EarningsBeats.com Digest for June 28, 2021
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Is A Big Earnings Surprise in This Company's Future?
We keep multiple ChartLists in organized fashion for our members. One such ChartList is our Strong Future Earnings ChartList. This ChartList is designed to track companies not on our Strong Earnings ChartList that show excellent relative strength based on their SCTR (StockCharts Technical Rank) scores. Last week, one of the best performing industry groups was apparel retailers ($DJUSRA), which surged back above both its 20-day EMA and 50-day
SMA as consumer discretionary stocks (XLY) began to show relative strength once again. When I looked at our Strong Future Earnings ChartList and sorted it by industry group, I noted there were 6 apparel retailers included. One that I believe looks quite promising is Citi Trends (CTRN):
CTRN had a huge run in late 2020 and during the first few months of 2021, but it was plagued by slowing momentum. Multiple negative divergences printed in 2021 and the stock recently tumbled 30% or so. But now it's beginning to show a positive divergence, or slowing bearish momentum. CTRN was a relative strength leader at the time of its April high and I believe it was for a reason - a very strong upcoming earnings report in August. I
view the current price action as some sort of bullish continuation pattern. On the chart, I've speculated that perhaps we'll begin to see the right side of a cup print. I would be careful if CTRN closes back beneath 75, but I don't believe it will. Instead, I think this selling episode is an opportunity to enter ahead of what should be solid results in August.
Happy trading!
Tom Bowley
Chief Market Strategist
EarningsBeats.com
Better Timing. Better Trades.
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