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Before you go any further, please remember that ALL trading and investing carries a level of risk. NO system has ever been created that can guarantee profits or prevent risks. It just doesn't work this way. When it comes to a portfolio decision, always do your due diligence.
Now let’s get down to the drift.
How We Find Drift Trades
Drift Trader is based on a well-studied market phenomenon known as the post-earnings announcement drift (PEAD) or earnings momentum effect.
Over four decades ago, Ray Ball and Phillip Brown began analyzing the relationship between earnings surprises and following stock market reactions. They found that while a stock's price may react to an earnings surprise, the price adjustment doesn't occur right away. It can take days, weeks, or even months for the stock price to adjust. According to their findings, this "drift" in price can produce abnormal returns.1
If you've spent any time following Wall Street, you know that earnings surprises (above or below estimates) can result in logic-defying moves. A stock that smashes analysts' estimates can take a sudden free fall. Sometimes there is a gap between the drift and trader sentiment.
To close the gap, we added an extra layer of analysis to find stocks with the most potential for a price drift. Stocks on the Drift Trader list could see substantial and steady moves in the day, weeks, and months following the drift alert.
1 Fink, J. A review of the Post-Earnings-Announcement Drift. (2021). Department of Banking and Finance, University of Graz, Universitätsstraße 15, 8010 Graz, Austria.
My Watchlist
Add a stock to your watchlist to closely watch the drift strength and price move.
To add to your watchlist, click the star in the top right corner of a stock card.
You will receive alerts and custom updates as the drift strength changes for stocks in your watchlist.
Add up to 20 stocks to your watchlist to closely monitor the drifts and see custom alerts.
If you are on a free test drive, you can add one stock to your watch list. If you'd like to change your watchlist selection, unselect the star for your watchlist pick and then select the star for your new find.
New Drift Alerts
There is no need to dig through 10-Q reports or search the web for new earnings surprises.
We’ll look through the biggest earnings surprises and run those through our analysis. When we detect a new drift, it will pop up on the New Drift Alerts list. It’s that easy to monitor thousands of stocks for select drift moves.
New Drift Alerts is where you'll see the latest stocks beginning their drift. These stocks have had earnings surprises within the last seven trading days and show technical signs of price drift.
The Gain/Loss From Drift Alert shows the stock's positive or negative movement away from the price when the drift was detected.
We may detect new drifts throughout the trading day. However, if we do not detect a drift within seven trading days of an earnings announcement, the stock will not be considered a drifting stock regardless of a strong price move.
The quick answer is no. We look at many more factors than just an earnings surprise. The stocks on our list will have to make it through our strict filters and show signs of a price drift.
Drifters
Stocks that show up on the Drifters list are still within the confines of a drift. The strength of their moves will be indicated with a green, yellow, or red gauge.
You haven't missed the move yet; these stocks are still climbing!
Monthly subscribers could see up to 100 stocks, while Test Drive subscribers will only see five stocks on this list.
Stocks can stay on the list for up to three months IF they are still in a drifting pattern.
The Drifters list may hold up to 100 stocks depending on earnings season and how many stocks show strong drift potential.
Test Drive subscribers will see a limited number of stocks on this list. Join as a monthly subscriber to see the complete list.
We'll remove a stock from Drift Trader if the drift strength is weak for more than three trading days.
If a stock is on your watchlist and the drift ends, you'll see an alert and a custom update.
DRIFT INFO
There is a story behind every stock that makes its way to you.
We'll track the important information for any drift-detected stock and display it at the top of the chart page.
Last Earnings Date - Date of the most recent earnings announcement.
Trading Days Since Earnings - Number of trading days since the earnings announcement.
Earnings Per Share (EPS) Surprise % - Difference between the actual EPS and analysts' expectations.
Drift Strength - Strength of the drift momentum:
- Strong Drift - Green Gauge
- Steady Drift - Yellow Gauge
- Weak Drift - Red Gauge
Drift Signal Date - Date that the drift was detected, which may be one to seven days after the earnings announcement.
P/L % Since Drift Detected - Difference (displayed as both a dollar value and percentage) between the current price and the price when the drift was detected.
MORE FAQs
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If you’re on a Test Drive, you may unlock all of Drift Trader's features when you start a monthly subscription. Click the button below to get going.