Earnings Swings

Discussion in 'Trading' started by mrswing, Mar 24, 2004.

  1. mrswing


    Do to a short-term data problem with Earnings Swings, this current publication is a little shorter than anticipated. I apologize for any inconvenience.


    Cardiodynamics International (NASD:CDIC)

    Swing Type: Common Stock (optionless)
    Swing Strategy: Buy CDIC Above $6.10 (1-Day Resistance)
    Stop-loss: use 2% mental stop (based on common)

    1. On March 23, 2004 CDIC reported a 100% earnings surprise. (reported: $0.02; forecasted $0.01)
    2. High Short-term tech rating: 84% buy rating
    3. Above average top and bottom end growth rates
    4. High Analyst Confidence (avg. recommendation: buy)

    TOP (SHORT) Preannouncement Swing Play

    I-Flow Corp. (NASD:IFLO)

    Swing Type: Common Stock (optionless)
    Swing Strategy: Sell Short IFLO Below $12.65 (1-Day Support)
    Stop-loss: use 2% mental stop (based on common)

    1. Recent Earnings Warning (March 23, 2004)
    -management revised Q1 2004 EPS estimates from $(0.04) to
    $(0.06) to $(0.10) per share
    2. Weakening short-term technical rating
    - my short-term technical buy rating fell from 56% to a 68% sell bias rating. Very bearish!
    3. Poor Analyst Confidence
    - analysts revised the consensus Q1 EPS estimate on IFLO downward from $(0.01) to $(0.04) within the last 90 days
    4. Poor long-term EPS Performance

    Larry’s Trading Tips:

    1. I do not recommend using stop-loss orders on options, as they are too volatile.
    2. I recommend that you use mental stops based on the underlying price of the common stock.
    3.“If” the trade by chance works against you don’t hesitate to sell all of your options “at market” once the common’s 4% stop loss is reached.
    4. Practice buying on weakness and selling on strength, if possible.
    5. Always let your winners run. Therefore, sell 50 % of your original position once your options double in price. And repeat this process for each corresponding 100% rise in your option price. This will ensure that will you truly buy low and sell high, and even higher yet.