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How To Buy Stocks During Earnings Season

|Includes: FTNT, Netflix, Inc. (NFLX), TSCO

True to form with thrills (IBM, AAPL, VMW) and spills (RVBD, FTNT) earnings season is here in all its glory.  So how do you go about buying a stock in the volatile climate? 

Let’s take a look at a couple of examples from the watch list in our newsletter — starting with an example of what not to buy, then an example of what we did buy and a stock that is setting up to be another good buy should conditions hold up.
What not to buy:

Here we have FTNT that was setting up nicely before earnings.  It was pulling back off of its highs in an orderly manner and was above support and the 50-day.  What we wanted to see after earnings was the stock finding support at the 50-day or the blue or green lines.  If that occurred, we would have stepped up to the plate to buy it.  However, as you can see, the stock crashed through multiple areas of support and therefore is no longer a buy candidate.

Now let’s take a look at what to buy:

Yesterday TSCO announced earnings and the stock went from 70.67 to the 65-66 range.
Why are we buying it on weakness? Because its uptrend is still intact as defined by the upward slopping green trendline.  That’s what we wanted to see happen with FTNT.

Now let’s take a look at a stock that is setting up nicely:

We want to see NFLX tag the 50-day after earnings. If so, we’ll initiate a long side trade. 

“Let your stocks tell you what to do by the action they exhibit”
“We trade what we see, not think, hear or fear”

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