What post-earnings drift is
A company reports its quarter. When earnings come in above what analysts expected, the price usually jumps on the first session that reflects the news.
Researchers have noticed for decades that the move often does not stop there. The price can keep edging the same way for weeks while the market absorbs the news. That slow follow-through is the drift.
It is a tendency, not a law. It has been weaker in large, heavily traded stocks in recent decades, and any single stock can do the opposite.
The rule, step by step
The rule is called pead-v1. Each of its six steps is mechanical: the same release always gives the same answer.
The company beats the estimate
Reported earnings per share come in above the analysts' estimate.
The reaction day closes higher
The first session that reflects the release closes above the session before it. A beat that closes lower is set aside.
Enter at the next open
The model enters at the open of the session after the reaction day.
Hold for 60 sessions
No stop and no target: the trade stays open whatever the price does.
Exit at the open
The trade closes at the open of the session after the 60th.
A new signal extends the trade
If the stock signals again while a trade is open, the exit moves to 60 sessions after the new entry. One trade per stock at a time.
How a signal shows up in the app
The PEAD dashboard lists every stock in the universe with its trade state for the coming session. An instruction always comes with its entry and exit dates and the words “Model signal, not advice”.
Enter at the open on Tuesday. Exit at the open 60 sessions later.
Model signal, not advice
- New signal
- The rule fired on the latest release. The trade enters at the next open.
- In trade
- The trade is open and counting down its 60 sessions.
- Exit at next open
- The hold is over. The trade closes at the open.
- No trade
- No open trade and no new signal for this stock.
What PEAD is not
No short trades
The rule only enters after a beat that closed higher. It never bets on a fall.
No options
PEAD trades the shares themselves. Options belong to the volatility play.
No sizing and no stops
The rule says when a trade starts and ends. How much to commit and when to cut a loss stay your decisions.
Not advice
Every signal reads "Model signal, not advice". It is the output of a model, shown for research and education.