Optical illusion

Optical illusion

Optical illusion

Optical illusion

Can you find “The Hidden Tiger”

Which one is off the ground?

Alternate Entry Methods

•Sloping Pivot Line•Pocket Pivot•Moving Average Bounce (Tennis ball, Squat)•Moving Average Convergence•Regaining 50-day Moving Average•Shake-out + 10%•3 weeks Tight•Short Stroke•12 of 15 up (11 of 13 days up)•*Bonus* How to find the next superperformance stocks

Natural reaction and Tennis Ball Action

Tennis ball action can be 1 to 4 days of strong up days of buying, breaking through prior resistance levels.

Natural reaction is a brief pull-back that can last 1 to 14 days after Tennis ball action. The pull-backs will be brief and will be met with support that pushes the stock to new highs within just days, bouncing back like a tennis ball. Volume should decrease compared with the volumes observed during the initial trend, and the price may move against the trend somewhat. (Average 10% correction)

Within a few days or perhaps a week or two of the normal reaction, volume should increase again and the price trend should be resumed.

After an O’Neil Break out, look for a stock that is up 12 of the past 15 days.

Q: I have heard of a buy signal being given if a stock is up in 12 of the past 15 days. Where would the actual entry point be?

G: I look for 11 out of 13 or 12 out of 15 days up in a row after a breakout. Once the stock does this, I’ll wait for it to move sideways or perhaps pull back for anywhere from 3-10 days, and once it moves back out through the top of this little formation I will come into the stock heavily as I add to my original position, or even sometimes just enter the stock for the first time.

Currently up 10 of 12 days

Started up-days in the pocket and coincided with O’Neil Pivot and Pocket Pivot. (12 of 15 days up) Confluence of 55 DMA and 50% Fibonacci Retracement

Pocket pivot and continuation pocket pivot.

Short Stroke Pattern

Short Stroke Pattern

Confluence of Moving Average Lines, Bollinger Bands & Fibonacci

Retracements

Trend Trading using

Confluence--Place of Junction, Flowing Together, Union, Meet-Up

Pivot point “Squat and Tennis ball Effect”

Confluence of 100 DMA and 75% Fibonacci Retracement… Followed by a pocket pivot.

Can you spot the Bollinger Band Breakout, pocket pivot, confluence of Moving Average lines, volume up 10 of 12 days, Breakout from O’Neil Pivot point?

Confluence of 100 DMA and 75% Fibonacci Retracement… Followed by pocket pivot and Bollinger Band break-out.

Support and Resistance lines.PRAA is running into support at it’s prior resistance levels.

Moving Average Convergence

The current stock price is above the 150 day (30 week) and the 200 day (40 week) moving average price lines

The 150 day moving average is above the 200 day moving average The 200 day moving average line is trending up for at least 1 month (preferably 4-5

months minimum in most cases). The 50 day (10 weeek) moving average is above both the 150 day and 200 day moving

averages The current stock price is trading above the 50 day moving average The current stock price is at least 30 percent above its 52 week low. (Many of the best

selections will be 100 percent, 300 percent, or greater above their 52 week low before they emerge from a solid consolidation period and mount a large scale advance.)

The current stock price is within at least 25 percent of its 52 week high (the closer to a new high the better)

The relative strength ranking (as reported in Investor’s Business Daily) is no less than 70, and preferably in the 80s or 90s, which will generally be the case with the better selections.

What drives Superperformance?“Follow the Trend—EPS Surprise Trend”

When a company reports quarterly results that are meaningfully better than expected, analysts who follow the stock must reexamine and revise their earnings estimates upward.

Be on the lookout for companies that are beating earnings estimates; the bigger the earnings surprise, the better.

Because earnings surprises have a lingering effect, we want to focus on companies that beat estimates and avoid firms that have negative earnings surprises.

The stock market cares little about the past, including the status of a company. What it cares about is the future, namely, growth—real growth, in earnings and sales. Look for companies that show strength with their ability to grow earnings, sales, and margins.

In real estate, the mantra goes “location, location, location.” In the stock market, it’s “earnings, earnings, earnings.”

The Cockroach Effect

They call it the cockroach effect because as with cockroaches, if you see one, you can bet there are others. The same thinking applies to companies earnings surprises. If a company has posted very good quarterly results that are much better than were anticipated by analysts, there are probably more good quarters ahead.

www.zacks.com Price & EPS Surprise

>10%

>20%

>30%

>50%

LNKD >50% EPS Surprises last 4 Qtrs

EPS Surprise

PED (Post Earnings Drift)

Suggests that it may not be too late to buy a stock after it has reported better than expected earnings.

Even if you miss the first upward reaction after results are reported, the post-earnings drift after a significant earnings surprise can last for some time.

Many studies have shown that the effect can persist for months after an earnings announcement.

Efficient market theory holds that the market reacts instantaneously and fully prices in new information completely. Experience traders know that his theory is false for several reasons. For one thing, it’s impossible for everybody to respond at the exact same time. Liquidity is also a factor; only so many shares are available to be bought and sold. Large buyers must buy over time to avoid running a stock up too quickly, and if they sell too fast, then can crush the stock. This is what accounts for post-earnings drift, a persistent bias in the direction of the surprise.

PED

PED

PED

FundamentalsLook for: Future earnings and sales

surprises and positive estimate revisions. www.zacks.com

Revisions

Future EPS Revised Higher