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Strategies & Market Trends : Ask Vendit Off-Topic Questions -- Ignore unavailable to you. Want to Upgrade?

To: Gush who wrote (3793)	1/13/2005 4:13:14 AM
From: Walkingshadow	Respond to of 8752

I looked at how AAPL has performed in the days following the last 3 earnings announcements in April, July, and October 2004 (Q2, Q3, and Q4 respectively). I think it is important to interpret this in the context of general market conditions. At the time of Q2 and Q3, market conditions were bearish. Q4 was much different, very bullish of course. Now, market conditions, sentiment, etc. are just now shifting from short-term bearish to short-term bullish. AAPL beat EPS estimates by 40%, 13%, and 50% in Q2, Q3, and Q4 respectively. The day following, AAPL gapped up 8.2%, 10.4%, and 8.7% respectively, and closed the day up an additional 1.7%, 0.8%, and 4.1%. From there, AAPL drifted down a bit after Q2 and Q3, but in the case of Q4, it closed the following sessions up 5.3%, 10.6%, and 10.5% (all compared to where AAPL opened the day following earnings announcement, which was after the close on each occasion). Today, they beat estimates by 45%. Also, they beat revenues, and again revised forward earnings and revenue projections upwards significantly. My conclusion is that the gap that will form tomorrow provides solid support, and that significantly attenuates downside risk. Over the next few sessions, upside potential if one buys at the open tomorrow is probably anywhere from 3% to 10%, depending on how strong the general market moves. I think AAPL will probably move more like it did after Q4, but not quite as strongly. I am guessing over the next 2 or 3 sessions it will move up about 5% on a closing basis compared to the open tomorrow. Intraday, it might spike up as high as 10% sometime in the next few days, again compared to where it opens tomorrow. All this means one could enter a long position at the open tomorrow, and relatively large position size is warranted because of the blunted downside risk. I am planning to do just that. The way I will likely manage this is to place an initial stop at a 3% loss, then try to adjust it up to breakeven or better by the end of the session. Then, every day thereafter, set a stop just under the low of the previous day. Adjust the stop up, never never never adjust it down. If AAPL ramps up 10% intraday from the entry, I'll take the money and run. If not, I just wait to get stopped out. I have a core position that I will probably keep at least half of for a longer term hold. The above refers to just trading shares. T