Tools, Resources Key To Earnings ‘Run’

2021-03-24

“Turnaround Tuesday” hit the market yesterday like clockwork as selling sent the stock market reeling.

All three major indexes were down on Tuesday with the Dow and Nasdaq taking some fairly strong hits. And then today the markets turned again to the upside through much of the day before dropping back into the red across the board as the session ended.

This chop-and-slop, topsy-turvy market has traders searching for solid setups with less risk.

Are you ready to run?

No, not away from the market, but toward opportunities within the volatility.

Often overlooked is the quarterly run into earnings where tickers trend upward into quarterly earnings report dates. Historical data reveals a weeks-long run into setups for trades.

Some tech stocks have followed historical patterns of rising into earnings even after large drops and through the pandemic-influenced market losses last year. There are other sectors and tickers that follow this pattern no matter the market conditions.

Earnings trades — when executed correctly — offer “planned profit” opportunities. Following the historical data and knowing when these trades tend to peak (every quarter) is an advantage for traders.

There is a schedule throughout the year for company earnings reports (an internet search will bring this up). There are no official regulatory dates for quarterly filings (these aren’t like the April 15 tax deadline). While most companies follow seasonal quarterly reports (April, July, October, and January) earnings reports can be an almost daily rollout of earnings statements from various companies.

Earnings season isn’t a “crystal ball” for planning traders around these corporate filings. There is simply no way to predict company financial forecasts or estimates… and there is no way to predict public or investor reaction to earnings.

Traders should consider developing an “edge” during earnings season through specific tools and resources. This includes determining which earnings reports to watch, stock market expectations, and future company plans.

There is a limited window with an earnings trade that includes the run into earnings, the actual report, and the immediate market reaction afterward. Seasoned traders will carefully structure trading plans to maximize profit potential.

Traders know when the earnings windows open, so why not take a peek?

We Saw: Market struggling to maintain upside momentum — 

  • Individual stocks with strong jumps
  • Frenzy favorite GME gets pummeled for “no comment”
  • U.S. officials gaming for more taxes

We’re Watching: For support to hold, momentum to shift —

  • Patience to allow strong setups to build
  • What tickers are reverting to the mean
  • Setups that don’t lead astray from internal signals