EarningsBeats.com Digest for August 5, 2020
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Join EarningsBeats.com Chief Market Strategist next Monday, August 10 as he discusses what will be covered during the "Top 10 Stock Picks" webinar on August 19. This event will be open to all EarningsBeats.com community members and you will receive room instructions the day of the event.
Blowout Earnings And A 12% Selloff - It's How The Market Works
Nothing surprises me any more. I think I've seen it all. In fact, many times I can predict a slide after earnings and wait for it. That was the case with Equifax (EFX). It's on our Strong Earnings ChartList, because on July 22nd, EFX posted revenues of $982.8 million (vs. consensus estimate of $858.9 million). In addition, EFX crushed the consensus EPS estimate, $1.60 vs. $1.31. But like so many other stocks, EFX had run
significantly prior to earnings. It was showing exceptional relative strength. Unfortunately, it was a "buy on rumor, sell on news" type of event:
At one point after its earnings were released, EFX traded higher by 13.75 and was on the verge of breaking out above the June 8th closing high of 179.45. Then the selling began. It's been going on for the better part of two weeks now and, the past few days, volume has been fairly light. Now EFX has reached key price support, closing on Tuesday at 160.75. Its July 9th low was 160.34. From a false breakout above 180 to a key test of
price support near 160....in 2 weeks. Now EFX is set up with a very solid reward to risk. The setup here would be even better if EFX breaks below 160 on an intraday basis on Wednesday, and then closes back above the 160-161 level. Over 2.5 million shares changed hands when EFX was on the verge of a breakout as many traders wanted to buy at the stock at that elevated price. But now that we've seen a pullback to 160, no one wants it. Only 524,000 shares traded on
Tuesday. It's the way the stock market works. In the short-term, it's very inefficient, and astute traders like us are here to take advantage.
Happy trading!
Tom Bowley
Chief Market Strategist
EarningsBeats.com
Better Timing. Better Trades.
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