Hey 5-Star Trader,
I joined CNBC’s “The Exchange” to talk about earnings destruction candidates.
What does the “earnings destruction” pattern look like?
This is the pattern that appears when a ticker is more likely to fall going into earnings, due to a lack of earnings anticipation. This can occur both pre-earnings, while the ticker is in the Hot Zone, and it also likely continues post-earnings.
This pattern sets up nicely when the ticker:
Previously experienced an extraordinary run, likely driven by the pandemic, hype, and retail sentiment, and that run has faded, substantially, with the ticker losing more than 30% since the previous all-time high
The ticker has shifted into a downward trend on the daily chart and is currently under key technical resistance
The ticker has shown disappointing moves post-earnings. This means that even if the company beat earnings, investors weren’t pleased and the stock fell post-report
The company may have missed several EPS estimates in a row
The ticker has experienced a major gap lower on a previous earnings report
Some of the names on my BAIL watchlist include:
- PayPal (PYPL)
- Carvana (CVNA)
- Wayfair (W)
My BUY list includes:
- Caterpillar (CAT)