Thursday, December 9, 2010

GES Watch

Guess? Inc. (GES) was a road not taken. In mid-November I looked at it as a potential earnings play, and the day before earnings rejected it.

Bad decision. The company delivered an earnings surprise plus a bonus dividend, resulting in a nice price increase.

So, too bad. I've kept GES on the Watchlist so I could see what happened afterward.

ppspsarmacd obvh-a trend ma20ma50ma200
GES $47.28

My main objection to GES as an earnings play was that it tended to decline in price after earnings surprises. And that is indeed what has happened in this case.

Two days after the earnings announcement, the price hit a high of $51.53, up 13.7% from the pre-earnings close. It has since dropped by 8.2%.

So my analysis was correct. It failed, however, to anticipate the strength of the price response to the earnings surprise, and also failed to foresee the bonus dividend, which could not really be forecast by any rational analysis.

And although the financials of GES are those of a growth stock, the technicals suggest that it's not a stock that I would find worth entering at this point.

I'm removing GES from the Watchlist. I'll keep it in my futures file, to look at as a possible play leading up to the next earnings release, on March 14.

Tim Bovee, Private Trader tracks the trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

  • h-a trend - Heikin-Ashi trend.
  • obv - On-Balance Volume.
  • pps - Person's Proprietary Signal.
  • psar - Parabolic Stop and Reverse
  • ma20 - 20-day moving average
  • ma50 - 50-day moving average
  • ma200 - 200-day moving average
  • macd - Moving Average Convergence-Divergence

About the glance: The colors indicate the state of each signal.
  • Signal Section:
    • pps, psar, macd: green for bull mode, red for bear.
  • Confirmation Section:
    • obv: green for uptrending, red for downtrending.
    • h-a trend: green for uptrending, red for downtrending.
  • Environment Section:
    • ma20, ma50, ma200: green for above the average, red for below the average.

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