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What are Episodic Pivots and how to find them

If you are serious about your tradin

build an enduring edge the Stockbe
might help you.

Members tell me they have tried lo

before coming to my site and it has
the most extensive and detailed me
and position trade. Members range
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You will learn about Stockbee Mom

Episodic Pivots for Thursday market close breakouts, Stockbee Trend Intensit
Stockbee Episodic Pivots Breakou
Lemonade Strategy for 401k,and m
member shared methods.
sector

Symbol eps % sales % float p/s Episodic pivots

rank
You will learn how to setup your o
POT 99 -71 -41 290 91 Agrium issues bullish forecast on fertilisers for next year to select right kind of stocks, how t
when to enter , when to exit, how m
AYE 167 48 buyout how to track your trades and all oth
trading.
Beats analyst estimate

ATVI 152 58 -5 543 78 Declares dividend

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Announces 1 billion buyback methods and not relying on others
Develop your own edge. Once you
CME 94 -6 -4 66 92 buys 90% of Dow Jones Index own method you will have life lon
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In top 10 sector
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HGR 45 42 11 30 34 Beats estimate and guides higher employees, financial advisers, activ
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LPSN 42 200 26 41 81 Beats estimate and guides inline
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ELOS 15 74 -50 23 87 Misses earnings estimates chart templates. They have develop
methods based on my methods.
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NGAS 7 -125 -53 25 33 Convertible note exchange completed

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LNUX 58 -25 -6 57 55 Post earnings rally recommendation of some of the lea
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12.02.22, 20:49 Stockbee: What are Episodic Pivots and how to find them
LMLP 94 100 5 20 80 Post earnings rally Most tell me that they stay on beca
they learn so much from the memb

If you are looking to develop your

strategy the membership site might
You have to be willing to put in the
What are Episodic Pivots your own method. There are no sil
offered on members site. Every me
Earnings season offer two types of opportunities. Some stock will make a immediate big move post earnings scan, every nuance is detailed and
is offered to design your own meth
and can be good short term trades. The second type of stocks are stocks which start their rally on earnings day
and continue it for months or sometime 3-4 quarters. If a company announces a big earnings surprize and if it Recommended trades are docume
position sizing so that you can lear
is not currently priced in to the stock it will go up. This phenomenon is called PEAD or Post Earnings
time these strategies are implemen
Announcement Drift.
other members also share their trad

If you are just looking for stock pic

Ball and Brown in 1968 first documented the PEAD anomaly. As its name suggests, the PEAD is the tendency
members site is not for you. It is ab
of stocks that beat earnings expectations to continue to drift upwards after the announcement, or likewise for find your own fish.
stocks that miss earnings to continue to drift downwards. What does the study show. it shows that if you form
If you are serious about your tradin
10 portfolios of stocks ranked by their earnings surprize then the portfolio of stocks that are in top 10% by
build an enduring edge the Stockbe
earnings surprise outperforms the 9 other portfolio and similarly the bottom decile portfolio under performs the might help you.

nine other deciles. This is the most researched topic in financial field. Every year at least 50 new papers are
published on PEAD and is persistence. 

Earnings are the most important criteria affecting stock prices both in short term as well as in the long term. Investors want to invest in
companies that are growing their earnings or are likely to grow their earnings in future. Wall Street is obsessed with earnings and
rightfully so. So any earnings related news has a potential to move stocks in either direction. Studies after studies have shown that
trading strategies based on post earnings announcement drift  (PEAD) has consistently generated abnormal returns. 

So when a company announces earnings and it is "surprisingly" good or bad it leads to a rally lasting 2 to 3 months. Earnings EP are
easiest to understand and act on. The market reaction tells you whether this earnings was "surprise" and "significant". The stock will
New Versio
immediately go up post such announcement and the move will be supported by high volume. 
is Ready
Pre-Market Bu
You can create a  scan captures such breakout. It should basically looks for a out-sized price move on high volume post earnings. One Historical Scan T
of the simple way to create a scan like this in Telechart is:
((C - C1) >= 5 AND V > 10000 AND C >= 62.50 AND V > V1) OR ((( 100 * (C - C1) / C1) >= 8 AND V > 3000 Color Bars by Cond
AND (100 * V / AVGV100) >= 300) AND C > 1)

See What's New

So a stock appearing in such a  scan has a volume surge and the price surge. We then investigate what caused this price and volume
surge or what was "the surprise" that caused such a big move and what is "the nature" of such surprise. Is this information likely to lead
to big move. 

