Earnings Plays.. various strategies that have worked for us in the past will be discussed in the Market Gems Manual being prepared. But in a thumbnail.. You should look at some articles on "anticipatory upswing" on the market gems website.
marketgems.com
You won't find the answers in the FAQ's.. as regards strategies just the FAQ's just explain the 'coding' system when we call the buy triggers. It does explain the 'terms' we use but not the actual strategies.
Actually the enty/exit strategies are the same as for any momentum trade. We have no magic forumula, although we do have strategies that are perhaps a bit easier to work with. Most are based on trendline breakouts with support and resistance lines.
Most of all the strategies for earnings plays and most of our plays are rather straightforward, and don't require intricate and involved technical analysis. That is simply because the stock selection process is what is foremost in our strategy. From the get go the stock are selected to be in the top 3% percentile for earnings per share, technical strength and in some cases stability of earnings qurter after quarter, while in other cases, it could be a companies first positive quarter. All the plays are on the calendar and some will never trigger buy signals and just lie and languish.
Once you've picked the stock any good trading system should work pretty well. But if you don't have any idea of technical analysis then you should prepare for the season by reading some beginning books. The best I've seen so far is
Getting Started in Technical Analysis by Jack W. Schwager.
His explanations are easy to understand and he gives examples in 'actual trading situations'...
All the earnings plays revolve around one premise: Anticipatory Upswing the stock will have a robust move anywhere from 2 weeks to 1 day before earnings. Its when the bulls (or bears which we ignore) express their opinion about the earnings report and that anticipation for a good report reflects itself in increased volume/buying pressure on the stock. There are numerous examples in the collection of articles. Scroll through them and look for the ones mentioning 'earnings' or 'anticipatory upwsing'.
We do have some more newbies this week, thats true, but if you read the education articles on the website you should have enough of an idea. I'll have the manual ready for first editing probably in about 2 or three weeks.. It will contain numerous examples of the charts and strategies that work for us and the ones that won't work (i.e. buying a stock just because you expect earnings will be good).. It won't however be a book on technical analysis. Others have done that rather well and all you need to do is know basic technical analysis to play the stocks. The manual will explain which strategies work the best and the difference forms of earnings plays (before earnings, after earnings, the intermediate hold, the short correction right after earnings that turns into a steep upswing after the breakout etc.)...
Of course an additional part of the manual will explain the use of BOTH earnings and watch list plays and how the complement each other especially on difficult market days when the only thing that moves will be the earnings play.
It will also focus on the interplay of technical and fundamental analysis, which gives you a trading edge should you decide to hold your trade longer than 2-5 days or a daytrade. Since the earnings plays are fundamentally sound, they have offered better opportunities for short or intermediate trading than your 'momentum' stock.
Some have gone on to be extreme high flyers like HIFN, HLIT, ETEK, EMLX, GALT, GAEO, OCLI, etc.. |
