surface is, well, just the beginning. Much of the story lies below and beyond. Why? Trading never sleeps. Life’s for living and the market’s for winning. Yesterday’s trade war turbulence made that both more difficult, and easier. The value of existing positions was dragged down, while better prices were being created. We intend to buy more of what we already own, thus reducing our cost basis. But not yet. The volatility picture has two additional pieces.
The regular trading session is the sun-bubbly party. Extended hours is the exclusive memory-making after party. Many will tell you to remain top-side and in bounds. Most do, rightly so. Every explorer is warned. Only the few move past those entreaties. They’re the ones with tales to tell.
The pre-market and after hours sessions are known as “The Wild West.” True. Barrel-head bargains are cut in mere minutes while butt-fugly knives routinely fall from a darkened sky. Collectively these flickering hours are called “extended,” and oodles of the good stuff resides there. We go often now, and so might you. We have two tales, in HD detail–and close up gruesome. Yet we go, to get that good stuff. Plan and know, before you go. Otherwise, you’re just working for the man.
clocks quick-stepping backward takes your mind off the good stuff on a flash sale, don’t go. If for you drama is humiliated Barbie facing a declined credit card, don’t go. If impromptu hysterical selling interrupts your reading of the actual facts, don’t go. If you’ve been told, you’ve been warned. However if you truly know your company, and your prices, volatility is your friend. Extended hours trading is where you can go for more of yours, in rapid-cycle fashion.
hours are like the Olympics, only less corrupt. The IOC routinely misses both the top and bottom lines, while providing glittering guidance which never actually materializes. No one is ever held accountable. And earnings season? Earnings season is a spilling cornucopia of skunky fear, lingering regret, and wholesome goodness now nearing an end. STOCKjAW’s been working like car salesmen in a freak hail storm. Honestly we can’t even remember where it began. But we do know we’ve been paid.
Abiomed, the Danvers Mass.-based maker of the Impelia line of heart pumps, missed everything and was dumped like a leper on the side of the road. Sj was there. ABMD commenced a dead-engine helicopter drop as soon as it began telling its’ story. No one cared about any details, or even appeared to be listening. We were. We were yet reading the facts as shares hit 18.43% down. Then they hit -19.6%.
No one seemed to notice the light volume, or the actual Abiomed story. Adjusted EPS of $1.07, vs Capital IQ consensus $1.10. A miss. Yet Reuters had an EPS estimate of $1.08. Next, the Associated Press reported; “The results met Wall Street expectations. The average estimate of seven analysts surveyed by Zacks Investment Research was also for earnings of $1.07 per share.” Shares hit 19% down as we continued to read.
Revenues of $207.1 vs. estimate of $218.9. and $174.1 the year ago quarter. Sj does the math–an annualized revenue growth rate of 18.9%. No one chose to include that. Full year revenue growth guidance comes in at 17%-23%, or $900m-945m, below someone’s estimate of $988.7. A distinct true shortfall. Net operating margin forecast of 29%-31%.
ABMD’s share price had crashed $51.03 or 18.43% in a ghastly twenty minute limp-body drop. As trading continued it finally landed on it’s 19.6% bottom. ABMD shares had already declined 11% over 12 months and 15% YTD. Reorienting can be an eye-popping experience. ABMD is creating an annualized 5 year revenue growth rate of 33.2%.
We surged in, almost capturing the very bottom. Look at the chart. STOCKjAW entry price $223.50. STOCKjAW exit price $248.99. Net gain 11.4%. Total investment time, under 2 hours.
10 minute chart.
have such persistence–you wore down my resistance–oops. Stacey Kent obviously understands Chinese trade. Chinese trade policy seems to understand best a baseball bat in a back alley. Hum–well, the numbers are on our side, unless you’re Tim Cook or a farmer. Stay away from agriculture, the Apple complex, and Boeing, and you’ll be mostly good.
The Grim Reaper loses all his boo when you quietly pull him into a seat next to you. Embrace the suck.
Broken trade talks and those spiffy new tariffs are busily tossing in oodles of added fun and volatility to our equity day. And it’s yet earnings season. What’s not to love? We’ve adopted an attitude from the military. “Embrace the suck.” Embracing volatility is simply part of the fun, and there’s plenty of both around. Live scared or go bold, intelligently so.
reporting means everyday somebody else is being unceremoniously shoved about on the street–and we’re there for them, after the shove about. STOCKJAW loves smirking survivors and when they’re dizzied senseless we’re on scene to pick and dust them off, at a discount. Think Square(SQ) and Abiomed(ABMD.) Earnings reports always create overreactions somewhere, which in turn provide profitable entry points. But there’s a method.
1. Buy what you know, and are willing to own longer term. Leave what you don’t. 2. Find the precise reason for the selling, before buying. Things change even fro the best companies. It’s not a bargain if you’re buying trash. Read. Read multiple earnings summaries. Read the company’s press release on the IR section of their site. The front end of the story is almost always an EPS, revenue, or guidance miss.
Circumstances change even fro the best companies. Locate the precise reason for the selling, before buying. It’s not a bargain if you’re buying a big problem.
When those are small, while the fundamentals and thesis remain intact, you may have an opportunity. When digging for precise truth, strategically plum the superbly-organized 10Q SEC filing for the exact details. The 10Q is incredibly helpful and actually easy, once you know the document’s layout. No kidding. We used to skip this wealth, yet now we love it.
All report and many are punished for such, even the righteous. Being there to select from what remains pays. That’s called opportunity and extended hours offers lots of that. After all, the point is buying low and selling higher.
Day of Repeat Crazy
10 minute chart.
5-01–19, SQ, entry price $68.85–Holding. We’ll be here a while. We like it long term.
4-30-19, TREX entry price $67.40–exit $70.30. 4.3%. Total investing time, approximately 2 hours.
STOCKjAW uses Schwab brokerage services exclusively. Many exist but they’ve been good to us, and we know their tools inside and out. We use and love others as well. Find a set of charting tools that offers the features demonstrated above. Market action never really stops. Nor should your search for the facts. In investing knowledge is opportunity. Good luck and enjoy your journey.
Extended Hours Anthem