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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank -- Ignore unavailable to you. Want to Upgrade?

To: John NY who wrote (71388)	11/15/1999 12:10:00 AM
From: Jenna	Read Replies (2) \| Respond to of 120523

You can account for earnings reports, but ironically its technically evaluated.. For example if the earnings report and 'ballyho' alone caused the stock to reach a 52 week high the day the report came out (or the next morning) you have a probable short. If on the other hand you have a stock that has been in hibernation and the report just awakened it into the low end of trading channel you might have a short term trade there. You would then check and see how many and what were the Total number of winning trades (i.e. shorts), the largest winning trade (which would most likely be much more than the average winning trade. What were other contributing factors to the 'winning trade' (was there volume, historical volatility breakout and/or range expansion breakout BEFORE the earnings report or were they both an occurrence directly related to the day of the earnings report. It's just not quite as mechanical as Trade Station, but on the other hand it does have definite rules that would stop you into a trade based on technicals. For example, there are stock like VSH, ZLC, ELBO that would show a range contraction in almost every quarter prior to its breakout... BEFORE earnings. Then the burst of volatility would begin again as the stock moves up prior to the report. Anticipation is basically the dominant catalyst in all these plays and what makes them do so well. How come we were so well prepared for both HLTH and CYVC and called the buy trigger just the day and general time of the breakout? Because they were under our telescopes already as a possible play for earnings. The same with GOTO, FFIV, PGTV etc. So we aren't doing away with backtesting. We still look for the same success rate with various strategies and trading systems. We just have a 'booster seat' of sorts and get a little push ahead when the stock happens to be reporting in the next 1-2 weeks. And what about gaps? They are no longer filling so quickly and only become exhaustion gaps after 2 or 3 days instead of the very first day. So do you still hold by the old theories of waiting for the gap to reach yesterday's high? Right. you probably will still be waiting. Isn't it better to ride the runaway gap for a day or two then short the third day? (CYSV even had a small gap up after its momumental rise last week) and the entire srategy of shorting stocks that show some small downtrend when the next day they succeed in rallying for real.. That's going to the dogs. How many of us have closed positions on stocks that looked like they were fizzling near the close, only to have them break out supremely the next morning? I have seen that new theories need to be developed.. just because you have fabulous computer programs like tradstation doesn't mean you will will have winners. If you aren't willing to bend a little your mechanical systems will not be right. No longer are stocks tanking just because they closed the day at the 25% of the daily range.. A trading system to tell you to sell will be steering you wrong. I happen to think the largest falls should be buy triggers because they will inevitably rise and quickly.. Likewise don't climb on top of the largest and highest spikes in the hope of riding a winner because that could tomorrow return 'normal volatility' and price ranges and correct. It seems that the contrarian approach has worked a lot lately.. (QCOM rising against the odds. Same with PHCM, CMRC, AUDC, HOTJ etc).. Old trading systems are not 'covering' these signals.. They don't take 'popularity', 'market sweetheart stocks', IPO's that are making the grade very quickly into consideration.