Earnings season started after the close today with the usual first big company to report, Alcoa AA. So far it looks like the stock is down marginally in the after market but we will see how it behaves when the market opens in the morning for a better feel. The rest of the flood of other earnings starts tomorrow as well. Like we mentioned in last nights report, buying ahead of earnings is gambling pure and simple. We will not be doing any gambling in our reports. We focus on stocks that odds favor a large move over the short term and it’s not based on trading ahead of news. This is how many traders look to get their big moves but we have other proprietary variables that allow us to discover these types of moves. Ours are based on statistics and not guessing how a news shock will be digested in the market.
We will hold off on any new positions for Tuesday until we can get a better feel on how unpredictable the market will be with this first batch of announcements. We will also focus on pointing out what we will be looking for in a stock after their earning report is made public that should allow us to get some big moves. If we see certain patterns, those will tell us all we need to know and where we need to be putting our money.
CLNE is a perfect example of why we close a position if it starts acting wrong or comes back to our entry point. We entered CLNE and within 9 days it ran 11%. It started pulling back and broke the 10 day MA with volume and struggled to stay at the 21 day MA. The heavier volume gave us the indication the stock may need to reset itself lower and that is what happened today. It nosedived right into the 50 day MA on massive volume. Even though the chart is not technically broken why let an 11% gain turn into a loss. This is why we encourage taking profits on ½ of your position on the way up and then moving your stop to break even. Do not let a winning trade turn into a losing trade EVER! You can always re-enter the stock down the road.
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