Thanks for the insightful post Regi!
Just for fun (and of course "profit" implied :-)), lets play a little
stock-dynamics at this earnings-time game here, for the week of earnings- Oct 20th - Oct 24. Lets roll out our predictions:
Day ---------------- MSFT price
================================
Mon Oct 20th:--> _______
THE ANN. DAY:--> _______
Wed Oct 22nd:--> _______
Thu Oct 23rd:--> _______
Fri Oct 24th:--> _______
================================
Now obviously, there are two schools of thought (simplified) here: one (R), who thinks that prior to earnings, it might be hovering around 139 and the other (L) thinks that it would have reached to 123 by then from the Barron-induced fear. These are Right and Left respectively.
And for these 2 camps in the game then, there are after-earnings predictors. They form a total of 4 camps, and their predictions right after earnings are:
(A) 145 and trading thereafter
(B) 125 and lower thereafter and then trading
(C) 115 and trading thereafter
(D) 135 and trading with a large range thereafter
Now the question is who is right? Option players may be particularly
interested in this game's consensus, if ever achieved here.
Ref:
=======================================
The logic of the 4 camps is as follow:
Predictors on R-camp position (pre-139):
-----------------------------------------
[A] As usual, MSFT is an undisputed King of beating estimates. As usual, they beat themselves up first before the media, and then land-up beating the media's predictions; hence nothing new--> a good jump after earnings, but because of the valuation concerns, trading thereafter for a while.
[B] Finally, the crying wolf for 10 years would be right, and they would indeed come down this time; then folks would start booking profits for a while, so lower thereafter, and will then find support where l.t. bulls<-->s.t. bears match in strengths! So, it will then remain in a trading range. [This camp also believes that CFO wants to make his predictions right, at least this time around, to get at least 1 hit out of last 40 qtrs.]
Predictors on L-camp position (pre-123):
-----------------------------------------
[C] Same logic as [B] above, except starting at a lower base.
[D] Same logic as [A] above, except starting at a lower base. In addition, they believe that 5-dollar jump days will be common thereafter, since the two sides' confusion will be accretive to the market's volatility, and since at 135, price will be same as 2-3 weeks prior to the earnings, so, investors mood swings would be a common occurence.
=======================================
So, lets the game begin by just saying: which camp out of the 4 [A, B, C, D] will be right!
Sorry for the long post ... but hereafter, it will reduce the consumption of SI-disk space as respondents will just say A or B or C or D, and provide their brief additional comment ... hence, its an effort to manage and organize this thread around the earnings' time heavy traffic usually found here.
regards to all,
-/Sonny. |
