Delayed reaction Episodic Pivots — Transcript

Full transcript

1. 0:00what happens to an episodic pivot or
2. 0:03earnings breakout after the earnings St
3. 0:06is a very important thing because a lot
4. 0:08of time on the earnings day the stock
5. 0:11makes a big move but it doesn't follow
6. 0:14through and this is a very common thing
7. 0:17because uh what is happening nowadays is
8. 0:21that earnings news leads to a very big
9. 0:24gap and when earning news leads to a big
10. 0:27gap total move is the stock is capable
11. 0:31of making gets priced in on the day one
12. 0:35and then after that or it happens for
13. 0:38two or 3 days and after that the stock
14. 0:40doesn't have anything left in the tank
15. 0:43or the stock just doesn't do anything it
16. 0:45just like it goes sideways or it pulls
17. 0:48back or it just like a uh for months it
18. 0:52will not do anything and then after that
19. 0:56it has a delayed reaction so this
20. 0:59delayed reaction to earnings or a
21. 1:02delayed reaction to an episodic pivot is
22. 1:05a good setup variation which is good to
23. 1:09trade in markets current markets or the
24. 1:12markets which are nowadays uh in if
25. 1:15you're trading say episodic P kind of a
26. 1:17methodology 20 years ago or 25 years ago
27. 1:21uh this was not such a popular way setup
28. 1:25kind of a thing or earnings related
29. 1:26strategies were not so popular uh there
30. 1:29were know algorithmic Traders trading
31. 1:32earnings or things like that at such a
32. 1:35industrial scale like it is today so
33. 1:38today if a stock comes out with an
34. 1:40earnings there are these news
35. 1:42interpretation algorithms which
36. 1:44immediately read the news as soon as it
37. 1:46is released and then can project how
38. 1:48much the stock is going to go up and
39. 1:50that's why you'll see explosive moves in
40. 1:52the after hours and that is why lot of
41. 1:54trading in this kind of earnings moves
42. 1:57has moved into after hours or pre-market
43. 2:00now let's look at some of the examples
44. 2:02what happens like when you get into a
45. 2:05trade and nothing happens after that and
46. 2:07the trade just like and it doesn't do
47. 2:09anything and this is very common also on
48. 2:12second or third EPS the first time it
49. 2:15works very well but the second time uh
50. 2:17it doesn't really happen that way so
51. 2:19let's look at like one of the things
52. 2:20like deers is a basically earning play
53. 2:23which work very well here now here
54. 2:25there's an earnings but on the earnings
55. 2:28day itself the stock went up so much 14%
56. 2:31And then after that it doesn't really it
57. 2:33really didn't do much and it's been
58. 2:35doing nothing since then basically and
59. 2:37now it's this might be the delayed
60. 2:39reaction kind of a thing another stock
61. 2:42iot had a very good earnings earnings
62. 2:45day stock makes a big move right nothing
63. 2:47happens stock just like and it pulls
64. 2:49back then like and it pulls back and
65. 2:51then after months the stock makes this
66. 2:54move so delayed reaction and this stock
67. 2:56has a history of doing that earlier also
68. 2:58it had big move big gap on earnings and
69. 3:02nothing happens and this can be very
70. 3:03frustrating and this is why you have to
71. 3:06conceptualize and use this trade uh or
72. 3:10look at this trade as a two part trades
73. 3:12one part is what happens on the day of
74. 3:14the earnings and second part is what
75. 3:17happens after that and how to trade the
76. 3:18second part of the move if there is a
77. 3:20good Catalyst another stock which is
78. 3:23recently had a very good Catalyst uh the
79. 3:26Catalyst was good but then what happened
80. 3:30is that this particular stock on the day
81. 3:32of the Catalyst itself went up 56% so
82. 3:36when a catalyst is so strong and it goes
83. 3:38up 56% on the day of the earnings itself
84. 3:42after that it hardly made much of a move
85. 3:45and then see yesterday it like and ended
86. 3:47up uh almost reversing some of the games
87. 3:49so this kind of a stock for this kind of
88. 3:53setups here also you'll see earnings was
89. 3:56there it didn't really it did do well
90. 3:58last time uh this earnings it just went
91. 4:01up for 2 three days and so lot of these
92. 4:04earnings related trades are going to
93. 4:06fall into this category where they get
94. 4:09prized in or things get prized in in one
95. 4:11day next tracker right and you see big
96. 4:15move happened 2 days the stock went up
97. 4:18and after that nothing really happened
98. 4:20the stock went down and now today there
99. 4:23is an earnings on this and it might go
