This is one of those concepts that eluded me for awhile ( and still does from time to time ), figuring out when a stock is overextended versus being at a proper buy point.

Some times the earnings are just so tempting we try to "force" the trade. Did the stock just pummel earnings? Raised guidance? "It's a no brainer, right"?! Eventually the stock will pullback triggering stops or worse twisting your mind while you watch all your gains fade away.

You need to balance the fact that a company had blow-out earnings with the reality that they have had a run-up to the day of the earnings release. When choosing stocks to enter, be selective and when in doubt, stay out.