As of 11/20/2019
  Indus: 27,821 -112.93 -0.4%  
  Trans: 10,695 -152.59 -1.4%  
  Utils: 855 +6.70 +0.8%  
  Nasdaq: 8,527 -43.93 -0.5%  
  S&P 500: 3,108 -11.72 -0.4%  
YTD
 +19.3%  
 +16.6%  
 +19.9%  
 +28.5%  
 +24.0%  
  Targets    Overview: 11/14/2019  
  Up arrow28,200 or 27,100 by 12/01/2019
  Up arrow11,400 or 10,600 by 12/01/2019
  Up arrow870 or 800 by 12/01/2019
  Up arrow8,700 or 8,200 by 12/01/2019
  Up arrow3,200 or 3,025 by 12/01/2019
As of 11/20/2019
  Indus: 27,821 -112.93 -0.4%  
  Trans: 10,695 -152.59 -1.4%  
  Utils: 855 +6.70 +0.8%  
  Nasdaq: 8,527 -43.93 -0.5%  
  S&P 500: 3,108 -11.72 -0.4%  
YTD
 +19.3%  
 +16.6%  
 +19.9%  
 +28.5%  
 +24.0%  
  Targets    Overview: 11/14/2019  
  Up arrow28,200 or 27,100 by 12/01/2019
  Up arrow11,400 or 10,600 by 12/01/2019
  Up arrow870 or 800 by 12/01/2019
  Up arrow8,700 or 8,200 by 12/01/2019
  Up arrow3,200 or 3,025 by 12/01/2019

Bulkowski's Good Earnings Surprise

 

For more information on this pattern, read Encyclopedia of Chart Patterns Second EditionEncyclopedia of Chart Patterns 2nd Edition book., pictured on the right, pages 868 to 879.

If you click on the above link and then buy the book (or anything) while at Amazon.com, the referral will help support this site. Thanks.

-- Tom Bulkowski

$ $ $

A good earnings surprise is an event pattern in which a company issues an earnings announcement and the market interprets it as better than expected. But, almost half peak after rising 10% in less than 2 weeks. Discovered by Thomas Bulkowski in the fall of 2003.

Important Results
Identification Guidelines
Trading Tips
Example
See Also

 

A good earnings event pattern

The Ideal Good Earnings Event Pattern

Good Earnings Surprise: Important Bull Market Results

Overall performance rank (1 is best): 5 out of 6
Break even failure rate: 29%
Average rise: 24%
Throwback rate: 41%
Percentage meeting price target: 76%

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

Good Earnings Surprise: Identification Guidelines

CharacteristicDiscussion
Price trendUpward leading to the announcement for the best performance.
MarketThis event pattern works best in a bull market.
AnnouncementThe company announces earnings and the stock makes a large upward move that day or the next if the market was closed.
Tall swingLook for announcements in which price makes a large intraday price swing, 2 or 3 times the average daily intraday price range over the last month.
Yearly lowFor best performance, select announcements that occur within a third of the yearly low, just make sure price is trending upward.
Upward breakoutA breakout occurs when price closes above the high posted on the announcement day.
VolumeSelect patterns with heavy announcement day volume, above the 30-day average.

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Good Earnings Surprise: Trading Tips

Trading TacticExplanation Good earnings event pattern measure rule
The Measure Rule
Measure ruleOn the announcement day, subtract the intraday low (point B) from the high (A) and multiply the difference by the above “percentage meeting price target.” Add the result to the intraday high (A) to get a price target (C).
ConfirmationWait for price to confirm the pattern because traders may push price down instead. An upward breakout (confirmation) happens when price closes above the high posted on the announcement day (point A in the figure to the right).
TrendTrade with the trend. Buy an upward breakout only if the market and industry are trending higher.
SwingersPlace an order to sell if the stock hits its price target.
CautionFailure rates are high. Almost half (48%) rise just 10% before tumbling and that occurs in less than 2 weeks.

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Good Earnings Surprise: Example

Good earnings event pattern example

The above figure shows an example of a good earnings announcement event pattern. Price makes a large price swing when earnings came in better than expected. Price climbed 7%. But, over the next three days, price retraced its gain and staged a downward breakout (price closed below the red line). The following day, price recovered and climbed to a new high. Then, as is so common with this event pattern, price rounded over and headed back down during the next several weeks.

-- Thomas Bulkowski

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See Also

 

Support this site! Clicking any of the books (below) takes you to Amazon.com. If you buy ANYTHING while there, they pay for the referral.

My novels:      New                  Bumper's Story Head's Law

Chart Patterns: After the Buy Getting Started in Chart Patterns, Second Edition Trading Basics Fundamental Analysis and Position Trading Swing and Day Trading Visual Guide to Chart Patterns Encyclopedia of Candlestick Charts Encyclopedia of Chart Patterns 2nd Edition Trading Classic Chart Patterns

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