When to Sell Before Earnings


You said you don’t like to hold a stock through it’s earnings date.  I own DRIV with its earning date of 10-26.  How close to the earnings date would you recommend selling?  The stock just hugs its 20 day MA and I thought for sure it was ready to break below that today.  Instead it opened on the upside and as of now is still rising.  I think it has pretty much run its course and that I should get out.  It has doubled its average number of days from base to peak and exceeded its average gain for that same period. 
From the chart I can’t figure if the institutions are letting the price go up then dumping some shares or if they wait for the price to drop to the 20 day then buy shares.  Since the trend seems to be up I’m guessing its the latter.  Key word there is "guess".  At some point the trend is over and past trends in that stock show that it could be a sudden drop without warning.  I would rather take a small profit than none at all.

My Response:

I can’t give buy and sell recommendations on an individual basis due to SEC regulations (not to mention we all have different risk levels), but I can tell you what I’ve done.  The stock looked great until yesterday when sell volume picked up signficantly. It did briefly dip below that 20 dma this morning but bounced back and has flatlined over the past few hours.  Over the long term it is a great company and should report very good earnings, but I like to lock in profits on any weakness in any stock especially before earnings.  Might be worth holding for a few more days if it can stay above that 20dma today. In a nutshell, I almost always sell before earnings and whether that’s one day before or several days before depends on the health of that particular stocks.

A little hint about the actions of institutions – if a stock is showing big volume without price progress then they are selling into the rising stock.  If the stock hits the 20 dma and bounces with volume, then they are adding shares at that short term moving average.   Based on the current volume and price activity in this one it looks like they aren’t doing much of anything right now. 


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