Wall Street has been accumulating stocks over the past few weeks in anticipation of strong results. That doesn’t necessarily mean we’ll see a positive reaction to those earnings, because there’s the old “buy on rumor, sell on news” adage that frequently comes true. But there’s no doubt that Wall Street looks for solid results from companies that it sees as leaders. That brings me to a medical equipment company that will report its quarterly results before the bell tomorrow – Thermo Fisher Scientific (TMO):
Medical equipment stocks ($DJUSAM) have begun strengthening relative to the S&P 500 and Wall Street has anointed TMO a leader in this space. There’s generally a reason for that and we’ll likely hear it tomorrow morning. Expect quarterly revenues and EPS to be above consensus estimates. Again, that may not result in a huge gap higher, but I believe it’ll be followed by more strength in the weeks and months ahead.
Want to see what a stock looks like when Wall Street abandons it?
Well, let’s go no further than Valero Energy (VLO). I think when you see this relative chart, you’ll see the big difference in expectations. VLO reports Wednesday morning before the bell. Take a look at this absolute and relative price weakness:
Wall Street wants no part of VLO, so I’d be looking for a sub-par quarterly report when it reports on Wednesday.
Later today, at 4:30pm ET, I’ll be unveiling yet another ChartList for our EarningsBeats.com members to download ahead of earnings reports the next 10 days or so. I’ll be breaking down the best and the worst of the upcoming earnings reports. If you’re a member of EarningsBeats.com and also at least an Extra member at StockCharts.com, you’ll be able to download this ChartList right into your StockCharts.com account. In addition, I’ll show everyone a few tips and tricks on how you can use the ChartList feature at StockCharts.com to quickly zero in on excellent trading opportunities. Let me give you one example. Imagine knowing that a company poised to report excellent earnings also has one of the highest short %s of float. If that report comes out solid, there’ll likely be shorts scurrying for the exit, driving the price up significantly.
I’ll be showing that and much, much more this afternoon. It only takes a fully-refundable $7 30-day trial to participate in this webinar. CLICK HERE to sign up and begin enjoying one of the best research and educational services anywhere!
Happy trading!
Tom