As of 05/01/2025   Indus: 40,753 +83.60 +0.2%     Trans: 13,624 -15.91 -0.1%     Utils: 1,036 +2.75 +0.3%     Nasdaq: 17,711 +264.40 +1.5%     S&P 500: 5,604 +35.08 +0.6%	YTD -4.2%   -14.3%    +5.4%   -8.3%   -4.7%	Targets    Overview: 04/25/2025     41,700 or 38,000 by 05/15/2025   14,400 or 13,000 by 05/15/2025   1,075 or 1,000 by 05/15/2025   18,300 or 16,500 by 05/15/2025   5,700 or 5,300 by 05/15/2025
Chart Pattern Indicator: on 4/15/25

As of 05/01/2025   Indus: 40,753 +83.60 +0.2%     Trans: 13,624 -15.91 -0.1%     Utils: 1,036 +2.75 +0.3%     Nasdaq: 17,711 +264.40 +1.5%     S&P 500: 5,604 +35.08 +0.6%	YTD -4.2%   -14.3%    +5.4%   -8.3%   -4.7%
Targets    Overview: 04/25/2025     41,700 or 38,000 by 05/15/2025   14,400 or 13,000 by 05/15/2025   1,075 or 1,000 by 05/15/2025   18,300 or 16,500 by 05/15/2025   5,700 or 5,300 by 05/15/2025
Chart Pattern Indicator: on 4/15/25

Bulkowski on Good Earnings Surprises

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

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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.

Good Earnings Surprise: Important Bull Market Results

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

Good Earnings Surprise: Identification Guidelines

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Good Earnings Surprise: Trading Tips

Trading Tactic	Explanation	The Measure Rule
Measure rule	On 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).
Confirmation	Wait 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).
Trend	Trade with the trend. Buy an upward breakout only if the market and industry are trending higher.
Swingers	Place an order to sell if the stock hits its price target.
Caution	Failure 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

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

• An inverted dead-cat bounce is similar to surprisingly good earnings but happens quicker.
• Inverted dead-cat bounce. The most important event pattern every trader should know.
• What do you know about event patterns?
• Flags and high and tight flags. What's the difference?
• Gauging Gaps. This article fills in the gaps.
• 3 tips might make your trading more profitable.
• 3 trading mistakes and how to fix them.

Never try to out stubborn a cat.