New Oriental jumps as Q4 earnings beat, FY27 outlook tops estimates
New Oriental (EDU) surged after announcing fourth-quarter results that exceeded market expectations and providing guidance for FY27.
Based on the fundamental momentum of positive earnings results and an upward revision of guidance, we considered entering while monitoring the candle flow and trading volume (1.38 times the 20-day average) between the resistance level of 65 and the support level of 55.
If the stock continues its upward trend by breaking through the resistance level of 65 due to positive earnings and an upward revision of guidance, I will take profits at $68.0. Conversely, if it experiences a correction due to excessive trading volume and falls below the support level around 55, I will cut losses at $52.0.
The RSI(14) is at 65.2, indicating an overbought condition, and the moving averages are in a non-aligned state. The trading volume is 1.38 times the 20-day average, and the recent 7-day volatility is +3.3%.
In the past, similar stocks such as GNRC, PKOH, and CTS, which recorded the keyword 'earnings beat' and raised their guidance, achieved returns of 13.0%, 12.6%, and 11.5%, respectively. This can serve as a reference for approaching the earnings positive news and guidance upward momentum of EDU.
Entering with the expectation of breaking through resistance based on clear fundamental momentum from strong Q4 earnings and an upward revision of FY27 guidance, the actual result ended in failure, reaching a stop-loss price of $52.0 with a decline of -10.2%. At the time of entry, the RSI (14) was at 65.2, indicating an overbought condition, and the trading volume was 1.38 times the 20-day average, reflecting an overheated state. However, it is regrettable that we did not adequately guard against the adjustment pressure from short-term overheating and the risk of breaching the support level at 55, as we focused on the magnitude of the positive news.
Through this trading experience, I have learned that even with strong positive factors such as earnings surprises and upward guidance, it is essential to prioritize confirming support levels after a correction when the RSI is overbought and trading volume is overheated, rather than chasing after purchases. In the future, when encountering similar positive stocks, I will adopt a principle of a divided approach during overheated periods and will rigorously verify the price defense near stop-loss levels and support lines.