Richard Coppleson

Reviewing the data for the last six reporting Seasons, I consider here how stocks that were either up or down on the day of reporting subsequently traded over the following four months. The results are very clear.

Looking at stocks I covered in last 6 Reporting seasons:

  • Feb 2016 235 stocks
  • Aug 2016 312 stocks
  • Feb 2017 327 stocks
  • Aug 2017 310 stocks
  • Feb 2018 304 stocks
  • Aug 2018 304 stocks

Looking at stocks that were up & down on the day they reported, I have noticed over the years (and now have the hard evidence from the last 6 reporting seasons) that how the majority of stocks move on Day 1 generally determines where it will be 4 mths later..

So in the last 6 reporting seasons Day 1 Moves were

Source Coppo Report

This shows how much stocks that were

  • Up on Day 1 went (first group on the left)
  • Were Down on Day 1 (3rd group in middle – all down)
  • Quite interestingly – you can actually see that most moves (be up or down) were very similar in each of the last 6 Reporting Seasons

In the last August 2018 RS the stocks that were up on Day1 had the biggest Day 1 reaction vs the previous 5 RS

  • You can see they rallied +6.2%, so when the market likes a result, more will try to get set on Day 1 as these stocks tend to stay up & in most cases keep going up in the 4 mths following

Source Coppo Report

Now stocks that were Up day 1 when they reported

  • How they went…..

Source Coppo Report

  • In all 6 they closed up on average of +4.9% - almost all exactly the same
  • Then in 3 of the 5 RS or 60% of the time – the rise was double digit over the next 4 mths
  • Overall though the rise +4.9% Day 1 extended to be up +8.6% 4 mths later.
  • BUT Aug 2018 RS saw the Stocks up day 1 do something we haven't seen before - they were sold off (thks to big mkt selldown) 4mths later to be down -3.4%
  • So in 5 out of the last 6 RS, being long these stocks up on Day 1 tends to be a good strategy, if you own before hold - but if not then you buy on the day they report.
  • So if you can’t decide to buy & you wait a few days or weeks – you may be paying more later on.

Source Coppo Report

--

Down Day 1: Stocks that were down on the day they reported

Source Coppo Report

Stocks that were down on the day they reported

  • Ok they were down on average -5.5% in the last 6 RS
  • In 5 of the 6, these stocks were still down, but had improved a little bit from where they were on the day they reported..
  • So many get smacked day 1 & then continue lower, but over time some bargain buyers come in & lift them. So the move 4 mths later is a lot better than where they were in the weeks & month after they reported.
  • But in most cases the bottom line is - they have not rallied too much from where they were on Day 1…
  • On average these stocks that were down -5.5% on Day 1 were still down -5.3% 4 mths later.
  • So in some ways its tells us there are "bargain buyers" who will go after some of these & buy on the weakness.
  • But in Aug 2018 they were smacked another -11.6%...

Source Coppo Report

Get more insights from the insto desk in the Coppo report

This article is based on excerpts from The Coppo Report contributed to Livewire by Richard Coppleson, Director - Institutional Sales and Trading, Bell Potter. You can find out more by clicking here.

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Mark Cardell

The trend is your friend.

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Ian

Wouldn't it be better to compare the moves to the market as a whole? That would eliminate the market bias in the following 4 months, which of course was pretty negative in the case of Aug 2018. That would certainly help me judge the consistency of the effect you are trying to demonstrate, rather than having the market noise confuse the issue.

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