Trading Places with Tom Bowley

Uncovering "Value" In Uptrending Stocks

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Last week when I identified the Top 10 stocks in our Model, Aggressive, and Income portfolios, I provided a bonus to EarningsBeats.com members when I unveiled my first ever Value Portfolio. I'm primarily a momentum trader and you rarely associate momentum stocks with value stocks. But the concept behind the Value Portfolio is to do exactly that - find great value in stocks that could just be starting a major uptrend.

I realize three days' performance isn't a particularly large sample to draw conclusions from, but this new Value Portfolio of 10 equal-weighted stocks surged 2.79% since the Tuesday, November 19th close (date on which the stocks were presented to EarningsBeats.com members). The S&P 500, by contrast, lost 0.32% over those same three days. Three full percentage points of outperformance in just three days? It'll be worth watching to see if the early outperformance continues.

These value stocks do not represent "value" in the traditional sense. I'm not scouring balance sheets to find companies trading near book value. Instead, this "value" is more technical value than anything else. They've been mired in downtrends, but their latest quarterly earnings reports and positive market reactions are suggesting "character changes" on their charts. By "character change", I mean a stock appears to now be uptrending after a period of declining prices and the reason is because of a positive revenue and earnings surprise. Here are two of the ten stocks as examples:

EVH:

SIEN:

Both of these stocks were clearly in downtrends prior to their recent earnings releases. Wall Street's reaction to their positive earnings surprises, however, was quite bullish. I now view these two stocks in uptrends - until they prove to me otherwise. If 2 or 3 of these 10 component stocks continue to post significant gains, that could easily result in a portfolio that crushes the S&P 500.

On Friday of this upcoming week, I've agreed to host a "Market Vision 2020" mini-series event to describe how these portfolios are designed and the strategies behind each. During this discussion, I'll be providing details on how I trade earnings-related gaps. If you'd like to attend, room instructions will be sent out to all free Market Vision 2020 newsletter subscribers. If you can't attend, no worries there. We're recording the event and will make it available to all newsletter subscribers.

In addition, EarningsBeats.com will be providing free giveaways worth hundreds of dollars! If you're not already a free Market Vision 2020 newsletter subscriber, alls we need is your name and email address. CLICK HERE to begin your free subscription and receive all news and updates about the upcoming Main Event on Saturday, January 4, 2020. In the meantime, you'll benefit from 7 mini-series events (from 7 different speakers) like the one I'll be hosting Friday. Also, we'll be announcing the pricing of the Market Vision 2020 online financial conference to include a BLACK FRIDAY SPECIAL. It'll be the absolute best pricing that you'll receive leading up the conference.

Happy trading!

Tom

Tom Bowley
About the author: co-founded Invested Central in 2004 and served as the site's Chief Market Strategist for more than 10 years. Invested Central provides stock market education and guidance for those interested in making their own financial decisions. During his tenure at Invested Central, Tom co-hosted Market Open LIVE, a national radio broadcast that covered many of the largest markets across the U.S. In addition, he has spoken at various conferences throughout the United States and Canada and has taught thousands of traders across the globe how to trade equities more wisely with an emphasis on managing risk and intermarket relationships. Learn More
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