When a stock gaps higher and keeps running, it generally tells me that the top of gap support is what we need to concern ourselves with. It’s definitely not a guarantee that it holds, but the odds are greater. When I trade stocks, it’s all about trying to situate the odds in my favor. On July 15th, Waters Corp (WAT) saw an extremely positive reaction when it raised its revenue guidance. At one point during the trading day, WAT was up more than 20% on the news. Since that time, however, we’ve seen the actual quarterly results come in and WAT has moved all the way back down to the top of gap support, despite beating consensus estimates in terms of both revenues and EPS. Earnings saw a very strong beat, $2.10 actual vs. $1.53 estimate. Patient investors/traders could be rewarded now, though, with WAT back at key gap support:
We never know for sure which direction a stock might turn, but I do know this. Buying WAT at its current level provides a much better reward to risk opportunity than buying it 2-3 weeks ago. (Disclosure: I own WAT shares)
If you’d like to learn more about our style and strategy at EarningsBeats.com, I’d encourage you to sign up for our FREE EB Digest newsletter. It’s published 3x per week and provides great educational content, as well as trading opportunities. There’s no credit card required and you can unsubscribe at any time. CLICK HERE to sign up!
We’ll also be hosting our quarterly “Top 10 Stock Selection – Sneak Preview” event on Monday, August 10th, at 4:30pm ET. This event will be open to EVERYONE in the “EarningsBeats.com community” and we’ll discuss our research and strategies that have enabled us to crush the S&P 500. Our Model Portfolio is now up by more than 123% (not a typo) over the past 21 months, easily distancing the S&P 500’s 22% gain over the same period. We’ll send out webinar room instructions to our entire EarningsBeats.com community, including free EB Digest subscribers. So that’s another reason you should consider signing up for our newsletter, if you haven’t already done so.
Happy trading!
Tom Bowley, Chief Market Strategist
EarningsBeats.com