Monday, July 19, 2010

The Daily Note - The Scent of Earnings

Traders love the scent of earnings season. Twitter,and StockTwits are full of predictions and most if not all, and that includes me, has an opinion.

Some earnings are predictable, or they used to be at one time, so timing them on the build to announcement was a fun play. Then there were the sell on the news crowd, no matter what the earnings, the sell of was predictable. One time, seems long ago now, buying into the announcement was an almost sure thing, because no matter what it was, as long as it was positive, the market reaction was to buy more. I'm pretty sure that those days are gone, so today, playing it with caution is the best way. It's really best to be in cash before announcement and at the ready for the next play once the results are in.

The potential of the earnings trade is good once the announcement is made, and it's also a safer play once the fluctuation subsides. Since most earnings are announced pre or post market, your platform has to be able to take orders and be current and accurate. It's best to get ready for the ones that are popular. It is also best to leave the initial reaction go by and use them for potential range.

Earnings are magical, they can make a great addition to your trading arsenal, but it's not the scent of napalm, rather perhaps more like Chanel No5? Or perhaps, "The Scent of a Woman" but I'll leave that comparison up to the guys.

Happy Trading, Living and Dancing

The Daily Pick - NFLX

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