Find Quick Profits as Earnings Season Wraps Up
Earnings season is like being in the playoffs, but for the stock market.
Every three months, companies give a report on how well their operations are doing.
They post their earnings, revenues and guidance along with an interview with their CEO.
This puts companies on the spot four times a year. It’s the playoffs for the stock market.
This is each company’s time in the spotlight. And the pressure is on.
The market is watching their every move, ready to react whether it’s good or bad.
Stocks can easily surge or plunge by more than 10% in a single day during earnings season.
For that reason, investors have become fixated on trying to predict these moves. Everyone wants a piece of the action.
But I flipped this event on its head. And I trade it for what it’s worth: a wealth of new information.
Here’s what I mean …
Trade During Earnings Season Like a Pro
With everything on the line for these corporations, they pull out all the stops.
They talk up their guidance if their current quarter was weak. Or they’ll focus on new developments. Or they’ll speak to the strength of the current quarter to get investors excited.
They’ll do whatever it takes.
And because of that, earnings season becomes impossible to predict.
For example, even if we know a company will miss earnings expectations, the company can move shares higher by showing strong guidance and having the CEO remain confident in a bounce back.
So how do you trade this huge event? In short, you don’t.
Why gamble on what will happen during the chaos of an earnings announcement?
Instead, I’ve developed a profitable approach that capitalizes on the stock after earnings are announced.
When all the new information from an earnings announcement gets dumped on the market, it takes time for them to factor it all in.
This delayed reaction takes several weeks. Analysts upgrade the stock, more investors bid up shares and more positive headlines hit the news outlets.
It creates a positive feedback loop that is much easier to predict than the earnings announcement. But it still yields great results in a short amount of time.
Capitalize on Positive Feedback
While other investors focus on the earnings announcement, I’m placing trades on the stock to benefit because I know it is set to keep climbing over the next few weeks.
Because of that, I don’t have to try to predict the impossible.
I’m following the trends that develop after earnings, so we can build quick profits with much higher success than taking a roll of the dice during earnings season.
These trends can lead to gains of 5% to 20% in just a week. Remember, we are trading after the big 10% move on an earnings announcement. But we are still pinpointing sharp surges of 10% or more in just a few days, with much more consistency.
It’s the concept behind my number one strategy, Quick Hit Profits.
What really makes it a success, is a powerful tool we implement to make the most of these short-term gains: options.
We use options to turn a 5% to 20% return, into a 50% or 200% return, in just days.
I know options aren’t for everyone. Or maybe you don’t know how to implement them successfully.
That’s why I created a short, 30-minute training video to bring you up to speed on my favorite way to trade options.
Chad Shoop, CMT
Editor, Quick Hit Profits
Investing has consumed my life since college. While double majoring in finance and economics at the University of North Carolina at Greensboro, I founded the university’s economics club, joined the finance club and participated in the Chartered Financial Analyst research competition to represent our school.