Tramondo Investment Partners AG – Unter Altstadt 10 – Postfach CH-6302 Zug

Power Earnings Gap (PEG)

When earnings season is in full swing, every investor has his favorite setup to trade and follow.

At Tramondo, our favorite setup is the “Power Earnings Gap” – in short we call it “PEG”, which was originally created by @traderstewie.

Why? Because a “PEG” highlights so many traits of very successful companies and works best with high growth stocks.

A “PEG” is basically:

  • A stock that gaps up after reporting strong earnings and closes the day by printing a strong candle (best is a close near highs)
  • Preferably, the stock makes new all-time-highs or 52-week highs and breaks out from at least a month’s range
  • Volume needs to be huge -> at least 3-5x daily average, we want to see other institutions next to us piling into the name
  • A stock that gaps up on strong earnings only to reverse and close weak or in the red is not what we want to see


PEG-stocks are very attractive candidates for watchlists, top-up positions or aggressive trades. In line with our investment credo “Good Story, Good Chart”.

However, we suggest leaving the more aggressive trades to very experienced investors, as volatility tends to be very high on these days and stocks can sell-off very sharply.

A picture is worth a thousand words, so let us show you some chart examples of the most recent earnings season: Nike (Chart 1), Snap (Chart 2) as well as Align Technology (Chart 3) with several “PEG” showing its trickiness, too.

Chart 1: Nike - Power Earnings Gap (PEG)
Chart 2: Snap- Power Earnings Gap (PEG)
Chart 3: Align Technology - Power Earnings Gap (PEG)
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About Tramondo

Tramondo Investment Partners AG is a bank-independent Swiss asset manager based in Zug and licensed by the Swiss Financial Market Supervisory Authority (FINMA) to act as an asset manager of collective investment schemes. The firm is a signatory of the UN’s Principles for Responsible Investment (PRI).

Contact

Tramondo Investment Partners AG

Unter Altstadt 10
Postfach CH-6302 Zug

+41 41 710 76 76
info@tramondo.ch

© 2022, Tramondo Investment Partners AG. All rights reserved.

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