+18% Profit within 17 Trading days
Earnings report always poses a risk of eroding your profits in a stock. $FIVE trade that I had highlighted last week already was showing + 12% profit within 13 days of initiating the trade on August 15th. Earnings was slated to be announced Sept 6th Thursday after the market close. One of the best ways to mitigate the risk is to harvest partial profits prior to the earnings announcement. It's always a good idea to lock in some gains by taking a partial position off the table. There is never a guarantee that the stock will react positively from an earnings announcement.
$FIVE had gained +25% during the earnings announcement on June 7th. This has been a leading retail stock ever since it surged +25% during the last earnings. In order to mitigate the risk and lock in some gains, 1/2 of the position was closed out at $114.47 for a gain of +10%. The other 1/2 of the position was left to take advantage of the possibility of stock surging again. After earnings announcement on Friday Sept 7th, the stock surged to $130.89 for a gain of +26%. $FIVE stock trade attained a cumulative gain of +18% for both 1/2 positions added togather.
$RH is a similar retail stock that exhibited the same characteristics as the $FIVE. It surged +21% after the earnings report on June 12th, triggering an "8 week hold rule". Unfortunately, $RH dropped by -21% within 4 days after the earnings announcement on Tuesday Sept 4th. This is why it makes sense to lock in your gains and just leave a partial position to mitigate the risk of bad earnings surprise.
Market Outlook
Market is still in a "Confirmed Uptrend" according to IBD (Investors Business Daily). We do have an elevated count of 10 "Distribution Days" - 4 of which were just piled on last week. There is a cause of concern heading into the second week in September. August was a phenomenal month with $QQQ posting +5.78% gain. This was unsustainable and we quickly gave away -2.97% of it just last week. September is traditionally the worst performing month looking over the data for the past 50 years. Its a good idea to raise some CASH now and adjust the trailing stops to lock in gains that you may have in your Growth Stock positions.
Currently the Technology stocks are under pressure and there may be some profit taking going on. $QQQ was up +20% as of end of August. Health Care, Transportation and Retail related stocks are in the lime light right now. Here are some of the stocks that I am monitoring this week. They are extended right now just as the overall market is. I have highlighted the resistance/support line in parenthesis:
- $CSX ... (72.22)
- $UAL ... (81.91)
- $CNC ... (143.79)
- $CTAS ... (212.27)
- $HCA ... (130.57)
- $UNH ... (269.14)
- $LOW ... (108.01)
- $GWW ... (347.20)
- $WSM ... (67.74)
- $ROST ... (95.57)
Mentoring Program
I am a devout follower of IBD (Investors Business Daily) style of investing/trading Growth Stocks. The chief reason being is that Growth Stocks tend to perform 2 to 2 and 1/2 times better than the performance of the general market as measured by the performance of $SPY. As of end of August this year, $SPY had gained just +9% year while the leading growth Stock index $QQQ had gained +20%. Third quarter is the best performing quarter followed by a stellar performing January as well.
Is your portfolio lagging the leading Growth Stock index?
If it is than do yourself a favour and get on board with our mentoring Program. I have identified over 35 growth stocks such as $FIVE that can enable us to Out Perform the leading index $QQQ. Let us help you with your trading and investing with our individualized mentoring program.
Schedule a FREE 30 minutes of "Discovery Call" with us and help you to profit in the following quarter. Secure your spot now to profit in the coming quarter.
Happy Trading!
Amin
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