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INTRODUCTION
We would like to welcome and congratulate you for joining the
Zacks Surprise Trader
family. Youhave made a major step toward achieving excellent returns in your trading. The Zacks SurpriseTrader is a short-term (14 days on average) trading alert service from Zacks Investment Research
that unlocks short term prots from companies that release positive earnings surprises.
We ask that you take the time to read this guide carefully, as it has many tips on how to use Sur-prise Trader effectively. This includes managing your expectations, advice on how to get the mostout of the service, the philosophy behind our stock selection process, and much more.The Surprise Trader is a combination of two extremely powerful tools: The Zacks Rank and thePrice Response Indicator (PRI).The premise behind the Zacks Rank is that earnings estimate revisions are the most powerfulforce impacting stock prices. It is a proprietary quantitative model that uses four factors related to
earnings estimates to classify stocks into ve groups, ranging from “Strong Buy” to “Strong Sell.”
Zacks continually compiles and analyzes research reports issued by approximately 3000 analysts
from 150 brokerage rms.
The Price Response Indicator (PRI) was a tool that was exclusively used for institutional investors.It gives each stock a grade depending on how the stock should react after its earnings release.When combined with the Zacks Rank, the PRI points out the best stocks to buy, even after their initial price increase. Combine these two Zacks tools and you have The Zacks Surprise Trader.As you begin to use this service, you may notice, most of our Surprise Trader recommendationswill have already increased in price. While many people have preconceived notions that stocksshouldn’t be bought after they have risen, we are here to say that this isn’t the case. Stocks that
have risen can and do go much higher. Instead of “Buy Low, Sell High” it is
“Buy High, SellHigher.”
The PRI identies stocks that are likely to move over the very short-term (14 days) after
an earnings announcement.
Expectations are a big part of this game. This falls into the “mental attitude” category as well. You
should expect some losing trades, and our 50%+ compounded returns don’t mean that everytrade generates that return. In fact, this awesome return works out to less than a 2% average gainon each trade assuming a 14 day holding period. So as you can see, this is a service that strives
for a lot of singles, not homeruns, but those singles add up to signicant performance at year’s
end.Again, welcome to Surprise Trader and happy trading!John TornatoreVice-President
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