Trade Alert: 10/18/2023

Two bullish trades and one bearish trade on companies reporting after the close today or before the open tomorrow.

Earnings Trades

Recall we are looking at seven different metrics for earnings trades:

• LikeFolio’s earnings score based on social data. The higher the number, the more bullish, the lower (more negative) the number, the more bearish.

• Portfolio Armor’s gauge of options market sentiment.

• Chartmill’s Setup rating. On a scale of 1-10, this is a measure of technical consolidation. For bullish trades, we want a high setup rating; for bearish trades, a lower one.

• Zacks Earnings ESP (Expected Surprise Prediction). This is a ratio of the most accurate analyst’s earnings estimate versus the consensus estimate.

• The Piotroski F-Score. A measure of financial strength on a scale from 0-9, with 9 being best.

• Recent insider transactions.

• RSI (Relative Strength Index). A technical measure of whether a stock is overbought or oversold. We’re looking for RSI levels below 70 for bullish trades and above 30 for bearish ones.

None of these metrics alone are dispositive, but we’ll consider the preponderance of evidence when placing our bets. We’ve got bets on two names today, both bullish. Here’s how they stack up on our seven metrics.

The Stocks We’re Bullish On

Bullish Stock #1

1. Social data: +61.

2. PA Options sentiment: Bullish.

3. Setup rating: 8

4. Zacks ESP: -2.74%

5. F-Score: 6

6. Recent insider transaction(s): Some open market sales over the summer, dwarfed by Elon Musk’s sales at the end of last year.

7. RSI: 49

Bullish Stock #2

1. Social data: +25.

2. PA Options sentiment: Moderately Bullish.

3. Setup rating: 7

4. Zacks ESP: +0.24%

5. F-Score: 4

6. Recent insider transaction(s): Open market sales in May and August, at prices >10% higher than here.

7. RSI: 42

Bearish Stock #1

1. Social data: -55.

2. PA Options sentiment: Bullish.

3. Setup rating: 5

4. Zacks ESP: -3.88%

5. F-Score: 6

6. Recent insider transaction(s): Open market sales every month from April to October.

7. RSI: 31. This is close to oversold territory, so we’re going to put a slightly lower bid that usual on this trade and not chase it.

Details below.

Bullish Trade #1