The prior version made it sound as though no trade was possible until two trading days following the earnings announcement or six days after ex-dividend date. In fact, my intent was that trades be possible one trading day following the earnings announcement or five days after the ex-dividend date.
Here are the applicable definitions from my rules:
- Earnings Day: The first trading day after earnings are announced. (For example, if earnings are published after the close on Monday, earnings day is Tuesday. If they are published before the open on Monday, earnings day is Monday. Earnings published during the trading day are treated as though they had been announced before the open.)
- Reset Day: The day after the first trading day following an earnings announcement. (For example, if earnings are released after the close on Monday, the Reset Day is Wednesday. If earnings are released before the open on Monday, the Reset Day is Tuesday. Releases during the trading day are treated as though they had occurred before the open.)
- Ex-Dividend Day: The day a stock goes ex-dividend.
- Post-Dividend Day: The fifth trading day after the date a stock goes ex-dividend (with the day after ex-dividend day counted as the first of the five).
Earnings Exclusions: A symbol breaking out within 30 days of a scheduled earnings announcement is disqualified as a potential trade.
If a symbol breaks out on Earnings Day, no entry is allowed until the Reset Day, and the Reset Day price channel boundary is treated as the confirmation level (rather than using those levels on Earnings Day).
Dividend Exclusions: If a symbol breaks out on Ex-Dividend Day, no entry is allowed until a breakout on Post-Dividend Day, and the Post-Dividend Day price channel boundary is treated as the confirmation levels (rather than using that level on Ex-Dividend Day).
All of this sounds a bit legalistic, as my trading rules always do. I want to be as precise as possible.
The version is that the rules, as previously written, treated Reset Day and Post-Dividend Day as fresh breakouts, requiring confirmation the day after. In fact, they are special versions of the normal confirmation rule, which requires trading above the 20-day price channel breakout.
My shorter-term trading rules can be read in their entirety here. My longer-term trading rules can be read here. And the classic Turtle Trading rules on which my rules are based can be read here.
Tim Bovee, Private Trader tracks the analysis and 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 decisions for his or her own account, and take responsibility for the consequences.License
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Based on a work at www.timbovee.com.