Identifying Stocks on the Move
This week marks the kick-off to Q1 earnings season, as the banks will begin to report on Friday. This means that we are in the prime time for pre-earnings movers when stocks will move either up or down as investors make moves before earnings.
To look for patterns and tickers, I use my tools to crunch data highlighting which tickers have moved the most in the past. I specifically focus on the 21-bar time frame before earnings, because this is generally when volatility starts to increase and stocks will start to move.
Pre-Earnings Bullish Tickers
I ran my scans this morning to see which tickers would pop. Here are some of the top bullish results:
If you look at the PreER21Days column, this tells you how much the stock has moved during the 21-bar time frame over the last four quarters. Anything 5% and more is generally a great candidate to use when looking for entries.
The Post-Earn Gap column tells you how much, on average, the stock gaps after the earnings report.
The Post 8-DayAvg tells you how much the stock typically moves in the 8-day time frame post-earnings. As you can see, some of these stocks not only move big before earnings but also historically continue rallying post-earnings as well.
Pre-Earnings Bearish Tickers
In more recent years, I began making bearish plays before earnings as well. This setup occurred during the bear market and has stuck around ever since. This setup works because when investors haven’t been reacting well to a company’s earnings reports for a few quarters in a row, investors get skittish with another upcoming report. In this instance, it becomes a bit of a self-fulfilling prophecy for the share price because investors sell the stock before the report in anticipation of a bad reaction, and so the stock declines even without a bad result.
Here is my most recent scan showing some of the top decliners on my radar:
With many of these, you’ll notice that they also typically decline post-earnings as well. So, the companies may experience a triple whammy of declining before the report, potentially gapping down on the report, and then falling even more post-earnings! Ouch! These are three great reasons for investors to be wary of being involved in these companies before the report.
