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Stocks Responding Well To Earnings

|Includes: AABA, American Axle & Manufacturing Holdings, Inc. (AXL), MELI

By Jeff Pierce

Earnings season is in full swing and we're seeing a lot of names responding well and this bodes well for the continued health of the general markets. If you've been frequenting the blog over the past few weeks you'll know that I've been very bullish and not surprised by the strength we're seeing in the markets. I sincerely hope you are participating in this rally because I've been on the sidelines in the past when my bias was such that the markets were "overbought" and "there's no way we can keep going higher" and it can be extremely frustrating chasing the markets.

The truth is such trading biases don't serve you in any way. We think they are protecting us from dipping our toes into dangerous trading waters, but it so very important to remind ourselves that high/low are relative terms. When you find yourself saying that stock is overbought and way too high, stop and ask yourself is it overpriced compared to it's peers, the general markets, or the current market leaders. That's not to say that the concept of overbought isn't valid, but often times markets and stocks can go much higher than you think they can.

AXL broke out in May and I initiated coverage on my tradewithZEN subscription service May 3rd when it was trading at $14.90. It rose nearly every singe day or had meager pullbacks until topping out in the $18.50 range. When the general markets corrected I snatched it up and recommended in real time to my subs to buy it right where I did at $16.68. I unloaded on Thursday, the day before it released earnings, only to see it pop higher.

One of the rules I use is if I'm in a stock and it rallies right into earnings then I'll take my profits and run However, as you can see it doesn't always work as AXL popped over 7% that day. If I had to do it over again I'd still sell because it wasn't worth risking my 17% gain I had accumulated.

MELI is another winner despite having bought a little too soon and having to sit through further pullback. I felt that the earnings gap would provide support so I bought at $110 and it got caught up in the late June downdraft and actually languished a little longer than I thought. However this stock never violated any of my chart pattern sell rules, found support, and ramped up into earnings. Again I thought the pre rally run up was over-done so I took my 10% off the table before they reported only to see it respond well to earnings.

The key is to not become frustrated that you may have left money on the table but to be thankful that your current trading strategy is putting you in a position that you can discover these stocks that continue to perform quarter after quarter.

Now let's address the one loser that we've had since June. I'm almost hesitant to say that we've only booked one losing position, but in June I decided to bring complete transparency to tradewithZEN by calling all my personal trades in real time and keep a detailed spreadsheet of all the buys and sells and since then we've only had one losing trade that is closed. All of these trades are in real time documented on my private twitter feed. If this doesn't remove any concerns you have about subscribing then I don't know what else I could possibly do to assist you in being a profitable trader.

To recap the benefits of being a tradewithZEN subscriber:

  • Market timing signals & trade alerts to know whether to be long/short
  • Long only watchlist of stocks updated daily and I also point out when trades are setting up
  • Access to my trading system & how I trade these particular momentum stocks
  • All real time trades are tracked

To view testimonials, past trades, and trading results visit tradewithZEN.

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