google  Yahoo  Earnings  Chart
REFR,Research Frontiers Inc (Google  Yahoo  Earnings  Chart
RRI,Reliant Energy Inc (Google  Yahoo  Earnings  Chart
SIGA,Siga Pharmaceuticals Inc (Google  Yahoo  Earnings  Chart
SNCI,Sonic Innovations Inc (Google  Yahoo  Earnings  Chart
SNDA,Shanda Interactive Ent Ltd (Google  Yahoo  Earnings  Chart
TSL,Trina Solar Ltd. (Google  Yahoo  Earnings  Chart
URZ,Uranerz Energy Corp (Google  Yahoo  Earnings  Chart
VII,Vicon Industries Inc (Google  Yahoo  Earnings  Chart
VYYO,Vyyo Incorporated (Google  Yahoo  Earnings  Chart

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