Earnings Roulette

“Only the mediocre are always at their best”–Jean Giraudoux

We have seen some decent “beats” on the earnings side of things the last couple of weeks. Last week and the next three weeks will continue to be a minefield though if your game is being long or short in front of an earnings report. I penned my feelings on this topic a couple of weeks back, just before the Alcoa $AA report.

A quick review of what has happened so far in this earnings season is interesting. I don’t play the earnings roulette game only because I really do compare it to riverboat gambling and not trading. Sure you may miss a few, but net net  I am pleased as punch when I avoid implosions that result in carnage to my P&L. I do play Apple ( $AAPL) though in front of the number because AAPL is the Temple of Goodness and always beats because they are perfect in every way imaginable, but have also mastered the art of under promising and over delivering. Wall Street knows this, yet loves it when it happens and drops to bended knee to the Alter of Jobs on a quarterly basis.

There are however some trades that I like in the period before the report and in my view that is the way to play, but I am always “gone” before the report.

One example just this week was Travelzoo $TZOO, when reviewing charts last Sunday the chart popped up as a true thing of beauty. Long story short my subscribers went long on Monday morning after it gapped up, we bought the pullback. We ended up selling a half position for two bucks and a day later, the other half for eight bucks. Why don’t I hold through the actual report? See the chart below. I have enough stress in my life, I don’t need that implosion to exacerbate it.

TZOO
TZOO

$CAT is another example, although I will probably be a buyer soon.

CAT
CAT

$BIDU reports Monday so we already took about seven bucks out of the name last week. Maybe it explodes higher, I made a nice trade. If it runs I’m still long 1/4 position.

BIDU
BIDU

Riverbed $RVBD earnings players are looking for their limbs today.

RVBD
RVBD

Bottom line, this is not the game for me. If you are a newer trader and went “all in” on a name like RVBD, it could take you a year to dig yourself out. Just be careful, this game is a marathon that never ends and there are no shortcuts.

Good luck. To request my performance email [email protected]

Have a great weekend.

 

 

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