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YourPersonalTrader- Toronto Canada/ London UK
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Thursday
Apr262007

Big Point Gainers...

Yes, the good earning plays are being rewarded with big points lately.   It seems you only have to beat just enough and raise the guidance(not necessarily required) just enough to be rewarded a big push on your earning day.    We love it, and this kind of phenomenon brings back memories of the golden days.    Alright,  so the strategy out there is to catch some of these big gainers once it's confirmed that people "like" their report.     How can you tell?    We figured if by 10 a.m.the stock is still holding up well, we'd be start looking for entry point there.   This may very well mean that we have missed the "best" entry price of the day, but it does ensure us that any entry price we enter would give us that much more probability that we can come out on top.   Why?   The big point gainer theory!    Of course, you still have to trade those stocks with that kind of potential.    If one of the earning plays did not give you a huge run-up, perhaps trying a few of them would work out better.    Keep in mind, we are playing the earnings play here, and these aren't the phase 3 stocks or other type of stories where the stories may only last as long as the time to chew down a snicker bar.     With a earning play, even if you get in at high on earing day, there's still a very high probability that stock continues higher throughout the following days if not weeks..if the market holds up, of course.

Bottom line, trading earnings play (after the earning announcement) is a rather conservative yet highly effective method to trade.   It can also be highly profitable if you trade mostly small caps like we do.    Four times a year, with each earning season lasting a month or two, this would be enough to make it a full time job.  With so many opportunities so far the past week, it just proves in our minds there is no reason to hold through and into the earnings call.  We have great expectations of the DXPE, SYNL, BW, BTJ's to announce great reports after trading them for months , if not already years....But this does not mean we want or will sleep with them the night before they give out their numbers/ guidance.  We practise, 'safe trade' around here, you might say on earning day.

Some plays today...

ALGN VDSI,  we group these two because they both shot up off their respective earning reports.    Volume was great for both and both pretty much spent most of their days flat lining until later on.    We alerted these earlier today and we liked the way they closed.   It wouldn't surprise us that they get some good follow through tomorrow and possibly into next week for some nice gains.

SVVS SSYS WST, these ones are much like the ones above and acted well off their earning reports.    We had to buy these because you never know which one of these will become a great runner.    What we do is keep a close eye on the strength of each one and add/reduce according to their action.    Basically, even for a small size, we just can't afford not to play them.  At todays pace , plus with the usual suspects rocking SYNL DXPE BTJ, we don't have time to do much if any DD on these new names.  We are trading the #'s and action.  We consider them secondary plays at this time and will choose the best in the days ahead to go forward with.

BTJ DXPE, wow these two had great follow through today and especially BTJ.    This is essentially pure momentum at work and we won't argue nor mess with them.

SYNL TRCR,  both notched a new closing high and in the case of SYNL, momentum seems to be really high and we are curious to see how high it goes before it stalls.  The last 4 are definitely the primary earning plays here.

PAE, wow we didn't even think this could be such a huge gainer(% wise) after we alerted it days back.   Of course, Briefing helped our cause but nonetheless the company PR machine is at work. Today, a deal with Sony Entertainment got the name out further. This is just getting too impressive and we'll keep trading it even after selling a chunk off this week.

IDSA,  it might be too cute to think that this one can get onto the IBD100 list with just 2 days left.   Well, technically, it's still possible given the float of the stock and volatile nature of this beast.    What we like about this one is the fact that the sector it belongs in is very hot and coupled with the general rosiness of this market, it's just not unnatural to run this one higher.   It does have good enough IBD number to get into the top 50 at least and we feel it's just a matter of time before it gets added to IBD100 list, provided that it can consolidate around this level.