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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank
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To: Cents who wrote (21356)1/6/1999 12:51:00 PM
From: Jenna  Read Replies (1) of 120523
 
The key to answer your question is the historic price patterns of the company and what is their technical situation at the time of the upgrade. Today for example Eclypsis, company I got from a poster was flirting with its 52 week high.. I checked up the company and it was making acquisitions and doing fantastic with good prospects going forward. After a steep uptrend lately the stock was upgraded again today.. Of that I would be suspicious.. I would not enter the stock since it is close to his 52 week high and I expect profit takers will milk this stock quite thoroughly before earnings come out.

Then you have a company like GUC which was an excellent earnings play.. I held for a number of days, sold, rebought then held for a number of weeks.. By the time I sold GUC was way overbought.. With all that GUC was up about 30% more in two days, so you have to look at every stock on a cases by cases basis..

As a general rule of thumb it is excellent if a stock that is flirting with breaking out of their bases which have been formed for weeks get an upgrade before earnings.

The third thing you need to see is check back about 3 earnings dates for that particular company and see how the companies stock reacted to the earnings report. If the stock was 10% less than its 52 week high, did the stock proceed to break through the high or did it lnguish because it was already AT its 52 week high.. I have watched CTAS, the premier manufacturer of uniforms.. It was near its 52 week high at time of the report.. It did not move up right away but a little later on it started on an uptrend than continues through today.

As for holding through earnings, this is risky. I can be done.. My own track record for holding through earnings is about 65% - 35% in hits but the profit level was much higher in favor of holding; this is the average for December so far. That is not the amount of profit versus lost but just NUMBER of stocks that did not beat the estimates and/or just met the estimates.

In others 65% of the stocks I held But the winnings far outweighed the losers of the other 35%.. For example I have not yet had a 'tanker' (thank g-d) but have lost a point - 2 points on a play.. but when the stock did beat I usually held for a longer term trade and the gains was three times the loss..
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