For that we look at : Methods and philosophy

Context of the earnings. Is this a first major earnings acceleration.
How to make millions using mo
What caused this acceleration. Is it one time or likely to persist.
How to develop your own tradin
Does this earnings trend represent a structural change in the industry or the position of this company.
How to swing trade using mome
Is this surprise reflected in current price level.
Buy range expansion at beginn

Market reaction tells you a lot about the likelihood of the future prospect of that stock. If volume is very high, you can assume move has Momentum burst is structural
legs. You will see that most earnings breakouts which go on to make really big  (like say 100% plus kind of) moves in next 1 to 2 months
What to look for in a momentum
post an earnings,  will have huge volume surge, typically of 10 times or more compared to average volume. In many cases the volume
on earnings day might be the highest volume in the history of the stock or multi year high volume.  Swing trading using momentum

Stocks move in short term mom

In earnings breakouts there are two kinds of situations:
1. Stock with no analyst coverage Right entry for swing trade
2. Stock with analyst coverage
Understanding the nature of sw

Stocks with no analyst coverage are typically smaller companies or companies which are out of favor. On such stocks a significant Right belief lead to profit
earnings acceleration compared to last year same quarter as well as quarter over quarter is what to look for. I like to look for companies
15 minute exercise to become b
which had earnings acceleration of 100% plus  in such cases. 

Trading tools I use

How to control risk

Many of the current market leaders were at some stage in their price life cycle such companies. They were neglected small companies
which market noticed when they announced big earnings acceleration.  
Study past winners to improve y

How to develop enduring edge

Stocks with analyst earnings coverage are widely followed stocks on the street. Such companies in most cases are well established
companies. They have predictable earnings most of the time and analyst keep a very close eye on such companies and constantly
How to detect trends early

adjust their earnings target. 

Look for well defined setup

Hunt for stock with big catalyst

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12.02.22, 20:49 Stockbee: What are Episodic Pivots and how to find them
But once in a while such companies manage to significantly surprise the market and that results in a earnings breakout. Earnings How to organise your trading ef
breakout on companies with significant analyst coverage do not do as well as the first kinds. Genuine analyst surprises are rare and in
many cases company pre announce and manage earnings expectations to avoid significant surprise. Established companies also often
How to find good anticipation se

time secondaries and other  capital raising events to time with such surprises and so often you find the EP on such stocks tend to have a How to get market monitor num
pullback.

Episodic Pivots Process Flow

Earnings Breakouts and low float Few good earnings trades can c
This is an ideal combination. In such situation you can have really explosive move. Float below 25 million is ideal for this. The best life
moves happen on float below 10 million. Earnings breakouts on companies with 100 million plus float tend to have pullbacks. Earnings
Swing Trading Process Flow
breakout on stock with 500 million plus float is something which I not really very enthusiastic about unless they are trading near their
historic lows or are in single digits.   Hunt for good trading template

How swing traders make money

So everyday we monitor earnings before and after the market close and look for trades in them. Earnings is not
Half Trouble to find big turnarou
the only catalyst which can move a stock big, many other catalyst can lead to big moves. Such Episodic
Catalyst can help you find many profitable trades. On a daily basis I monitor around 20 types of Episodic How to beat the market for $1.2
Catalyst.
How to find a stock which make
move in a year
Different Type of Episodic Pivots
How to find big winners
Earnings Growth 100% plus
How to find multi year leaders
Earnings 40% plus
How to trade earnings
Earnings Beats by wide margin

Earnings Other
Why I love Virgins

Sales 100% plus but no earnings How to find shorts

IPO Breakout How to find out of favor stocks

Retail  Neglect is a good strategy

Top Sector
Vehicle selection is the key
New order or contract /new order rumor
Three Concepts
Buyout/buyout rumor/mergers/ tie ups/division sale
Do successful traders have diffe
New product launch/news models
Regulatory Changes
Methods trump markets
Drug Approval
Markets and Methods
Drug /marketing Tie Up
Can you learn trading from boo
Natural disaster/ war/ disease
Are you lost in the technical ana
Shortages

Rate Increase

Media Mention New Version

Analyst upgrade/downgrade Ready
Declares Dividend
Pre-Market Bu
Financial Engineering 
Historical Scan T
Junk of the bottom rally

Color Bars by Cond

Related Posts
See What's New
How To Trade Earnings

How to trade earnings Part2

How to trade earnings Part3

Earnings and Bulkowski

Improving odds in earnings breakout

Earnings Season- Time to be very careful...

