The Consumer Price Index numbers for December came in higher than analysts expected…
That created the opposite effect in the market that I was hoping for.
But I never act like Chicken Little and scream that the sky is falling…
Just because the market pulled back one day, doesn’t mean it’s over for trading or small caps…
We’re coming into one of the best times of the year to trade.
Buckle up as we explore what it is, why you should care, and most importantly, how to trade during this high-stakes period.
Plus, I have a tool to help you make the most of it…
Here are three strategies I use this time of year and how you can make finding opportunities easier.
The Best Time Of The Year To Trade
Every quarter, we experience the exciting trading time that is earnings season.
The SEC requires all publicly traded companies to release earnings reports…
And with four quarters in a year, you can predictably mark the time when companies release their quarterly statements, including profits, losses, and earnings.
These reports deliver crucial financial data about the company … And earnings season runs for four to six weeks following the end of each quarter.
These can be exciting times to trade.
So I’m sharing three ways to make the most of the latest earnings season that’s kicking off next week…
Plus, I’ll share my number one way to be ready for the opportunities.
The Power of Story Stocks
First, focus on stocks with a story…
Traders are all drawn to stories … Think of it like TikTok dominating social media conversations.
Similarly, story stocks capture the attention of institutions, big investors, and the media during earnings season.
Since last year, the big story has been the launch of AI…
And it had big implications for tech stocks during earnings season. NVIDIA Corporation (NASDAQ: NVDA) had a huge gap up last May after earnings, and it’s still making new highs…
NVDA chart: 1-year, daily candle — courtesy of StocksToTrade.com
MSFT also had big moves on its earnings date in October when it was getting into AI.
After its initial gap up, it retested the consolidation level and then went on a month-long rally…
MSFT chart: 1-year, daily candle — courtesy of StocksToTrade.com
Understanding the story behind a stock during earnings season is key. If a stock has a story behind it and good earnings — there’s potential for an explosive move.
But just like any other trade, you have to have your timing right when trading earnings winners…
Timing Trades In Earnings Winners
Trading during earnings season requires patience and strategy. You don’t want to anticipate moves…
If you buy the day before earnings or the week before, the odds aren’t in your favor.
We want to join the trend and the crowd….
Don’t play guessing games.
Because ultimately, stocks can announce terrible earnings.
And if you buy the night before and earnings are terrible, you get destroyed.
You get stopped out and take a big loss because you were playing a guessing game.
The key to trading earnings winners is to wait for the stock to react to the news. Then trade a repeatable setup if it’s there…
If a stock is reacting positively after earnings, align factors in your favor — check all your boxes, create a solid trade plan, and set your stop-loss.
One pattern I like to look for in earnings winners is the…
Dip-and-Rip Strategy
Take advantage of powerful chart patterns like the dip-and-rip during earnings season.
Look for stocks with an earnings catalyst that is gapping up, trading high volume, and breaking key levels.
This is what I call an earnings winner.
You don’t have to dissect earnings reports and dig deep into fundamentals. The chart will show you if the earnings were solid.
Combine a good earnings reaction with a compelling story stock and you could have a winner…
But you still have to time your trade right.
That’s where the dip and rip pattern comes in.
Look for a stock gapping up in premarket and wait for it to set a high of the day at the open.
Then ideally it pulls back to suck in shorts. Then enter when it reverses and breaks the high of the day.
The dip and rip pattern is one of the must-know patterns available in my ebook.
Watch this video to learn how to trade the dip and rip.
For new traders, the key to success and consistency is trading less — focusing only on the most high-probability setups.
If you’re juggling a part-time trading schedule with other commitments, earnings season is a great time to focus on swing trades in ‘real’ companies that you don’t have to micro-manage.
Real stocks aren’t as volatile as penny stocks, but you can still grow your account with the right approach.
Learn how AI can help you spot explosive opportunities during earnings season, and all year long…
I’m giving a special presentation on it next Thursday at 8 p.m. Eastern to show you how…
Sign up here to save your spot!
See you there.
Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade