I am hoping that some of you can help me with a problem. For the trading style I have, I do much better with stocks that are just prodding along without the influence of any breaking news. I watch earnings announcements, but I keep getting burnt by analysts making statements about projected earnings and changing their rating/ recommendation. I haven't been able to find a source that will tell me when these announcements will be made. Do the analysts give notice that they will be initiating coverage or making a revision to earnings estimates, or do they just make the announcements without warning? If they do give notice, where can I find this information? If they don't give notice, what is the best way to find out about their statements as quickly as possible? If it matters, I have a short list of stocks that I follow - these are the ones that I would be concerned with. Thanks for the help.
Eldredge: No analyst will ever give notice as to their intentions of initiating coverage and/or changing their rating or earnings predictions. There are no set times when an analyst reviews a company. If a firm covers a stock the analyst is expected to always be on top of the company (not always the case in reality). If he notices a fundamental change in the company, and after doing his homework wants to change or revise something, it will usually be announced publically the following morning before the open. The traders for that firm will notify institutional clients, and a copy of the report will most likely be on First Call or Bloomberg (Both services might be a little pricey for an individual trader) before the open. Eventually a condensed version will make its way to services like Briefing.com and others. There would be no benefit for an analyst to announce that he is going to make a revision to a security on a particular date. It would only create a lot of speculation and volatility (Good for daytraders but not for the rest of the world). Some traders used to check road shows and conferences that companies would hold and see which analysts were there and then try to formulate a guess as to the reaction of the analyst. Others went even further as to actually "spy" a whole analytical team meeting with a particular companies CEO or management. Word would get around pretty quickly and the stock would be all over the map. I doubt if anyone made any money from this, but it was fun to watch... As far as your situation goes, I can certainly identify with you. If I try a swing trade and think I might be in it for a few days, the first thing I check is when they are reporting earnings. You can get that info from Yahoo finance, Earningswhispers.com, or a number of other places. The next thing I check is if that company has a history of pre-anouncing around the same time period. If they do, I avoid trading that stock that particular week. All of the other factors are unavoidable, and just the hazards of trading. Over time I've found that about half of the time an analyst's comments will help my situation, and the other half it will have a negaitve influence, so it's a wash. It just seems like the comments are always "against" our position because when we get stopped out and lose money we tend to feel that it wasn't our fault. If an analyst's comments help our cause we just think we're smart. DeeMan
Eldredge, I don't think there's any way around it. One of the traders in our Master Interview series went from looking for news and ratings that might affect stock prices (speculating the news) to trying <i>not to hold stocks during the release of any economic numbers, or earnings, or things of that sort where the risk increases.</i> That is especially so for the short term trader. If one is more of a Long Term Buy and Hold, I think you have to constantly remind/ask yourself, is the long term potential good? You can't let the latest news affect your long term plan, unless the latest news indicates it's a long term pattern. <b>André</b> If you're interested in reading it: http://www.innerworth.com/masterinterview/iwInterview8.asp
DeeMan and IW Andre, Thanks for the insightful relpies, at least I know there isn't something I could be doing that I'm not. Good trading.
One thing that I always look at is the companies' percent earnings surprise...this always seems to go hand in hand with the analysts ratings or broker ratings...I always look for a steady quarter over quarter increase...nothing to volatile...if you can catch the company in the early stages of growing percent earnings surprise, the ratings will follow...however, if you are late in finding the company, then they will topple of their own weight... bad ratings usually come when analyists see this change in percent ernings surprise...change.. or dramatically reduce....check me out and see if I am not right...find a few companies that have all of a sudden gotten a bad rating and then check out their percent earnings surprise...I'll bet you find that its gone down...nothing is fool proof but this has helped me when swinging a trade long and helped me from being kicked in the pants by an analyist...I usually daytrade but on the occasions when I swing a trade I always key in on the percent earnings surprise...I hope this helps you as it has helped me
IMO Breaking news and analyst ratings are just what someone wants the general public to hear and have very little, if any, correlation to the price movement of any stock over any timeframe. If I had to guess I'd say that the best bet would be to do the exact opposite of what you hear, over a 2-3 month timeframe. IE, if the news reports, analysts, "earnings guidance" reports tell you that you that the stock will continue to be weak for the near future, then buy some and sell it in 2-3 months. The insiders, large brokers like Solomon, Credit Suisse, etc., and others, are the ones who really know how a company is going to do and not coincidentally are also the source of much of the news. This big money will always want to sell into strength any buy on weakness, and will use all of their considerable media clout to create these perceptions (weakness and strength are just perceptions). You see this all the time on the news. Every day there are interviews with brokers and fund guys and the interviewer will ask "so what would you reccommend" and they will say something like "Intel looks good to us in the near term...". There's no way to know who is being honest, who is being dishonest, who knows what they're talking about, who doesn't know what they're talking about. The same goes for analysts. It's a real can of worms. As far as I'm concerned the only reliable source of information on a stock are its price, volume, and history. My advice is to not listen to anything except the numbers, price, volume, and price-volume history, and make your own decisions.
I would like to find a source for industry conferences. This can be useful, if only to know when a stock in consolidation is likely to breakout.
It's funny when you're just speaking of something and then it happens... I was short CSCO at 17.13 for about an hour. For an overall down day, CSCO had held up remarkably well, and enough time had gone by where I started doubting my decision. At around 1:10, CNBC announces that AG Edwards just announced a midday rating cut of CSCO from a strong buy to a buy, and the stock gets killed. Although I always feel better when I make money, I know that tomorrow I may be on the wrong side, and I just try to keep it all in perspective. The thing that I find humorous though, is that knee-jerk reaction after an announcement such as this is made. I don't know too many people who put much credit into any analyst's ratings, yet the stocks always react as if that particular analyst was the guru himself. I suppose it's just the self-fulfilling prophecy routine, where traders are scared that other traders will sell, so they want to sell first, but it still seems silly to me. But for today, I think I'll grab a beer and be thankful I was lucky. Hell, if I was smart I would have covered at 16.50 instead of 16.80... DeeMan
No kidding, DeeMan. A member in our boards posted about Enron recently. It dropped 10 points on the news that the SEC asked for some info. But the stock is already down significantly this year. Is it over-reaction to news, or are they deservedly getting beat up? It seems to me, the market is prone to overreactions. I mean, I knew my portfolio was bloated because of the bubble, I'm heavy into tech. But we needed a correction, and it seems what we got was an over-correction. Errr.... <b>André</b>