#$apol

Relief bounce for the death spiral in Apollo Education Group ?

Something is definitely wrong with this stock.  The negative market commentary could not be much worse particularly after the poor response to the earnings release a few weeks ago.  And there are undoubtedly droves trapped short in here BUT - could there be relief in sight, albeit temporary at this juncture?

How can relief bounces be identified?  

In a series of observations that correspond to high probability reversal behavior

1) Hyperextension from the 50 daily moving average - this creates the ‘reversion to the mean event’ or the rubber band effect - a snap back action that brings price closer to the average (the pink line shown)

2) Completion of any number of trading patterns that create ‘potential reversal zones’ or ‘PRZs’ - we have that here with the bullish crab pattern superimposed on the candlesticks.  Completion seems to be near 15.50

3) Extreme readings in reliable momentum indicators like the SMI -the stochastic momentum index- see my SMI video here

4) Price action will test higher lows or begin to move sideways as participants create a base price in an attempt to reverse the slide

Any one of these is insufficient on its own, and ultimately, the movement of price will be the tell.  It is not just price, but price action that delivers sufficient information to put your money at risk.  And we are still waiting for observation 4) to show up in our list of requirements to take a high probability bounce trade into resistance.

For now, I will be watching this one to prove itself out as it tries to change course.  Price levels of interest are 15.45, 15.8 16.2 16.45 16 17.67 18.05 18.65 19.24 and 19.79 - all representing jagged stairsteps upward.

Apollo Group (APOL) stock has had a pretty good year in 2013. The American for-profit education company’s stock pushed upward from $21.60 to $27.32 last year. Most analysts believe the bull market of 2013 will continue into 2014 with more modest gains, APOL will be one of the first companies to report quarterly financial results in the new year. Apollo Group is expected to report their first earnings release of 2014 on Tuesday, January 7th after the market closes.

The information below is derived from data submitted to the Estimize platform by a set of Buy Side and Independent analyst contributors.

The current Wall Street consensus expectation is for APOL to report 90c EPS and $861.33M revenue while the current Estimize consensus from Buy Side and Independent contributing analysts is 92c EPS and $863.58M revenue.

By tapping into a wider range of contributors including hedge-fund analysts, asset managers, students, and non professional investors the Estimize community has built a data set that is up to 69.5% more accurate than Wall Street, but more importantly it does a better job of representing the market’s actual expectations. Over the past 5 quarters Estimize has been more accurate on EPS all 5 times and 4 times on revenue.

The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are seeing a small differential between the consensuses.

Over the past four months the Wall Street consensus trend for EPS has increased from 82c to 90c while Wall Street revenue expectations have fallen from $896.55M to $861.33M. The Estimize EPS consensus has remained flat at 92c and the revenue consensus is also unchanged at $863.58M.  

The distribution of estimates published by analysts on Estimize range from 90c to 93c EPS and $962.33M to $865.00M in revenues. This quarter we’re seeing a small distribution of estimates for APOL. The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution signaling the potential for greater volatility post earnings, a smaller vice versa.

The analyst with the highest estimate confidence rating this quarter is Analyst_7718081 who projects 90c EPS and $862.33M in revenue. Estimate confidence ratings are calculated through algorithms developed by our deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. Analyst_7718081 is ranked 368th overall among 3,400 contributors. In this case the analyst with the top confidence rating is expecting even profit but more revenue compared to Wall Street.

This quarter the Estimize community of buy-side and independent analysts is expecting Apollo Group to beat Wall Street on both profit and revenue. Although EPS and revenue have both been on the decline for APOL over the past 2 years, the contributing analysts are projecting that Apollo Group will beat the Wall Street consensus on both the top and bottom line this quarter.