It’s been a phenomenal earnings season with big moves all in stocks all week. Today’s blog post features a clip from yesterday’s Q&A call (3:40), that was in response to a question about two symbols GILD & GRMN.
One positive surprise, (GRMN) shares closed up better than 10% the day following earnings & at the time of writing, it is up another 3.6% today.
And while GILD beat earnings estimates, the stock was down over 9% the following day on lower revenue & weak guidance. What was the difference? And how do we capitalize on these moves?
Yesterday, we said set your trading rules based on winning strategies & apply again and again. The market reaction to news is sensational, but the trade setup behind it is text book. We gain exposure to positive surprises through our normal trade setups – a combination of looking for a long term trend to continue, combined with favorable ‘money odds’ or risk/reward.
Dealing with negative surprises are also text book, following these setups – cut losses short. If your time your trades for sweetspots, we may often get enough price action & open profit before the news, that the initial break does not result in a large net loss. That’s the beauty of the sweetspot – prices can start in the right direction just as a function of noise, before the direction is really confirmed.
Also, as a reminder, we have a special Summer sale is on now (ending July 31). The 30-day trial is now $99 instead of $199. Take advantage of time-limited offer now.
Best Regards,
Jesse Wang