Trade Alert: Earnings, 9/18/2023

A bullish bet on a company reporting before tomorrow's open.

Getting Back To Earnings Trades

Last week, I didn’t see any attractive earnings trades. Partly, that was a result of declining volume, as we’re getting toward the end of Q2 earnings season. This week, there are a few that look interesting.

Remember the metrics we’re using when selecting these 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.

Another metric I keep an eye on but don’t post all the time is short interest. If short interest is in the mid-to-high teens or higher, I’ll note it here.

Our Bullish Stock

Here’s how today’s first retailer stacks up on our seven metrics:

1. Social data: +51.

2. PA Options sentiment: Bullish.

3. Setup rating: 7

4. Zacks ESP: 2.88%

5. F-Score: 6

6. Recent insider transaction(s): net open market sales in June and July.

7. RSI: 50

Details below.

Today’s Bullish Trade