It is very important to isolate the noise and pay attention to price and volume as we make our way through yet another earnings season. There are a slew of analysts that come out and set "targets" and who constantly engage in publishing upgrades or downgrades on various securities. An important element in profitably navigating through a busy earnings season is to see how your individual holdings react to their latest earnings news and guidance. While it is a common occurrence to see stocks sell off after a new earnings report, it is healthy to see investors promptly bid the stocks higher after a company reports their quarterly results.  Investors that objectively analyze price and volume will likely do better than blindly following a plethora of analysts' upgrades and downgrades.

Crocs Inc. (CROX -$27.01 or -36.13% to $47.74) triggered a decisive technical sell signal as it plunged to a new multi-month low and violated prior chart highs and its 50-day moving average line (DMA). After Wednesday's close, the stock reported its third quarter results and plunged in after hours trade. The maker of the peculiar-looking resin shoes earned $0.66 cents a share, up +144% vs. a year earlier. Meanwhile, sales jumped +130% to $256.3 million, missing views of $258.4 million. Crocs' full-year targets suggest that it will fall short in the fourth quarter. It sees 2007 profit of $1.94-$1.98 a share on sales of $820 million to $830 million. Wall Street had forecast that Crocs would earn +$1.97 a share on sales of $835.6 million. The company has enjoyed a stunning run since going public, soaring past views every quarter since its market debut on February 8, 2006. Its stock price has more than tripled since May 2007.

One of the most important rules of successful investing is knowing how and when to sell. Once of the most important sell rules is to always sell a stock if it falls 7-8% below its purchase price, no questions.  The stock gapped down on Thursday, experiencing its largest single day decline in the stock's history. If anyone was looking for additional evidence on whether or not to sell on such a horrible meltdown all they would have to do is look at the session's volume. A whopping 59,888,800 shares were traded as the stock suffered its largest single day loss of volume that was clearly indicative of institutional sellling (the I criteria) activity. The company only has 67.7 million shares in the float.

CROX was first featured in the Tuesday, January 30, 2007 CANSLIM.net Mid Day Breakouts Report (read here) with a $25.18 (split adjusted) pivot point.  Early on, CROX experienced a lot of whipsaw type action which made it difficult to trade for meaningful gains. Then in early May, CROX experienced a "break-away" gap after reporting their first quarter results.  Along the way it found support near its 50 DMA line before ultimately topping at $75.21 just before its breakdown.  Investors need to recognize that, even though the market has not dished out a lot of treacherous action like this in recent years, the market conditions are eroding and many recent leaders are coming under pressure during this earnings season.  CROX is an example of how and when a stock needs to be sold without emotion, no excuses. 

This stock was first featured in the Tuesday, January 30, 2007 CANSLIM.net Mid Day Breakouts Report (read here) with a $25.18 (split adjusted) pivot point.  Early on, CROX experienced a lot of whipsaw type action which made it difficult to trade for meaningful gains. Then in early May, CROX experienced a "break-away" gap after reporting their first quarter results and found support near its 50-day moving average line on the pullbacks since. 

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Group action plays a very important role, and experienced investors learn that they can increase their odds of picking a great winner by always focusing their buying efforts in the market's leading groups.  The "L" criteria in CAN SLIM(R) tells us to choose leading companies in leading industry groups, thus it is suggested that investors choose from the top quartile of the 197 Industry Groups (listed in the paper most days on page B4). A classic example of the success enjoyed by many CANSLIM.net readers usually starts when an investor reads a CANSLIM.net report and buys a featured stock before it has risen above the pivot point by greater than 5%.  After a stock breaks out above its pivot point, there is only a +5% window that investors have to purchase the stock under the proper guidelines. Once a stock rises above the "maximum buy price" the risk of a shake out balloons, meaning that even a normal retracement in the stock might force you to employ the 7-8% loss cutting rule.  Much can be told by the stock's daily action in the weeks and months that follow a breakout. Typically, a light volume and orderly pullback suggests that the bulls remain in control.  However, high volume pullbacks that violate support paint a totally different picture.

Crocs Inc. . (CROX -$0.96 or -1.62% to $58.18) ended lower on light volume as it continued consolidating below its latest pivot point. The stock was recently featured in the Special Report titled ''7 Stocks That Should Now Be On Your Watch List'' with a graph annotated by the CANSLIM.net expert staff (click here) with pivot point of $61.45.  CROX sports a very healthy Earnings Per Share (EPS) rating of 84. It is also encouraging to see the company earn a highest-possible Relative Strength (RS) rating of 99.  The company has managed to increase its earnings by triple digit percentages, well above the +25% guideline, in each of the past six quarterly comparisons versus the year earlier, satisfying the "C" criteria. CROX resides in the Apparel-shoes group which is currently ranked 60th of out the 197 Industry Groups covered in the paper, placing it just outside the much preferred top quartile. The stock is currently trading below its pivot point and above its 50 DMA line. As long as CROX does not trade below its 50 DMA line, the bulls are in control. A new technical buy signal may be triggered if it trades above its latest pivot point with gains backed by at least +50% above average volume, and it should remain on disciplined investors' watch list until then. Always limit losses per the 7-8% sell rule, and never hold a stock if it falls more than that much from your purchase price.