Since its appearance in the 2010 movie Scott Pilgrim Vs. The World, Metric's song "Black Sheep" has been a mainstay in the band's concerts; here's a video of them playing it in Lima, Peru last weekend.
The first verse of that song includes a lyric about "waiting for the world to end".
[Verse 1]
Hello again
Friend of a friend, I knew you when
Our common goal was waiting for the world to end
In that post, we presented the results of analysis we had conducted showing which signals best predicted stock price movements post-earnings. In response, one bear wrote,
I'm no guru at stocks but it seems to me that the depopulation and deindustrialization of western society is a strong sell signal.
Let's look at how trading our signals worked this week while bears were waiting for the world to end. First, a quick recap of our trading signals.
Our Ten Signals For Evaluating Earnings Trades
We use these ten signals for evaluating earnings trades:
LikeFolio’s earnings score based on social data. The higher the number, the more bullish, the lower (more negative) the number, the more bearish.
Chartmill’s Setup rating. On a scale of 0-10, this is a measure of technical consolidation. For bullish trades, we want a high setup rating; for bearish trades, a lower one.
Chartmill’s Valuation rating. On a scale of 0-10, this is a measure of fundamental valuation incorporating common rations like P/E, PEG, EBITDA/Enterprise Value, etc. For bullish trades, the higher the better the Valuation rating the better; for bearish trades, the reverse.
Zacks Earnings ESP (Expected Surprise Prediction). This is a ratio of the most accurate analyst’s earnings estimate versus the consensus estimate.
Zacks Ranking. A number from 1 to 5 with 1 representing their 5% most bullish stocks, 2 representing their next 20%, 3 the middle 50%, and so on.
The Piotroski F-Score. A measure of financial strength on a scale from 0-9, with 9 being best.
Recent insider transactions.
RSI (Relative Strength Index). A technical measure of whether a stock is overbought or oversold. We’re looking for RSI levels below 70 for bullish trades and above 30 for bearish ones.
Short Interest.
For most of those signals, we give a numerical rating from -2 (very bearish) to +2 (very bullish), and for each stock we evaluate each week (not just the ones we place trades on), we enter the data above in a spreadsheet, and at the end of the week, we record each stock’s 5-day return.
Contributor posts published on Zero Hedge do not necessarily represent the views and opinions of Zero Hedge, and are not selected, edited or screened by Zero Hedge editors.