Earnings Call: Broken Toymaker

Technical weakness ahead of earnings leads to a spectacular call powered by Wall Street Horizon Earnings Calendar

Not long before the market closed on Monday, October 21st, Tony Kolton, president and founder of Prognos Analytics, sent an email to clients that Hasbro (NASDAQ: HAS) might provide a good trading opportunity. He determined this after analyzing the stocks due to release earnings after the close or the next morning according to Wall Street Horizon’s earnings calendar.

Hasbro (NASDAQ: HAS) Stock Movement on Monday, October 21, 2019.

Hasbro had been holding steady after a strong rally in September and October, however, was looking decidedly weak during the course of trading on Monday. The stock had opened at $123.93, up 1.6% from the previous Friday’s close at $121.96, but the opening price would prove to be the high that day. As Tony’s daily chart indicates, HAS then turned around, declined for the rest of the session, closed on Monday at $120.16, down 1.5% from Friday’s close.

According to the Wall Street Horizon Earnings calendar, the company was scheduled to release Q3 2019 earnings on Tuesday, 10/22 before market open (confirmed by Wall Street Horizon on 9/24), therefore this weakness in the stock price on Monday was a red flag. Tony confirmed the bearishness evident in the price action with other indicators in his tychoNova software such as T-Score and Money flow, and published the email alert to clients.

Traders nimble enough to make the trade before the market close were rewarded quickly and well. Here are the details of the stock movement:

  • Opened on Tuesday, following the 6:30am release of earnings numbers, at $120.
  • In the first 15 minutes of trading dropped to $112, down 6.8%.
  • During early morning trading continued to free-fall, making the day’s low by 8:45am at $98.85 (a 17% decline from Monday’s closing price).
  • By the early morning on the 25th, the stock price had fallen to a low of $95.60, a 21.5% drop from Monday’s closing price.

Tony typically uses option contracts to trade Wall Street Horizon powered ideas. In this case, for a stock he believes will “miss” in their earnings release, a simple purchase of a put option on HAS would have captured this move nicely while limiting the risk of the trade to the cost to purchase the option.

Wall Street Horizon offers comprehensive corporate events covering 7,500 global equities to provide added context to help predict volatility. Since the trades within are centered around earnings, if you had Wall Street Horizon data you could see:

  • Upcoming earnings dates confirmed or forecasted, with the expected timing of earnings.
  • Today’s reported EPS with the timestamp of the announcement.
  • Revisions to earnings announcement dates and/or status as well as alerts when an earnings announcemen3t date crosses before or after weekly or monthly option contract expiration.

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For a free trial of tychoNova which includes the Wall Street Horizon earnings calendar, please contact Tom Joyce at 847-977-3138 or tjoyce@prognosanalytics.com.