A classic momentum setup is the PEAD trade.
PEAD is short for “Post Earnings Announcement Drift,” where a stock sees a strong move on earnings in response to improving fundamentals, and then the stock continues to rise in price due to steady demand for the company.
EA (Electronic Arts) is in such a setup. After a strong breakout on earnings, the stock ran from 32 to 36, and then pausing for a month. During this month volatility has continued to contract, but on Tuesday it saw a breakout of the pattern to new highs on increasing volume.
A long here with a stop under 34 is a good position trade, with initial targets at 37.
