Sunday, February 12, 2012

Potential Earnings Plays For Week of February 13, 2012

Before I post the charts, please make yourself aware of my (and many others) earnings strategy.   I am not Jim Cramer.  I DO NOT buy these stocks before they report.   I wait for the report to come, look at the numbers and the growth, and then look at the after-hours reaction.  I then may enter for the following session's hopeful follow-through.  This is NOT a fool proof strategy.  If you've traded long enough, you know there is no such thing.   However, when it works, it usually works very well.   Last week, I made four after-hours entries in earnings plays.   I took small losses in CSTR (-0.69%) and SNCR (-0.84%) and had nice gains in MITK (+14.16%) and LNKD (still in from $80.80).  During the previous week, I was able to get trades in RLD (+8.5%) and SIMG (+11.5%) basically as one-day trades.  Others from last week that I didn't get a chance to enter into were BWLD, GUID, and CALX.  Check out those charts when you get a chance. 

Here is a link to an older article explaining this strategy (which basically uses the idea of post earnings announcement drift or "PEAD").   One thing that I think is important with this strategy is to find stocks that are not super extended into the announcement.  It is much better to find stocks that are beaten down or are forming basing patterns.  The stocks below are the ones I see that report next week that have potential basing patterns from which to (hopefully) explode.  Most also have high short interest ratios as well, which is typically a nice fuel to power a big pop.  

CVGI, STEC, ARUN, QIHU
 STRA, SFUN, ZIP, DMD
 
 Z, VDSI, RNWK, CAB
All Charts from TC2000, Courtesy of Worden Brothers, Inc.

Other names that report next week that might be worth watching include TSLA, SAVE, SPAR, SKX, AIMC, NPTN, UCTT, ACOM, IPI, FOSL, RLOC, XEC, DVN, and ZNGA.  I mentioned ZNGA and SAVE yesterday as charts to watch this week.   In all likelihood, most of these stocks will NOT be up 10-20% next week, but even if you catch one or two of these plays a week, it can really make a difference on your total return.  If you miss them when they do breakout, don't forget above them.   They typically will set up nice consolidation patterns from which to enter (or reenter in some cases). Good luck.

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