Post-Trade Analysis: Allison Transmission (ALSN)

Hey Traders — Mark here from the Signal Trader Pro team! Each week, we break down real trades to show how the Signal Trader Pro algorithm spots high-probability setups—and what we can learn from the wins, the losses, and the trades that just go sideways.

This time, we’re taking Allison Transmission (ALSN) in for an inspection—a commercial drivetrain heavyweight that recently triggered a high-probability setup in our system —a textbook setup that didn’t yield fireworks but delivered solid alpha, showing how disciplined exits protect capital and free us up for better opportunities.

Company Overview:

Allison Transmission Holdings (ALSN)

Allison Transmission Holdings, Inc. (NYSE: ALSN) is a leading manufacturer of fully automatic transmissions for commercial and defense vehicles. Known for its durable, high-performance drivetrain systems, the company serves key end markets including on-highway trucks, buses, construction, and military applications.

In recent years, ALSN has pushed into electrified propulsion and hybrid drivetrain technologies, positioning itself for long-term relevance. Despite these strengths, the company remains vulnerable to macroeconomic pressures—especially tariffs tied to key inputs like aluminum and steel.

Spotting the Opportunity:

Market Context & Setup

The Signal Trader Pro algorithm flagged ALSN as a high-conviction opportunity in early February 2025.

The stock had just sold off from a double top that peaked on January 23, 2025 at $122.53. After reporting earnings that slightly beat expectations, shares dropped a steep 12.46% on February 11 after earnings, as analysts lowered targets citing rising tariff pressures on aluminum and steel.

This pullback pushed ALSN’s RSI below 30, triggering our system’s oversold alert.

Despite this pressure, ALSN earned a perfect 15/15 score from our Quantamental Scoring System—our highest-conviction rating, reserved for setups with both strong fundamentals and technicals.

The setup was clear: fundamentally strong company, short-term dislocation, high-probability mean reversion.

Executing the Trade: Entry & Exit

We entered the trade on February 18, 2025, the day after ALSN’s RSI crossed back above 30. Our entry price was $103.69 with an initial price target of $116.25 which is calculated as a 2/3 retracement to its trailing 90 day high.

What followed was a slow, steady drift lower as the market digested intensifying tariff headlines.

Then came April 4—“Liberation Day”—when broad tariff policy updates sent the market (and ALSN) sharply lower. ALSN bottomed on April 7, the same day the government announced a temporary pause in new tariff enforcement.

Our alpha based stop loss kept us in the trade, despite a drawdown of approximately 17%.

The stock began a steady recovery over the next few weeks.

As the trade aged past our typical winning trade time frame, our target price adjusted downward looking for an optimal exit from a slow moving trade.

We exited the position on May 14, 2025, after 84 days in the trade, at our adjusted price target $105.14. This represented a modest 1.4% gain, or 6% annualized with 5.5% positive alpha to our Russel 1000 benchmark.

Quantamental Scoring Review

Each week, we highlight a portion of our proprietary Quantamental Scoring Algorithm, which evaluates stocks based on a blend of technical and fundamental factors.

Not every trade is explosive out of the gate—and this one tested our patience—but the setup was clean and validated by the system.

Technical Screening System

The ALSN setup aligned closely with the criteria we look for in a high-probability trade:

• Strong Trend Structure – Both the 50DMA and 100DMA stayed above the 200DMA, confirming a strong uptrend.

• Positive Momentum – ASLN maintained a positive return year over year despite short-term volatility.

• RSI Oversold Setup: The February 11 earnings drop triggered a sub-30 RSI signal. Our backtests show that stocks with strong fundamentals and this oversold reading tend to bounce sharply.

Earnings Surprise Analysis

Earnings surprises play a huge role in stock price movements. Companies that consistently beat expectations tend to outperform.

For ALSN, we analyzed its earnings history and found that over the prior 12 quarters, it beat expectations over 75% of the time—across EPS, revenue, and cash flow. Contributing a full three point in our algorithmic scoring system and adding to our confidence in the trade.

Post-Trade Reflections:

What this Trade Taught Us

This trade reinforces an important lesson: not every high-probability setup leads to a breakout winner—but discipline can still generate alpha.

Our total return of 1.4% may seem modest, but ALSN delivered 5.5% of alpha relative to the Russell 1000 during our holding period. In a market that saw sharp tariff-driven volatility, that outperformance matters.

What made this trade different? Our exit strategy.

We exited after 84 days, well beyond our average hold time of 54 days for winners.

When a stock goes beyond our average hold, we begin the process of recalibrating our expectations which means recalibrating our price target.

ALSN hit our adjusted price target on May 14, and we exited with discipline—freeing up capital for fresher opportunities.

Would we take this trade again?

Absolutely. The setup was clean, the thesis was sound, and the algorithm confirmed it. In a stronger market environment, this could have been a fast mover.

But this trade is proof that it’s not just about how much you make—it’s about having a repeatable process that helps you manage risk, capture outperformance, and reallocate capital when trades start taking the scenic route.

Price Target Recalibration Review

At Signal Trader Pro, we’re not just looking for entries—we’re also laser-focused on smart, systematic exits, especially for trades that start to take the scenic route to profits.

We know that most successful trades resolve within 90 days. When they don’t, our price target recalibration algorithm kicks in.

Our algorithm relies on a dynamic price target based on a 2/3 retracement of the 90-day trailing high. If a stock starts to flatten out or enter a range, we aim to exit near the upper boundary—before the trade starts costing us in terms of missed opportunities.

This framework helps us avoid the trap of inertia—cruising in the slow lane while fresher setups pass us by. It’s not just about managing losses—it’s about managing time and capital.

What did you take away from today’s newsletter? Drop a comment, let us know in the STP Whatsapp group chat or email us at [email protected].

Want to Catch the Next Big Trade?

If this kind of high-probability trade interests you, now is the time to take action. 🚀 Signal Trader Pro scans 1,300+ stocks daily to identify low-risk, high-reward setups, just like the trade we just walked through. Join now and get instant access to our top-ranked trade signals—because opportunities like this don’t wait.

Visit Us At Signal Trader Pro!

Disclaimer: This post is not financial advice. The stock market is risky, and any trade or investment is expected to have some, or total, loss. Please do your own research before making any trades. Do not use this information for investment decisions.