Most of the traders avoid trading the stocks a few days before and after the earning reports since stocks tend to move in unpredictable direction (until now).
I decided to see if I can use the 5_Layer model to predict the stock movement just before the earning date.
Last month on the 24 Oct 2019 I picked up 12 stocks randomly, on the day before earnings from Yahoo calendar. They all reported on the 25 Oct, a day after. Here is the list: PFS, WETF, VTR, ITW, VFC, BY, FIX, AON, B, WY, PSX, SBSI.
In the example here, I presented the forecast from July 2019 for 4 month ahead,for each of the stocks, using 4 layers out of the 5_Layer model, up to 24 Oct, leaving the forecast visible for a month ahead.
In the post below, I come back to each of the stocks and analyze how was the performance of the model, looking on the following two topics:
I left the analysis of the cycles on the slide, as was published a month ago.
Conclusions:
The 5_Layer model in this case of 12 stocks was correct in 91%(Bi-Weekly) / 83% (Monthly) for the day of reporting when using 4 months ahead, and 100% when using a forecast one day before the reprting.
SYMBOL: PFS
Monthly cycle: predicted: DOWN, Real price move: DOWN Score: 1/1
B-Weekly cycle: predicted: DOWN. Real price move: DOWN for a week, UP for a week, DOWN for two weeks, Score: 1/1
SYMBOL: WETF
Monthly cycle: predicted: DOWN, Real price move: DOWN Score: 2/2
B-Weekly cycle: predicted: DOWN. Real price move: DOWN for a week, UP for a week, DOWN for two weeks, Score: 2/2
SYMBOL: VTR
Monthly cycle: predicted: DOWN, Real price move: DOWN Score: 3/3
B-Weekly cycle: predicted: DOWN. Real price move: DOWN Score: 3/3
SYMBOL: ITW
Monthly cycle: predicted: UP, Real price move: UP Score: 4/4
B-Weekly cycle: predicted: UP. Real price move: UP Score: 4/4
SYMBOL: VFC
Monthly cycle: predicted: UP, Real price move: UP Score: 5/5
B-Weekly cycle: predicted: DOWN and then UP. Real price move: DOWN and then UP Score: 5/5
SYMBOL: BY
Monthly cycle: predicted: UP, Real price move: UP Score: 6/6
B-Weekly cycle: predicted: UP. then DOWN Real price move: UP then DOWN Score: 6/6
SYMBOL: FIX
Monthly cycle: predicted: DOWN Real price move: UP then DOWN Score: 6/7 (* miss)
B-Weekly cycle: predicted: DOWN Real price move: UP then DOWN Score: 6/7 (* miss)
(*) An updated forecast made on the 24 Oct shows the correct directions
Here is FIX forecast from 24 Oct:
SYMBOL: AON
Monthly cycle: predicted: UP Real price move: UP Score: 7/8
B-Weekly cycle: predicted: UP Real price move: UP Score: 7/8
SYMBOL: B
Monthly cycle: predicted: CIT-DOWN Real price move: CIT-DOWN Score: 8/9
B-Weekly cycle: predicted: CIT-DOWN Real price move: CIT-DOWN Score: 8/9
SYMBOL: WY
Monthly cycle: predicted: UP Real price move: UP Score: 9/10
B-Weekly cycle: predicted: UP Real price move: UP Score: 9/10
SYMBOL: PSX
Monthly cycle: predicted: DOWN Real price move: UP then DOWN Score: 9/11 (* miss)
B-Weekly cycle: predicted: CIT-DOWN Real price move: CIT-DOWN Score: 10/11
(*) An updated forecast made on the 24 Oct shows the correct directions
Here is PSX forecast from 24 Oct:
SYMBOL: SBSI
Monthly cycle: predicted: CIT-UP Real price move: CIT-UP Score: 10/12
B-Weekly cycle: predicted: CIT-DOWN Real price move: CIT-DOWN Score: 11/12
Total Scores:
Monthly cycle for 4 months ahead (*) : 10 out of 12, (83%) missed on FIX, stock jumped after reports, while cycle shows CIT down. Also missed on PSX, too early signal down.
B-Weekly cycle 4 months ahead (*): 11 out of 12, ,(91%) missed on FIX, stock jumped after reports, while cycle shows CIT down.
Conclusions:
The 5_Layer model in this case of 12 stocks was correct in 91%(Bi-Weekly) / 83% (Monthly) for the day of reporting when using 4 months ahead, and 100% when using a forecast one day before.