Friday's markets tossed up a very small pool of prospects indeed. (See "Monday's Prospects", posted over the weekend.
The one live possibility for a trade today, AOL, failed confirmation, and so moves out of contention.
The other symbol, MU, broke above its 20-day price channel in the first trading day after publishing earnings, and so comes under my variant rules for handling earnings.
It works like this: Friday, the first post-earnings trading day ("Earnings Day" in my nomenclature), set a high of $34.10. That's the new 20-day price channel. To stay in play, MU must close above that level today, resetting its breakout level. (That's why I call it "Reset Day".) Then it must confirm the Reset Day signal by trading above that level on Tuesday.
The same applies to the one symbol that survived the first round of analysis from my supplement list of innovative companies. NKE broke above its channel on Friday, the first trading day after earnings, setting a high of $89.99. It must break above that level on Reset Day (today), and confirm it the day after, on Tuesday.
The earnings rules are formally stated in my "Trading Rules: Shorter-term", as follows:
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.)
If a symbol breaks out on Earnings Day, no entry is allowed until the day after Reset Day, and the Reset Day price channel boundary is treated as the confirmation level (rather than using those levels on Earnings Day).
I have no potential trades, so I'll be doing no further analysis today.
-- Tim Bovee, Portland, Oregon, Sept. 29, 2014
My shorter-term trading rules can be read 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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