EarningsBeats.com Digest

Published: Wed, 12/04/19

EarningsBeats.com Digest for December 4, 2019

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Will This Small Cap Explode With Earnings Today?

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While holding any stock into its earnings report can be an extremely risky proposition, it's still fun to look at the chart heading into the earnings report and speculate. Personally, if a stock is at or near its 52 week relative low (to peers), I wouldn't take a chance holding it. I'd feel a bit more comfortable if it's been trending higher on a relative basis as it would be a signal to me that Wall Street has received an "all clear for takeoff" message from management. We know that's certainly not a slam dunk either, but like I said, it would make me feel a bit more comfortable. Let's look at Methode Electronics (MEI), which reports tonight after the bell:

MEI is part of the improving electrical components & equipment index ($DJUSEC). While the group hasn't broken to a new 52 week absolute high yet, it has, on a relative basis, been improving off its August/September low. MEI has been a very strong performer vs. its DJUSEC peers, bottoming on a relative basis back in June and trending higher ever since. It's very close to a 52 week relative high and is currently in a bullish cup with handle continuation pattern as well. If MEI is about to deliver a disappointing report, no one told Wall Street.

Happy trading!

Tom Bowley

Chief Market Strategist

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