Stock Ideas arrow News Letter Reviews arrow Thank You, Costco
Rating
Click for Help

Market Watch

By Charles Delvalle
As I just said in today’s column, I think the dollar is ready for a small rebound.  And if you play your cards right, you could be sitting on a hefty profit.
More...
 

Most Popular

Login Form






Lost Password?
No account yet? Register
Thank You, Costco
User Rating: / 0
PoorBest 
Thursday, 11 October 2007
By Chris Johnson
I’ve made it rather clear over the past few weeks that I love earnings season.  It creates expectations, it moves sentiment to extremes, it gets stocks moving, it gets the adrenaline flowing … in short, it opens up opportunities.
And it’s fun.  Especially when you start off with a winner.

That’s what happened this week with Costco (COST), a stock/option play we recommended in our Earnings Tip Sheet.  The stock reported earnings yesterday that beat the Street by 10 percent.  The stock popped more than nine percent on the news, allowing subscribers to collect up to 90 percent or so on their call option.

So how did we analyze COST?  Sentiment, sentiment, sentiment.
ISM Services Index,Michigan Sentiment Index for a higher confidence

By Christian HillComing off a week in which a few economic reports surprised to the positive side, this week is potentially very important for the market. Last week saw Factory Orders more than...
+ Full Story

Motley Fool Global Gains

In June 2008, I traveled 14,302 miles in search of a tiny company with an explosive business. That stock has tripled, but you can still get in cheap (name and ticker symbol revealed below). Now...
+ Full Story


The technicals were showing some strength, although I was concerned that the stock was pushing the top of a trading range and could form a peak as it did in August.  

The trade was based on pessimistic sentiment, the thought process being that anything exceeding expectations would cause 1) pessimism to unwind, and 2) the stock to break above the August peak.

Where was I seeing this pessimism?  First, in a put/call ratio that was descending off a peak, meaning that buyers were starting to pick up the pace relative to sellers heading into earnings.  Second, short interest had been increasing, adding to the chances of a short-covering rally.  Third, seven of 12 covering analysts rated the shares a “hold,” leaving plenty of room for upgrades.

This trade underscores the importance of sentiment during earnings season.  Sure, COST had a nice earnings report, especially considering all the downgrades we’ve been seeing of late.  But sentiment provided that extra fuel that pushed the stock above technical resistance.
I look forward to many more such trades this earnings season.
Source : Investor's Daily Edge

  • We endeavor to decipher analysis of this Teaser/News Letter to distinguish the thoughts of Authors/Editors.

  • Please post your Review/Comments, your rating helps other users gauge the value of an article ...

  • Was this service a Ripoff ? Click Here To Post Your Ripoff Story !


Bookmark and Share



RSS comments

Write review Your rating helps people guage value of an article
Name:
E-mail
BBCode:Web AddressEmail AddressBold TextItalic TextUnderlined TextQuoteCodeOpen ListList ItemClose List
Review:

I wish to be contacted by email regarding additional comments
Sorry but! We have to make sure that you are not a bot Please solve this simple math before you submit: 
OMY         2IE      
  L    B    R     C4S
FWS   798   QRY      
D      5    T 1   BRS
LN2         AA9

 
< Prev   Next >
[ Back ]