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The Secret Combination For Solid Reward To Risk Trades

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Well, it's really not a secret, but it's our secret at EarningsBeats.com.  Our mantra is "Better Timing.  Better Trades." and, for us, that means finding the best stocks, identifying key price and moving average support and then adding.....an extra helping of patience.  Many of the stocks on our Strong Earnings ChartList never hit key support and, therefore, are not solid trades despite the fact they may go higher, even much higher in some cases.  To be successful traders, we must be disciplined in managing risk.


Let me give you a couple of examples of what to look for in a trade.  Both of the following stocks came off of our Strong Earnings ChartList, which means they already possess solid fundamentals.  The only way a stock is added to this ChartList is if it beats Wall Street consensus estimates as to both revenues and EPS.  In other words, their business plan is working.  If their business plan is working, Wall Street likely trusts the management team and will buy the stock on weakness.  And so will we.  Here's two perfect examples of what to look for:

1.  Atkore International Group (ATKR)

ATKR is a $1.1 billion company that manufactures and distributes electrical raceway products, and mechanical products and solutions.  Over the past 3-4 months, ATKR has been a leading stock within its industry and its industry has been showing relative strength vs. the benchmark S&P 500.  Strength within strength is a very nice combo, so for us it's just a matter of waiting for a rising 20 day EMA and/or price support to be tested.  We saw both one week ago:

Emotionally, we all want to buy a stock when it's moving higher.  It seems like the right thing to do.  Unfortunately, we're ignoring the risk of such impulsive buying strategies.  It's completely fine to want to own the stock, but put it in a ChartList and let it go on sale first.  When ATKR pulled back to test both price support and it's rising 20 day EMA, there was little risk involved in the trade.  If it fails to hold support, you exit quickly with a minimal loss.  But now, one week later, ATKR is on the move again, having risen 7% over the past week since touching support.  

2. Deckers Outdoor Corp (DECK)

DECK is a $4.3 billion company that designs, markets, and distributes footwear, apparel and accessories for casual lifestyle use and high performance activities.  Footwear ($DJUSFT) was a very strong area of the market in 2018 and not much has changed in 2019.  The DJUSFT continues to demonstrate excellent relative strength.  With its latest quarterly earnings report, DECK broke out to fresh highs and has begun leading an already strong industry group.  Chasing the earnings-related gap higher, though, was not the right choice.  Instead, the best reward to risk entry was waiting for the pullback to test price support:

Instead of paying 145 at the opening bell after strong earnings were released, three days of patience would have resulted in a solid technical entry at 137, a savings of 8 bucks at the outset of the trade.

Better Timing.  Better Trades.  It's that simple.

I want everyone to experience the difference that a Strong Earnings ChartList with annotations can mean in your trading results.  We constantly update our Strong Earnings ChartList throughout the quarter and every time we update it, we want to send you a copy.  It's our first-ever quarterly trial.  That's right, 90 days of annotated ChartLists for a trial price of just $7.  In order to download our ChartList, however, you'll need to be at least an Extra member at StockCharts.com.  If you're not currently a StockCharts.com member, you should take advantage of their 30 day free trial.

Included in the quarterly trial membership at EarningsBeats.com will be a special Tuesday, February 19th event - Tom Bowley will join me for his "Top 10 Picks", which will begin at 4:30pm EST.  He joined EB.com in November and shared a similar Top 10 Picks list that crushed the S&P 500 (+17% vs. +1%) over the next quarter.  I've invited him back to share his next list of superstars and your quarterly trial offer includes this special event. For further details, CLICK HERE.

At your service,

John Hopkins, President
EarningsBeats.com

 

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