AI
Wednesday, June 08, 2005 7:20:13 PM
Trade Journal: Korn Ferry International (KFY) Update
I don’t know how to stress the significance of this trade on both the technical and the fundamental fronts other than the fact that I could’ve closed my short position yesterday for a nice 4% gain, but I didn’t ($17.57/$16.88=104.09%). Money is not the issue although I was tempted to take the profit yesterday. The issue is to get first hand experience on this experiment.
In any case, so, the earning was announced this morning. KFY earned $0.27/share, which was $0.02 better than the analysts estimate of $0.25. The “Surprise%” was then 8%. This was the chart I posted yesterday that shows the declining “Surprise%” (red bars).
As I mentioned that the analysts seem to have caught up with KFY’s earnings. This 8% “surprise” for the recent quarter was making another lower low. It’s lower than the 9.5% in the pervious quarter.
I also mentioned that I would give KFY the benefit of the doubt of having a better than estimated earnings due to its concentration on recruiting executives and managerial positions. However, I believe that this “better than” estimated earnings had already been factored in the price when it recently moved above the centerline of the Bollinger Band.
I firmly believe that anything known at any point in time has already been factored into the price action. The market’s always forward looking. It does not look back. It doesn’t even look at the present. As a side note, this is why trading or investing is so hard for us. Humans tend to live in the past. And the older we get, the more time we spend living in the past.
Notwithstanding, the only way to verify this theory once again is to keep this short position open until KFY price moves back to the equilibrium point. The point where it belongs should be right at $16. This was where the market had already given it the benefit of having a better than estimated earnings.
So, we shall see...
I don’t know how to stress the significance of this trade on both the technical and the fundamental fronts other than the fact that I could’ve closed my short position yesterday for a nice 4% gain, but I didn’t ($17.57/$16.88=104.09%). Money is not the issue although I was tempted to take the profit yesterday. The issue is to get first hand experience on this experiment.
In any case, so, the earning was announced this morning. KFY earned $0.27/share, which was $0.02 better than the analysts estimate of $0.25. The “Surprise%” was then 8%. This was the chart I posted yesterday that shows the declining “Surprise%” (red bars).
As I mentioned that the analysts seem to have caught up with KFY’s earnings. This 8% “surprise” for the recent quarter was making another lower low. It’s lower than the 9.5% in the pervious quarter.
I also mentioned that I would give KFY the benefit of the doubt of having a better than estimated earnings due to its concentration on recruiting executives and managerial positions. However, I believe that this “better than” estimated earnings had already been factored in the price when it recently moved above the centerline of the Bollinger Band.
I firmly believe that anything known at any point in time has already been factored into the price action. The market’s always forward looking. It does not look back. It doesn’t even look at the present. As a side note, this is why trading or investing is so hard for us. Humans tend to live in the past. And the older we get, the more time we spend living in the past.
Notwithstanding, the only way to verify this theory once again is to keep this short position open until KFY price moves back to the equilibrium point. The point where it belongs should be right at $16. This was where the market had already given it the benefit of having a better than estimated earnings.
So, we shall see...
David
#board-3693
Join the InvestorsHub Community
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
