Goldman Sachs equity derivatives strategist Vishal Vivek says he has answers, based on a study of 35,000 earnings events and more than 100 variables that predict price movements.Vivek's research identifies the four variables that best predict a stock's direction on earnings day, and brings them together to find the 10 stocks that are most likely to surge in the first day of trading following their upcoming quarterly reports.
He's looking at moves implied by options-market positioning to find stocks where traders expect a lot of volatility, as that contributes to rallies following earnings. He's looking for stocks with relatively low short interest, as that's associated with negative moves. He is also taking into account both Goldman Sachs' price targets for the stocks and its growth estimates for the companies, as he says both of those factors are correlated to gains for stocks following earnings.
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