Back to top

Free: Subscribe to Profit from the Pros

Zacks' Bull Stock of the Day, morning market e-briefing, strategies for picking the best stocks, funds, ETFs, and options plus more.

Join 500,000+ investors in-the-know.

Privacy Policy


View the PFP Archive

Cause and Effect

The action Monday and Tuesday is typical for a consolidation period. That is where the overall market is about breakeven yet some stocks are big winners while others are big losers. Often it has to do with what industry or market cap the company belongs to (right now small caps are getting hammered while large caps are enjoying some time in the sun). And quite often they switch places as the consolidation period rolls on.

At times like these you begin to realize that recent price action for your stocks is not a good guide of where they are headed next. For me there are 2 stronger indicators of future stock prices:

1) Earnings Estimate Revisions: Yes, the power behind the Zacks Rank. If they are going up, then a stock has a much greater likelihood to outperform over next 1-3 months.

2) Valuation: If the reasonable valuation for a stock is greater than what it trades for today, then there will be a natural pull in that direction over time.

Price action comes in a distant third behind these two in determining where a stock is headed next. That's because you have to realize that the earnings estimates and valuation are the "cause" behind the "effect" of stock prices over time.

Remember that institutional investors are the 800 pound gorillas of the investing world managing trillions in assets. The majority of these money managers rely upon the above fundamentals to determine what to buy and sell.

This is old hat to long time followers of the Zacks Rank investment philosophy. If you have not yet studied the merits of our system, or you need a little refresher course...then no better time than the present. Check out our free guide that gets you on the road to understanding and profitably implementing the Zacks Rank:

The Billion Dollar Secret: The Zacks Rank Guide to Trading Success

Featured Commentaries:

•  4 Cash-Rich Stocks

•  Oil & Gas Stock Roundup

•  Top Ranked Defense Stocks & ETFs Ready to Explode Higher

•  How to Pick Market Beating Stocks - Plus 5 of My Current Favorites


Steve Reitmeister (aka Reity...pronounced "Righty")

Executive Vice President

Zacks Investment Research

Follow Us:  


America's 10 Best Stocks Under $10

FREE report reveals 10 stocks under $10 that could more than DOUBLE your money! Discover the Weiss Ratings' best 10 stocks under $10 available in the market today. The Weiss Stock ratings are unbiased, 100% conflict-of-interest free, and have a steady track record of being some of the most accurate you'll find, anywhere. These stocks can help you avoid big losses and guide you to even greater profits in the months ahead.

Simply click this link, enter your email address and to receive a FREE copy of America's Ten Best Stocks Under $10.

Bull & Bear of the Day

Zacks Rank #1

St. Joe (JOE)

With the recent timberland sale, this real estate developer can focus on its core activities.


Zacks Rank #5

Endologix (ELGX)

Estimates have come down significantly after disappointing 2014 guidance by the management.

Stock Picking Strategies

Auto Parts: Staying in Overdrive  ››

Technical Analysis VS Fundamental Analysis  ››

Roundtable Top Picks for the Week of Mar. 24th  ››

Funds Commentary

Top Ranked Growth Mutual Funds  ››

Top Ranked Defense Stocks and ETFs Ready to Explode Higher  ››

China Bond ETFs in Focus on Recent Market Turmoil  ››

Options Strategies

How To Determine the Correct Position Size  ››

Video Reports

Thoughts on Rising Rates

Zacks experts weigh in on whether interest rates will rise sooner than expected.

This Week's Growth & Income Stocks: (MMC) (SSS)

Growth & Income Stock Strategist, Todd Bunton, highlights Marsh & McLennan (MMC) and Sovran Self Storage (SSS) on March 19, 2014.

2 Revenue Weighted ETFs to beat the market

Revenues are arguably one of the best indicators of financial health of a firm.

Earnings HQ

Today's Noteworthy Earnings Before the Bell:   ››  MOVLNNFRANIBPEGLT

Today's Noteworthy Earnings After the Bell:   ››  PAYXFULRVNCWPTCGIX

Get the First Calendar Made for Traders.

Visit the Zacks Earnings Calendar

Recent Earnings Winners

Company Symbol Reported Surprise %Price Chg
WSI IND INC WSCI Mar 25 +0.09% +5.97%
MCCORMICK & CO NON VTG CS MKC Mar 25 +0.62% +5.47%
ORIENT PAPER INC ONP Mar 25 +0.19% +5.04%

See All »

Best Earnings ESP Stocks  

Company Symbol Consensus
Accurate Est.
Reports Zacks Rank ESP
STRONGCO CORP T.SQP 0.10 0.11 Mar 25 1 +10.00
ACCENTURE PLC ACN 1.04 1.06 Mar 27 2 +1.92
ALCOA INC AA 0.04 0.05 Apr 8 2 +25.00
CARNIVAL CORP CCL 0.07 0.09 Mar 25 2 +28.57
GREENBRIER COS GBX 0.60 0.62 Apr 3 2 +3.33
Don't trade these stocks until you have read the Zacks ESP Guide ?


Why Are Institutions Hiding These 10 Stocks?

Big funds and pension plans try hard to keep others from spotting their key moves too soon. They need time to go all in, drive up the prices, and make big profits.

Before now, you could only catch their moves early if you had the time and expertise to comb through obscure SEC filings. Today, a Zacks strategy brings the best of them to you at "first sniff" so you can enjoy the full profit ride. During 2013, this approach more than doubled the S&P 500 with a stellar overall gain of +66.4%.

See its 10 stocks right now >>

Manage Your Newsletter Subscriptions

Update Preferences         Update Your Profile         Unsubscribe All         Feedback         Send to a Friend

This free resource is being sent by to our subscribers. We look for investment resources and inform you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer.

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable.

All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, brokerage, market making or asset management activities of any securities. Visit for information about the performance numbers displayed in this press release.

Zacks Emails

If you would prefer to not receive future profit-producing emails from the primary purpose of which is the commercial advertisement or promotion of a commercial product or service, then please click here and confirm your request. If you have trouble with the unsubscribe link, please email

Zacks Investment Research, Inc.
111 N. Canal St., Suite 1101
Chicago, Illinois 60606

Please login to or register to post a comment.