Trading through an Earnings Surprise
Thesis & Catalyst For Rite Aid Corporation (NYSE:RAD)
There is Earnings announcement for RAD dated 12/18/2013 the day before I was planning to buy it on Extended hours because its in consistent with its Earnings estimate on first quarter and 2nd. In addition its 3rd quarter earnings surprised above estimates +113%.
with the history of meeting earnings estimates there is a possibility that the price will shoot up on the date of the announcement along with Technical signals from MACD bullish crossover, OBV hits its resistance and SS is near Oversold 35%ish and there is a crossover %K on top of %D. this quantifies a breakout.
What made me hold back to place an EH trade is because the OVERALL market is struggling sideways it and it has a BETA of 1.6 so it means it is 60% more volatile than the market.
with my uncertainty even though factors are clinging on a bullish breakout. I decided to place a Trailing Buy stop of 0.50% closing price the day before is 6.06 thinking I need a price movement confirmation first before buying. What did happened is RAD stock opened at 7.05 giving me a fill for 7.01 because of Volume traded EH that pushed the opening price at a tremendous high point.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.