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Earnings and Dan Zanger

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models
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Pivots

How to buy at the right buy poin

Are you serious about your trading?
How to develop pullback metho

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12.02.22, 20:49 Stockbee: What are Episodic Pivots and how to find them

If you are serious about your trading and want to build an enduring edge the Stockbee Member site might help you. How to develop trading expertis
Members tell me they have tried lot of things before coming to my site and it has offered them the most extensive and
How to find breakouts on stocks
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How to find high probability sho

It is only for those who want to develop their own self sufficient trading method. It is not a stock picking service. It is
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Unless you understand that no site, no service, and no mentoring is going to work. How to find shorts using Telech

How to find stocks likely to boun

Why traders come to stockbee? Telechart

How to find stocks likely to go u

The member site is one of the most recommended site for learning to trade by other traders and bloggers. You will see
no advertising, no hard marketing, no promotions, no free offers, no affiliate marketing, no incentive to other bloggers How to find stocks with high sho
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How to trade earnings

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Why do post bankruptcy p
By
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at
February 12, 2010

do well ?
25 stocks with momentum

6 comments: 12 high volume movers

Earnings breakouts offer
ppmoore
said... opportunities in bearish
Hello Pradeep,
What are Episodic Pivots
how to find them

I recently discovered your site through the Kirk Report, and was especially interested in your EP scan How to become good at tr
for Telechart.
Episodic Pivots
KCP: Kenneth Cole Produ
earnings breakout
I tried to reproduce the scan using Amibroker, and using its built-in backtester, didn't find the result
ecouraging (about 6% CAR). However, when I modified the scan to also detect the subsequent flag 20 stocks with momentum
after the breakout, as described in the Earnings Flag pattern on p893 of Bulkowski's book, which you The little secret to trading
also referred to, the results for the period 2000 to the present were about 50% CAR.
success
The Kirk Report Strategy
This scan is a purely mechanical buy/sell backtested system, so I would expect better results in real- Session
life.
22 stocks with momentum
GPRE: earnings breakout
Thanks for building this site. I intend to subscribe.

LF: earnings trade examp

Paul Which stock makes the bi

move in a year
Feb 21, 2010, 8:17:00 PM Two possible ways to find
One Possible buy idea
Pradeep Bonde
said...

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12.02.22, 20:49 Stockbee: What are Episodic Pivots and how to find them
I buy less than 1% stocks from that scan. Tere are additional criteria like eps growth, sales growth, ► 
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extent of neglect, nature of catalyst which are used to narrow the scan candidates further. So it is not ► 
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a pure mechanical method.
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Feb 22, 2010, 8:52:00 AM ► 
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ANS
said...
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Pradeep,

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Why do you use 8% and not 6, 10 or some other number? What's the reasoning behind the selection ► 
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criteria being a rise of 8%. ► 
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► 
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PEAD basically says that a company with earnings surprises will good stock price appreciation in
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Pradeep Bonde
said...
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Going by past experience and research typically a stock which makes 85 plus kind of move on
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earnings tend to do well.

I also use a monthly EP scan to find stocks that breakout later after earnings. Besides that i also use ► 
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a screen for stocks which had 50% plus earnings surprise last quarter. So there are many ways in ► 
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ANS
said...
I tried finding in the articles on Episodic Pivots about setting stops, however could not find anything.
The entry criteria are pretty well definied, such as running the scan and looking at what news item
caused the move as well as what was the chart action prior to the move. However, I could not find
anything about a stop.

What sort of exit strategy should one follow if trying to trade the EP method?
Sep 30, 2010, 3:31:00 PM

Pradeep Bonde
said...
Because we track earnings daily most of the time we enter these kind of trades in pre market or at
open. In such cases the stop is the low of last 2 days before entry. The exits are in 4 parts with profit
target of 20% plus.
Sep 30, 2010, 3:36:00 PM

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