100. 4:25up a based on that earnings again so
101. 4:28delayed reaction to earn earnings
102. 4:30Delayed Reaction which is like and you
103. 4:32don't really or you trade that stock on
104. 4:35the day of the earning just as a one or
105. 4:37two days trade because it makes such an
106. 4:39explosive move and then wait for a
107. 4:42delayed reaction is a very good setup
108. 4:45variation for episodic pivot and in
109. 4:48order to do that the way you can keep
110. 4:51track of these stocks which are good
111. 4:53earnings is to create some sort of a
112. 4:55scan for stocks which reacted positively
113. 4:59to earn or which had good earnings and
114. 5:02then keep it them in a watch list and
115. 5:04continuously look for them for a delayed
116. 5:08reaction this also works very well the
117. 5:09delayed reaction works very well on the
118. 5:12short side because on the short side
119. 5:13what happens is when there is a negative
120. 5:15news the stocks tends to drop
121. 5:18significantly on the day when it drops
122. 5:20significantly there are always these
123. 5:21people who are going to cover their
124. 5:23shorts or there are people who are
125. 5:25constantly buying weaknesses or their
126. 5:27core methodologies to buy a stock
127. 5:30which has gone down a lot and then it
128. 5:32bounces back but after some days the
129. 5:35bounce gets over and then the move
130. 5:39starts down again let me show you an
131. 5:41example uh of this uh
132. 5:45M
133. 5:50MBL now MBL had a earnings which was
134. 5:53like and it missed earning guided down
135. 5:55uh but immediately it bounced and 3 4
136. 5:58days it bounced and after after that it
137. 6:00went down so delayed reaction uh
138. 6:04episodic p on short side uh sometimes
139. 6:07like an you can get a second entry like
140. 6:10Accenture had like this drop and then
141. 6:13rallied and then here offered you an
142. 6:16entry so keeping an eye on stocks which
143. 6:19had episodic p and those episodic PS
144. 6:22after they happened uh after 5 6 7even
145. 6:26sometimes after a month they make the
146. 6:28moves and that gives you another second
147. 6:32chance to make money from the stocks
148. 6:34which had good earning so what I do is I
149. 6:37create uh a watch list of stocks which
150. 6:41has reacted positively for one or two
151. 6:43days to earnings and then keep an eye on
152. 6:45them keep an eye and keep an eye and if
153. 6:47they set up either as a shot or set up
154. 6:50as a delayed reaction then I try and
155. 6:52enter them as a delayed reaction and
156. 6:54this is becoming more and more frequent
157. 6:57uh thing in this market Market current
158. 7:01years so delayed reaction EP is a setup
159. 7:04variation of EP which offers you a lower
160. 7:07risk entry and delayed means like after
161. 7:10a few days typically uh most of these
162. 7:13stocks will make give you an entry
163. 7:15within next 10 days or 15 days of having
164. 7:18an earnings like say uh you have the
165. 7:21stock currently recently SG which had
166. 7:25like a very positive reaction to
167. 7:27earnings but then again the stock went
168. 7:30up almost 40% on the earnings day and
169. 7:32now the stock is not doing anything so
170. 7:35it might set up as a delayed reaction uh
171. 7:38earnings the volume was very high and
172. 7:41that kind of a stock is capable of like
173. 7:44making a second leg or a third leg kind
174. 7:46of a move obviously you're looking for a
175. 7:47second leg you're not looking for a
176. 7:49third leg kind of a move so if you're
177. 7:51trading episodic P or arnings reaction
178. 7:54kind of a trading uh look at Delayed
179. 7:58Reaction setup as
180. 7:59something to add to your Arsenal because
181. 8:03stocks are having very large moves on
182. 8:05the day of the earnings then they go up
183. 8:07for one or two days and then nothing
184. 8:10happens so you trade that stock on the
185. 8:12earnings day or on the EP day just as a
186. 8:16one day phenomena or two day phenomena
187. 8:18and then uh wait for a delayed reaction
188. 8:22set up and some people might be better
189. 8:24off not even trading it on the first day
190. 8:27because the first day moves are so fast
191. 8:29and so difficult to get in you need a
192. 8:31wider stop while the delayed reaction uh
193. 8:33you're watching that stock so you can
194. 8:35get a better stop and you can get a
195. 8:37better risk reward strategy so delayed
196. 8:40reaction EP as a variation of the EP is
197. 8:43a good strategy to look at for those of
198. 8:45you who already know what an episodic p
199. 8:49is and are trading episodic Poots