Tuesday we talked about how to trade earnings and there definitely was something to learn from that exercise. (you can read it here) We dove into a strategy for trading earnings and looked at the charts to see what they could tell us. Although we ended the lesson with pointing out that stocks have a tendency to move erratically around earnings, we did notice that Microsoft had a stronger signal of a drop than Google. Sure enough, MSFT slipped after earnings.

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Google actually jumped a bit. The takeaway for us is that trading earnings is high horsepower trading. It can definitely offer some great pops, but it is best done with risk capital and small positions. The other key lesson is that the charts can offer insight into what to expect the stock to do after earnings. We talked about considering a put option on Microsoft and the Aug 18 335 puts went from closing at 5.70 on Tuesday to hit over 9 on Wednesday. It would have required being dialed into that trade but it was possible to grab a win there.

At the end of the day, it is really about using all of the tools and knowledge you have access to. Charts are just one piece of the puzzle.

Keep learning and trade wisely,

John Boyer


Market Wealth Daily