EarningsBeats Digest

Published: Fri, 02/05/21

EarningsBeats.com Digest for February 5, 2021

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Timing The Pullback For High Reward to Risk Entry

I think most traders would agree that timing is just about everything. Yes, you want to find a high quality stock to trade, but nothing trumps jumping in at exactly the right time. For me, it's very important that I be able to admit a mistake quickly and minimize any loss. In order to do that, you need to look objectively at a chart and decide where that potential "pivot point" is on the chart. Recently, Helen of Troy (HELE) posted EPS well in excess of estimates and the stock was handsomely rewarded, trading at an all-time high:

At the recent price high, HELE also set a new high on its AD line. However, HELE has now printed a lower price high for 6 consecutive trading sessions, returning to the level of its most recent price breakout. The current price down to its 50 day SMA would seem to provide a solid reward to risk opportunity for entry. I'd consider two entries - one at the current price and a second on a 50 day SMA test, should that test occur. A target could be the most recent price high just above 260, while a close below 220 could be considered for a stop. As an aside, HELE has not missed an earnings estimate since 2015, according to Yahoo Finance.

Happy trading!

Tom Bowley, Chief Market Strategist

EarningsBeats.com

"Better Timing. Better Trades."