Hey, Ross here:
Markets are off to another good start coming out of the long weekend…
Even though the situation in Iran appears to have flared up again.
That can seem pretty contradictory…
Which is why, as today’s chart shows – lots of people are betting on the market falling.
Chart of the Day
If you’ve been reading this newsletter, then you’ve seen me talk about how corporate earnings – one of the fundamentals beneath stock prices – are strong.
In fact, revenue growth for the S&P 500 companies for the latest quarter is the highest since 2022.
And yet, at the same time…
Negative earnings surprises – i.e. when a company underperforms estimates…
Are being “punished” by the markets far above average.
As the chart above shows…
A company that underperforms expectations in the latest quarter typically sees a 4.9% instant drop in their stock price.
And remember, that’s the average…
Meaning there are many companies that see far larger post-earnings drops – far into the double digits.
Now that may seem like bad news…
But as I explain below – it actually leads to opportunity.
Insight of the Day
These massive post-earnings drops can be overreactions – and overreactions lead to opportunity.
Every time a company releases earnings, investors’ expectations get “reset”.
That’s what causes big price moves around earnings.
However, sometimes these immediate price moves can be overreactions.
Investors see management moderate guidance a bit…
Or see that numbers fell a little short…
And many of them run for the exits.
Factor in herding behavior – where people see others selling and rush to do the same…
And you have what I call post-earnings overreactions…
Where the selloff has been overstated, creating a buying opportunity in the stock.
Now, the problem is – it’s extremely difficult to find stocks where the post-earnings drop are actually overreactions…
And not justified selloffs.
That’s why instead of trying to scroll through thousands of financial statements trying to figure out what’s what…
I let the corporate insiders do that for me.
These are high-ranking executives – CEOs, CFOs, Directors – exploiting an SEC loophole to buy up their own company stock…
Even though they know more about their own company than any random investor – or even the best Wall Street analyst.
And these insiders LOVE buying these post-earnings overreactions.
I’ve seen it time and time again.
A big earnings drop…
Followed by the insiders suddenly buying in force…
And then – a massive surge in the stock price in the weeks and months after.
The bigger the earnings drop – the bigger the opportunity.
And as you just saw above, there are plenty of these opportunities right now.
I’ll show you how you too can exploit these opportunities tomorrow.
So keep your eye out for an email from me Friday morning.
In the meantime, check out these 2 “hidden” AI stocks quietly being bought by the most successful hedge fund manager on Wall Street.
Customer Story of the Day
“Ross is a minefield of knowledge…
Really enjoying his live sessions – a lot of information to process being new enough to the game.
But I’m enjoying the teaching style as he breaks things down well and says it how it is – no fluff no messing about.
This man knows his onions recommend 10/10”
Ross Givens
Editor, Stock Surge Daily
