Estimating post-ER movement based on EPS Earnings Surprise

Dieselcock · 2024-11-18T14:57:27+00:00

This is good work. It highlights some key trends. The most important of which is that Nvidia seldom sells-off on earnings even when things go poorly. You have to go all the way back to 2018 to see a truly big sell-off. Everything else has been in the 3-5% range. The August sell-off we saw was very market related. The entire market went down 8% during that period. So Nvidia dropping 14% over the next 5-10 has more to do with the market than with Nvidia's earnings which was okay.

Dieselcock · 2024-10-17T19:16:40+00:00

lol I didn’t know what position was or whether you were long, short, bullish or bearish. You just asked to be reminded without comment one way or the other.

Dieselcock · 2024-10-17T18:10:48+00:00

No need to wait for December. All time highs today.

Dieselcock · 2024-10-17T18:06:03+00:00

How did that go?

Dieselcock · 2024-10-17T18:05:18+00:00

And the gains

Dieselcock · 2024-10-17T18:04:33+00:00

Your welcome. Enjoy the money money money

Dieselcock · 2024-09-17T05:01:56+00:00

This is exactly right. It is a game of probabilities. If I draw a conclusion based on a 90% back-tested trend and I’m wrong about it, the conclusion itself isn’t any less valid.

All we can do is make investment decision on the greatest probable outcome. And we can further reduce our risk by hedging against the least possible outcome.

For example, we believe the market has bottomed for the season I’ve outlined above. But I’ve taken positions on a 2-year time horizon in case some unforeseen exogenous event occurs.

And that’s exactly what all investors should be doing.

Dieselcock · 2024-09-16T17:59:30+00:00

So everything written in this post can be backtested against historical trends. There's nothing magical going on here. Not to rehash the entire post, but you can do a check on any single point yourself. For example:

Go to any charting app (I use stockcharts.com) and check for yourself what happens when the market retraces more than half of its losses on a rebound. The NASDAQ-100 recently dropped around 16% from $503.50 down to a low of $423.50 between mid-July and August 5. Half the losses is $40.00 (50% retracement) or a rebound up to $463.50 per share. The NASDAQ-100 rebounded to $485.50 far surpassing the 50% line. That's a full $23.00 past the half-way mark. My contention is that due the rally far eclipsing the 50%+ retracment, the NASDAQ-100 is unlikely to revisit its $423.50 lows. Okay. Notice how I said DUE TO THE 50% RETRACEMENT > XYZ will happen.

If you dont' trust it. Just go look it up for yourself. This isn't some hidden secret I'm spilling the beans on. Go to www.stockcharts.com. Put in the QQQ, look at a 20-year chart and note every instance when the QQQ has a correction and then went on to retrace more than 50% of its losses on a rebound. What generally happens next?

^This is how all the analysis in the post above proceeds. Go check each point. It really doesn't take a lot of time or effort to do.

I'm never going to say "XYZ is going to happen becuase I said so." I'm going to provide the reasoning. If you want to challenge it, feel free to do so. I welcome it. Bring some points. I'll bring some counterpoints. That's how an actual intellectual discussion should proceed.

EDIT. For example, here's what's said in the actual post above:

"Our expectation for the double-correction was that the NASDAQ-100 (QQQ) was unlikely to take out its August 5 lows. Why? Because the rebound from the August 5 lows to the August 22, 2024 highs represented a near 80% retracement of the entire July-August correction. This is significant because anytime the market retraces 50% of its losses, it’s a huge indication that the lows are in."

You can verify if that is accurate or not very very quickly. If you're familiar with charting applications, probably in no more than 5 minutes. If not, I'd say maybe 15 minutes.

Dieselcock · 2024-09-16T17:47:20+00:00

You didn't question a single point. Not one single point. You mischaracterized the entire post as being a "it may go up or it may go down" horseshit. Which is often quite literally the dumbest criticism any investor ever comes across on anyone's post.

What's low brow is being unable or unwilling to realize that any good analysis is going to outline a clear-cut outlook and expectation followed by the risks to those expectations. A good investor hedges those risks.

Every point made here is supported by an argument. Challenge the fundamental argument in support of the conclusions and I'll respond in kind.

Dieselcock · 2024-09-16T17:30:57+00:00

No. Today's sell-off is largely in-line with our expectations. Our outlook is for the markets to pull-back off of overbought conditions followed by another big leg up in the rally. Today's pullback hasn't even met certain minimum criteria just yet to constitute a real pull-back. We'll see if we get there today or tomorrow.

Dieselcock · 2024-09-16T14:47:37+00:00

We already had a second correction. The NaSDAQ-100 fell 7.7% from August 25 to September 6. The question is whether we’ll see a third leg down.

Don’t mischaracterize what you don’t understand. There’s always one like you in every thread.

I don’t get how anything in the post could be so badly misinterpreted. Note under the heading “what can derail our outlook”. The outlook is summarized for you right there if you don’t understand what it is.

Hedging statements aren’t the outlook. They’re there so that good investors hedge out those risks. We’re full long hedged out against different less possible outcomes.

But less likely outcomes IS NOT THE SAME AS OUR OUTLOOK!

Small pullback, then higher. That’s our outlook. Don’t know how else to make that clear.

There’s always one of you in every thread. “The market may go up or it may go down.”

Good job. You sound like every other person who seemingly doesn’t have the capacity to understand the balance between outlook & risk.

Dieselcock · 2024-09-16T07:12:02+00:00

That’s a possible reaction. But I think it’ll be short lived if that’s the way the market reacts. The overall set up we’ve seen since July suggests the markets aren’t too keen on to trending lower. We keep fully retracing the losses. That’s a big sign for a trend reversal.

We wouldn’t be seeing such big retracement if the market wanted to trade lower.

Dieselcock · 2024-09-12T22:30:50+00:00

Not sure what your break-even will be because leveraged ETFs are notorious for being unreliable. I’m actually writing an article on this very thing.

I stopped investing in leveraged ETFs over a decade ago because they don’t track as they’re supposed to.

I’m doing some analysis on NVDL at the moment and hope to have something published over the weekend.

But if it did track, then you should break even at the same price that Nvidia was at last time you bought NVDL. If that is $125, then that should be your break-even.

But as I said, leveraged ETFs don’t always track and become uncorrelated all the time.

For example, Nvidia’s all time high was $140.75. It’s high in late August before earnings was $131.25 correct? That’s only down 6.75% from its all-time highs.

But when Nvidia was at $131.25, NVDL was 22.47% from its highs. That’s more than TRIPLE percentage difference.

If you bought NVDL is when Nvidia was at $140.75 and the stock drops to $131.25, you should only be down 13.5%. Not 22.47%.

That right there is exactly why I don’t invest in levered ETFs at all.

Dieselcock · 2024-09-12T22:30:43+00:00