Making money is almost always fun. Making huge profits from smart investments while others are scrambling to recoup losses is even more fun.
2018 has been an important year in separating the investors who made money because practically everything soared last year from the investors who used their money smartly and efficiently to bank serious gains.
While it’s arguably been more difficult to make major profits and predict future successes in this current stock market it just requires us to get a little more creative, to do as the insiders do and take home our biggest profits.
One such company we’ll be looking at today has seen gains of over 234%, so get ready!
As we’ve addressed in this column before, the Insiders’ advantage comes from the insider information they have access to, either based on their position or the people they know (or both).
While that can certainly be disheartening, we have learned some of the Insiders’ moves that allow us to predict when and where they’ll move next.
A major time of movement for companies is immediately before and after they release earnings for the previous quarter.
In a perfect world, if a company beat earnings’ expectations, we would expect their stock to jump up.
If they miss expectations, we expect the stock to dip down.
Now this isn’t done by using some crystal ball, it’s really just common sense from the point of investors.
If a company releases disappointing earnings, investors typically want to get out as quickly as they can to incur the least amount of damage which causes the stock to dip.
If a company beats earnings, then new investors start buying in and existing shareholders increase their holdings, causing the stock to shoot up.
So, you can see that while it may not be a perfect science, it does make sense and we can use earnings to our advantage in that way.
Now you’re probably thinking that this is all well and good, but obviously you have to know what a stock is going to do BEFORE they release earnings, or you’ll just be buying in or selling out at the same time as everyone else, which won’t do much for your wallet.
While we haven’t yet figured out how to exactly predict the future, we have learned that it’s very helpful to closely watch a stock in the days leading up to an earnings announcement.
Those are the days that insiders will be making their moves and depending on whether the stock moves up or down a majority of that time, we can make an educated guess for what the earnings announcement will be, and plan accordingly.
The stock we’ll be looking at today and into next week is Entegris, Inc. (ENTG).
ENTG works in specialty chemicals and advanced materials for the microelectronics industry and other high-tech industries.
As a leader in the field, ENTG has been a strong performer for a while.
From February 2016 to February 2018, ENTG shot up over 234%!
It has also proven to follow some pretty useful patterns that we as investors can replicate for profit.
Let’s take a look at the daily chart for ENTG:
The pattern that I’m referring to is the tendency of ENTG to drop down to its 150-day simple moving average (the red line) and then quickly bounce right off of it.
We can see even in February, although it didn’t quite touch the 150-day SMA, it still followed similar activity by bouncing up after its drop down.
It happened twice in May, and a couple of times in June and July. What that tells us as investors is that the next time it drops down to the 150-day SMA, we should consider buying in.
Now another pattern we should utilize is earnings announcements which I mentioned earlier.
ENTG has exhibited an incredibly strong earnings history, beating earnings every quarter the last four quarters, and beating by a lot.
ENTG just announced that they will release earnings for the second quarter of 2018 on July 26th, so in the days leading up to that, keep your eyes on the stock and see what the Insiders are doing.
Once you can see how the stock is behaving, you can make the same moves the Insiders are, putting THEIR profits into YOUR pockets.
Good.