EarningsBeats.com Digest for September 30, 2019
|
Dear EarningsBeats Digest Members.
As we get ready to move into the month of October there's a lot on tap for EarningsBeats community members. This includes Tom Bowley's debut of Trading Places LIVE that begins this Wednesday from 9-9:30 am EST before the opening bell. Discussions will include various topics such as earnings reports, industry group charts, sectors, big picture considerations, etc. Stay tuned for instructions
on how you can listen!
We've also got our Q4 Outlook webinar coming up one week from today where Tom will share his insights on where the market could be headed in the fourth quarter. Discussions will include an in-depth look at market and industry charts with the goal of putting EarningsBeats members in a good position to profit as we head into year-end. This is an
EarningsBeats members-only event. To sign up for a $7 30-day trial and receive access to this event, visit:
https://www.earningsbeats.com/public/7-Trial-Offer.cfm
At your service,
John Hopkins
EarningsBeats.com
*****************************************
Not All Gaps Are Created Equal
*****************************************
I absolutely love trading gaps. Why? Well, if they result from an earnings report, it can provide us with 20/20 vision as to where demand can be expected. The earnings provide us new information. The market - both buyers and sellers - assesses the new information and market makers consider the demand/supply and determine an appropriate opening price. A maribozu candle (forms when a stock opens at or very close to the low of the day
and closes at or very close to the high of the day) is a great indicator of massive accumulation by Wall Street. Think about it. When news comes out and everyone wants to buy, who's on the selling side? Market makers. They rarely lose money, which is why we see "gap fills" where stocks return to their pre-earnings close. But if a stock gaps higher, market makers short, and the stock still goes higher, that's a sign
of tremendous demand. When a stock returns to that level, we typically see buyers jump back on board. Here's a current example:
MANH isn't a perfect example of a maribozu candle as it finished off of its post-earnings intraday high back in July. But there were 3 solid days of higher prices after the gap up - and on massive volume. I think you can see how the top of gap support has been the key area where buyers have returned on weakness. MANH is down testing that support level again and has remained as a leader in software ($DJUSSW). The big problem with MANH is
that software in general has had a very rough five week period since the final week of August, especially relative to the S&P 500.
Should software begin to see buying again in October, I'd look for a strong rebound in MANH shares.
Happy trading!
Tom Bowley
Chief Market Strategist
EarningsBeats.com
Better Timing. Better Trades.
|
|
|
