EarningsBeats.com Digest for August 5

Dear EarningsBeats Community Member.

Save the Dates!

We're now exactly two weeks from our Top 10 Stock Picks webinar, scheduled for August 19, where Tom Bowley of StockCharts.com will unveil his top 10 Model, Aggressive and Income portfolios. These have become extremely popular events so we have two dates for you to save.

To prep the EarningsBeats.com community, we will be having a Sneak Preview event on Monday, August 12. This will be a FREE event that you will be invited to attend. During this webinar, Tom will describe the methodology behind his Top 10 Stock Picks and will discuss results to date - Model from November 19, 2018 up until the event and Model, Aggressive and Income results from May 19 up to the date of the event. You WON't want to miss this event! Then, the main event will take place on August 19. So mark your calendars and we'll keep you posted.

At your service,

John Hopkins
EarningsBeats.com

Signs of Weakness

I spend a lot of time here on EB Digest, my blogs at StockCharts.com, MarketWatchers LIVE, etc. discussing how to pick relative strength winners, especially those that have excelled on a fundamental basis as well. I think it's just as important to know when a stock isn't working and when we should bail. Let's take Network Appliance, Inc. (NTAP) as an example:



Hopefully, you can see the difference between a stock that is outperforming and one like NTAP that is badly lagging. Yes hindsight is 20/20 and we can see that NTAP took a big hit on Friday after issuing a revenue warning on Thursday afternoon. But this wasn't a shock to Wall Street. They've been selling NTAP for months. It shows up quite clearly in the relative strength charts above. Computer hardware stocks ($DJUSCR) were rallying off the June low, outperforming the S&P 500. NTAP was not rising at all, despite its peers benefiting from a strong industry group run. That should tell us something. If it doesn't, then we end up holding, listening to the warning, and getting absolutely clobbered.

As a final note, in its prior quarter, NTAP reported revenues and EPS that fell short of consensus estimates, so the stock was not on my Strong Earnings ChartList. That keeps me from trading a stock like this.

A long time ago, I heard a Wall Street adage, "there's never just one cockroach in the kitchen". Relative weakness in NTAP shares were warning us of another cockroach and we saw it.....on Thursday after the bell. Call an exterminator.

Happy trading,

Tom Bowley
Sr. Technical Analyst
StockCharts.com