How Traders Will Beat Wall Street This Earnings Season
Jeremy Mullin, 07 July 2021
Jeremy Mullin
Wed, July 7, 2021, 8:44 PM·7 min read
^GSPC
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Let’s review a common scenario investors come across as they wake up to their portfolio in the morning:
The Dow is up 250 points; it’s going to be a good day.
Stock A is up 1.5%. That was a good pick!
Stock B is up 2.3%. What a beast!
Stock C is down 10% and falling fast! What the heck???
It turns out stock C reported earnings above expectations, but investors are not happy. So, what happened?
And why is this stock going down when they had a good quarter above everyone’s expectations?
There are many reasons why a stock might go down after a solid earnings report. It could be profit taking, margins are weakening, competition, or maybe the CEO is leaving. But more often than not, computer-driven trading is forcing investors to sell when they don’t want to.
Some of the aggressive drops in stocks are scaring investors into selling, when they actually should be buying for the longer run. I’ve found that times in the aftermath of earnings seasons (like now!) bring us a multitude of opportunities.
These opportunities are plentiful and there are traders making money hand over fist. Perhaps the greatest chance to profit in 2021 is coming over the next month, when a volatile earnings season comes our way.
Because of the uncertainty surrounding corporate earnings and the reopening, the moves both higher and lower after companies’ report will be historic. It will be commonplace to see the stock prices after earnings yield big moves of 10-30% in a single day, which means your opportunity to make money is great than ever.
