Cintas Corp (CTAS) is just 1 of 83 companies that have qualified to be on our most powerful ChartList, our Bullish Trifecta ChartList. In order to make it, it must be on our (1) Strong Earnings ChartList (SECL – tracks companies that beat quarterly revenue and EPS estimates), (2) Strong AD ChartList (SADCL – requires a minimal SCTR score of 75 and a strong accumulation/distribution line to suggest significant accumulation by Wall Street), and (3) Raised Guidance ChartList (RGCL – just as the name implies, a company must have raised its quarterly or annual guidance). When CTAS reported its latest quarterly results on March 29th, they easily surpassed both revenue and EPS estimates. In addition, CTAS upped both its revenue and EPS guidance for the year.
The following chart of CTAS highlights the right side of a cup that formed with its earnings reaction. For the past week, it’s been pulling back in a nice handle as it approaches its rising 20-day EMA. Check it out:
My preference is to trade stocks that show all of the characteristics of CTAS – leading stock in its industry, under accumulation, strong volume trends, better-than-expected revenues and EPS, a strong market reaction after earnings, and a pullback within a very bullish continuation pattern. None of this guarantees a successful trade, but I do believe it increases the likelihood.
Tom Bowley is the Chief Market Strategist of EarningsBeats.com, a company providing a research and educational platform for both investment professionals and individual investors. Tom writes a comprehensive Daily Market Report (DMR), providing guidance to EB.com members every day that the stock market is open. Tom has contributed technical expertise here at StockCharts.com since 2006 and has a fundamental background in public accounting as well, blending a unique skill set to approach the U.S. stock market.
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