How do you trade earnings announcements, from blowouts to big misses?
Unlike Christmas, earnings season comes four times a year. It’s the time when Corporate America gives investors a peak under the hood. The guys have some tips to follow ahead of earnings. And a note: since earnings are news events in themselves, everything the guys said about news applies to earnings as well. But there are also unique ways to tell how to trade around an earnings event.
In an earnings season, Tim Strazzini says you want to see who releases early in the season and how it impacts your stock. When a company reports late in the season, much of the expectations for a sector or a specific product are already factored into stock prices. Unless the company is an industry leader, it’s very tough for earnings to turn into big upside or downside surprises.