Episodic Pivot is a setup defined and described in detail by Pradeep Bonde (@EasyGuru), founder of https://stockbee.biz/.
"The main logic behind an EP is the presence of a catalyst (triple-digit earnings, government policy, management change, etc.) that completely changes the market value and trajectory of the stock and leads to a multi-days or multi months run and a high opportunity for profits."
The setup is one of the top 3 prefered by Kristjan Kullamägi who described it in detail on his blog https://qullamaggie.com/
“When unexpected good news hits a stock, especially if that stock is neglected, that can trigger multi-month, and multi-year moves.”
“…is a gap up of 10% or more. There must be massive volume near the open, ideally the stock should trade the average daily volume the first 15-20 minutes or even quicker.”
“…the beautiful part of this method is you find stocks that have a FUNDAMENTAL REASON to go up, stocks that have rocket fuel that can generate alpha for your portfolio.”
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To understand the setup, I studied the behavior and patterns of stocks that gapped up +7% or more in the last six years using TC2000 historical data. After a deep dive into the patterns, I came up with an EP classification that helps to grasp better the type of EP I am most likely dealing with and trade it accordingly. More details in the video below:
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Episodic Pivots start with a catalyst! As a result, a study was made on the full list of EPs to better understand and categorize the catalyst. Here are the results:
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An Episodic Pivot Map was made to better understand the correlation between EPs and the overall market activity (SPY). The map showed a very relevant dependence of EPs to the overall market, with EPs happening more often in a sideway or uptrend environment.
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A pre-market and post-market 5-minute chart analysis was performed to grasp the price action patterns shown by EPs after the news catalyst is anounced. More details in the video below:
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Download the pictures of 1018 EPs together with their catalyst, intraday data and the slides of YouTube presentations on the link below to better internalize the mechanics of this setup.
Here are some practical tools to track the earning season results
I use TradeIdeas (no affiliation) Top Lists below to see each day what companies announce earnings to locate stocks that have unusual volume or change compared to the previous day close in after-hours or during the day.
Download the Episodic Pivot information deck with the complete dataset collected during the study, the episodic pivot map, classification, 4 PowerPoint presentations and the Excel file with statistical analysis for an in-depth review of the setup on the link below. Good luck!
