{"id":21993,"date":"2024-07-18T07:30:05","date_gmt":"2024-07-18T11:30:05","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=21993"},"modified":"2024-07-18T07:30:05","modified_gmt":"2024-07-18T11:30:05","slug":"an-earnings-season-pattern","status":"publish","type":"post","link":"https:\/\/stage.jeffclarktrader.com\/market-minute\/an-earnings-season-pattern\/","title":{"rendered":"An Earnings Season Pattern"},"content":{"rendered":"

A bad earnings reports can really tank a stock…<\/p>\n

And there’s a pattern I’ve identified over the past earnings season.<\/p>\n

Once the selling pressure was exhausted, the stocks rallied back up towards their declining 50-day moving average lines about one month later.<\/p>\n

It’s not uncommon for stocks that fall hard following a poor earnings report to decline for several days… get wildly extended to the downside… and then bounce back up towards their 50-day moving average lines.<\/p>\n

Indeed, there are plenty of recent examples.<\/p>\n

Take a look…<\/p>\n

<\/p>\n

\"Image\"<\/p>\n

\"Image\"<\/p>\n

\"Image\"<\/p>\n

These are just a few of the dozen or so examples of this pattern I’ve identified over the past earnings season.<\/p>\n

Another Victim<\/h2>\n

Walgreens Boots Alliance (WBA) is the latest victim of a huge decline on a bad earnings report.<\/p>\n

The company missed its revenue estimates. It lowered its forward guidance for earnings and revenues. It announced it was closing a “significant number” of stores.<\/p>\n

The company gave investors no reason to own the stock. So… they sold. And, they kept selling for several days following the report.<\/p>\n

WBA traded recently for less than $11 per share – its lowest price since 1998.<\/p>\n

But here’s how it’ll look if it follows the pattern of companies missing earnings, and jumping back up to its 50-day moving average…<\/p>\n

\"Image\"<\/p>\n

There’s no guarantee, of course, that WBA follows this path.<\/p>\n

But Walgreens is a profitable company. Management estimates it will earn at least $2.80 per share this year. That means, at less than $12 per share, WBA trades for over four times earnings.<\/p>\n

<\/p>\n

\n
\n

Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/p><\/div>\n<\/div>\n

<\/p>\n

The stock trades for just 74% of book value, and 0.31 times sales.<\/p>\n

So, given the cheap fundamental value of the stock, and given this consistent technical pattern, I like the chances for WBA to bounce back towards $14, or perhaps a bit higher, over the next few weeks.<\/p>\n

Best regards and good trading,<\/p>\n

\"Signature\"<\/p>\n

Jeff Clark
Editor, Market Minute<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

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