Microsoft and Alphabet are ready to let folks know how they are doing. Big earnings announcements like these can be extremely tempting to try and trade. A solid beat of profit and the stock could soar. But, even a good performance that is below expectations can tank the price, not to mention what happens if there is bad news.
We talked about how the charts can sometimes reveal what we are going to hear the other day. (read it here) Lets see what the charts tell us to expect.
Microsoft has been on a solid uptrend although we have seen some gravity recently as evidenced in the the MACD.
That bearish crossover where the purple line on the MACD at the bottom of the chart is crossing below the red is sign to expect things to pull back.
Google is showing a similar pattern but it isn’t as strong as Microsoft.
One consideration to minimize your risk and maximize your leverage is to look at a put option for both of these. That said, earnings have a potential to “break” a chart as well and make it do things it doesn’t normally do. This type of trade has the potential for a big win but also carries more risk than a trade on a day where there isn’t an earnings call.
Using a smaller position and making sure it is risk capital (money you have allocated to use for more risky trades) is the wise approach in this situation. We will follow up and see how they do.
Keep learning and trade wisely,
Market Wealth Daily