The Upside Earnings Alert
A Hedge Against Earnings Shortfalls
by Barbara J. Simon

Technology stocks fell again Friday as the market and especially the tech sector have been plagued by earnings shortfall announcements. How do traders grapple with some major earnings warnings and still profit by trading on the long side? Even when the charts might indicate a technical breakout, and just when this technical momentum might look positive, another earnings pre-anouncement impacts the market once again. Hedge against Earnings Shortfalls by tracking and trading companies with Upside Earnings Alerts. It is these companies that will usually skyrocket amid the weakness across the board.

4Pristine Market Gems uses both fundamental and technical analysis scans to select a roster of "Earnings Plays" which contain companies in the top 5 percentile for high earnings acceleration. We are looking for "Anticipatory Upswing," the driving force that propels a stock in expectation of a strong earnings report. Technical analysis is then used is to find any possible patterns that can confirm these moves. Alerts are set for potential upside breakouts.

4These "Earnings Plays" are placed in portfolios and set with "NEWS" alerts for all articles and news that might affect the stock price in the coming weeks prior to the earnings report.

4 Watch Lists and charts are set up that include companies that are displaying upward price movement before or following an Upside Earnings Alert. This increase in price momentum can last for days.

APOL was on our watch list October 2.

APOL - Apollo Group Sept. 06, 2000 - WR HAMBRECHT 'A STRONG BUY rating was reiterated with a 12-month price target of $50 per share. The company should generate revenue growth of 24 percent over the next three years.'


Apollo Group (APOL)
10-Minute Chart

Figure I. APOL triggers on Anticipatory Upswing on Oct. 4, the day before the scheduled earnings are released.


The Upside Earnings Alert - APOL

4 APOL Upside Earnings Alert On Oct. 5: 4Q 28c; First Call 26c

Apollo Group Inc. Reports Fiscal 2000 Fourth Quarter and Year-End Results PHOENIX--(BUSINESS WIRE)--Oct. 5, 2000--Apollo Group Inc. (Nasdaq:APOL) Thursday reported fiscal year 2000 financial results for the fourth quarter and year ending Aug. 31, 2000. Total revenues for the fiscal year ending Aug. 31, 2000 increased by 22.3 percent to $610.0 million, compared to $498.8 million for the prior fiscal year. Net income for the fiscal year ending Aug. 31, 2000 increased by 20.7 percent to $71.2 million, or $.93 per diluted share, as compared to $59.0 million, or $.75 per diluted share, reported for the prior fiscal year.


The Upside Earnings Alert - DGX

4 Upside Earnings Alert Before a gathering of analysts and investors, the chief executive said Quest Diagnostics would beat the original First Call analyst consensus estimate for earnings per share next year. DGX already on our earnings calendar for the week of Oct. 19 with an expected 212 percent earnings surprise.

Oct. 5, 2000: NEW YORK (Dow Jones)--Laboratory giant Quest Diagnostics Inc. (DGX) expects profits this year of up to $2.20 a share and sees a 30 percent hike in earnings per share next year. In comments Tuesday before a gathering of analysts and investors at the UBS Warburg Global Life Sciences Conference here, Chairman and Chief Executive Ken Freeman said the diagnostic laboratory company expects year-end earnings of $2.10 to $2.20 a share on revenue of $3.4 billion. The First Call/Thomson Financial analyst consensus is for $2.19 per share in 2000 and $2.92 in 2001.

Quest Diagnostics (DGX)
10-Minute Chart

Figure II. DGX continues an uptrend that began on Thursday, Oct. 5, when it moved up sharply following an Upside Earnings Alert. It bucked the trend while stocks fell once again on Oct. 6 after an earnings shortfall warning by VECO, RAZF, CCRD and MRBA. DGX was one of the few good trades we had when few stocks were spared once again from a massive sell off after another in a slew of Earnings Shortfalls announcements.

 

The Upside Earnings Alert - TIBX

TIBX Upside Earnings Alert: 3Q Pre-Item 7c; First Call 5c

u TIBCO Software Announces Third Fiscal Quarter 2000 Financial Results Customer Demand for Infrastructure Software Drives Revenue New Customers Include: Telstra, Pirelli, NBCi, Southern Company, T-Online, Corning, Shell Energy, Musicland and Northwest Airlines PALO ALTO, Calif., Sept. 26 /PRNewswire/ -- TIBCO Software Inc. (Nasdaq: TIBX), a leading provider of real-time infrastructure software for e-business, announced today results for its third fiscal quarter ending Aug. 31, 2000. Growth during the quarter was driven by increasing demand for TIBCO's infrastructure software, which powers many of the world's leading e-businesses. Total revenues for the third quarter were $67.2 million, an increase of 180 percent over $24 million in the same period a year earlier and a 24 percent increase over the prior quarter. Year-to-date revenues were $163.2 million, up from $63.1 million, a 159 percent increase over the same period last year.

4TIBX was on our watch list October 4th.


Tibco Software (TIBX)
10-Minute Chart

Figure III. TIBX, a frequent trade, triggered an alert again on Oct. 6. A strong uptrend followed in an otherwise sharply down market. TIBX was on the Oct. 4 Watch List and the uptrend was spotted early in the session.