Monday, February 12, 2007

The POWER of Earnings

Well Traders, one thing I am going to stick to from now on, is NOT to play around earnings. Now, this is a pretty good rule because earnings can be a complete crapshoot. A few days ago, I mentioned BW (and ANDE as a Bullish play last week and we know how that turned out) as a possible Bearish play...here is the chart today:You'll notice that on Friday, things were looking really good for this downside play. The stock was making lower highs and lower lows, a Bearish indicator. With earnings coming up, it seemed like it could be more fuel to the fire but low and behold, a WHOPPING turnaround! That is the power of earnings, and is why it is important to me to stay away (unless I am already in a long-term TREND trade). Full disclosure, I did want to get into this trade in a Bearish position, but I wasn't able to...whew! That would have been a very painful lesson.

For now, I am just going to bide my time, be the Lion, and wait for good post-earnings plays to come my way.

I should have some more ideas for trades later.

Happy Trading!
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Anonymous said...

I too was looking at BW as a bearish trade. I did a paper trade to see if I completely understood the concepts that I learned at the investools 3 day in Salt Lake. (I was there at the same time as you)I'm glad that what I saw in the technicals was correct and also glad I didn't make that play. No play around earnings is a definite must for trading rules. This confirms that concept.

5:35 PM

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