With one of the downsides of owning individual stocks having been recently eliminated (trading costs), the biggest one (earnings surprises) becomes a bigger concern. In the early stages of bull market (think 2009), news and earnings tend to have positive impact on stock prices. Regardless what is reported. Why? Because investors have very low expectations and, as such, even bad news turns out to be good since it is not a surprise. As you would expect, the opposite is true too. As an aging bull lingers, expectations become increasingly higher (priced to perfection) and even good news often turns out to a land mines for stock prices. For this reason, as this bull market has persisted, my default action is to not hold individual stock positions through earnings announcement.

Yesterday we reluctantly sold MTCH position in client portfolios as it has been a nice winner, up >20%, because they were announcing their earnings results after hours. They were down as much as 20% immediately following their announcement but have tempered the losses somewhat this morning. Here is today’s chart, reflecting the markets opinion on their announcement.

Tempered reaction aside, this chart now looks very ugly and one that is screaming to avoid and potentially setting up to eventually be a decent short setup. Not the predominance of selling that has occurred since price topped out in August. For those watching, this is a huge sign the institutions have shifted their opinion on MTCH from buy to sell.