Just for comparison, I've compiled some stats on the On-Line Brokerage stocks that have had selloffs after pre-earnings stock run-ups.
To normalize the comparison between AMTD, EGRP, NDB, SCH, and NITE, I have selected June 28, 1998 as the most recent trough from which pre-earnings runups have occurred. You might recall Alan Greenspan's FOMC meeting was on the 29th and 30th, so the market was at a nadir on June 28, as were all of the OLB stocks.
Following is a table that clearly demonstrates that most OLB stocks had profitable runups until the day prior to earnings, and consequently were natural candidates for profit-taking:
STOCK_ PRICE6-28-99_ PriceBeforeEarnings_ PercentRunup
AMTD___$27.83________$38.00_______________31%
NDB____$36.00________$59.00_______________63%
SCH____$50.00________$55.00_______________10%
EGRP___$37.87________$37.50_______________-1%
(NOTE: SCH's earnings and forward-looking statements took the wind out of EGRP's sails the day before EGRP announced. Then on the day of EGRP's earnings, Barron's Mag sabotoged the OLB sector with its negative article on competition amongst the OLB's).
NITE___$51.81________$51.12_______________-1.3%
NITE (Knight-Trimark) announces earnings before the open today (Wed)and it is trading BELOW ITS JUNE 28th nadir. In other words, there has been NO EFFECTIVE EARNINGS RUNUP for NITE! No earnings runup = no profit-taking pressure.
The irony is that when NITE's earnings are compared to those of the OLB stocks, NITE is considered to have fared better because, as the NASDAQ leading market maker, it has less competition and less advertising expenses.
I would venture to say that Knight-Trimark (NITE) will not succumb to profit-taking pressure if is simply meets expectations. If it surpasses expectations, it will reclaim lost territory with a sizeable gap at the open.
Hopefully, NITE can reverse the malaise in the OLB sector by demonstrating that not every OLB-related stock sells off on earnings. |
