This is one of my favorite times of the year!
No, it’s not Christmas, and no, it’s not the first day of hunting season…
It’s earnings season, and it’s just starting to heat up!
Why do I love earnings season so much?
Because it’s a really hot time for swing trades. And I love swing trading.
If you’re not familiar with this type of trading, it’s the sweet spot between day trading and long-term investing.
Watch my intro videos to learn more about it.
You can also learn about swing trading and lots of other strategies by joining our StocksToTrade community.
We have tons of free live webinars.
They run all day and offer trading tips and tricks, information about how we use our proprietary Oracle system, and other valuable training.
Swing trading typically involves higher-quality stocks, or what I call “real” stocks, where earnings and fundamentals matter.
And it’s not just the earnings drops themselves that can move these names. Any major company announcement can create price action.
It could be a product launch, a new corporate partnership, a change in management, big news in the sector…the list goes on.
Take a look at Astera Labs Inc. (NASDAQ: ALAB), one of my top AI stock picks.
On October 8th, after market hours, ALAB announced a new portfolio of fabric switches. These gizmos improve the efficiency of AI processing.
But what’s more exciting is what the stock did after the announcement.
ALAB 5-Day, 5-Minute Candles Chart; SteadyTrade
It basically went from around $53 per share to $70 for a gain of 32%* in about two days. (Remember, swing trades deliver day-trade-like returns but take longer than a day. And with less trader stress.)
So, during earnings season, when the news is really flying, it becomes more important than ever for swing traders to sit up and pay attention.
When Does Earnings Season Happen?
Today, I’m talking about the top four times of the year you should be laser-focused on trading, especially if you’re a swing trader.
Every quarter, we get about four to six weeks when the majority of companies release their earnings reports. The SEC requires every public company to do this, so it’s predictable and something you can plan for.
You can pull up an earnings calendar and see when each company is reporting. It’s all out there for you to see, so don’t ignore it…
Earnings season tends to give us some of the biggest moves in the market.
Stocks with story catalysts behind them, like the situation with ALAB above, get even more attention during this time because big institutions, major investors, and the media are all covering them.
Understanding the Term Earnings Winner
Earnings winner…sounds like it has solid financials, right? Not so fast…
Here’s what you need to understand: when we talk about earnings winners in financial jargon, it doesn’t always mean the company reported great earnings, or at least in the way we usually think of it.
Stocks can often move in the opposite direction of what you’d expect based on the earnings report. Why?
Because sometimes it’s a classic case of “buy the rumor, sell the news.” Even if a company posts a profit, if the numbers fall short of what the market expected, that stock can take a nosedive.
Remember this: it’s all relative during earnings season.
For instance, let’s say a stock has been running up for weeks, and everyone’s anticipating huge numbers.
However, once the earnings release comes around, if the company reports profits that don’t hit the market’s higher expectations, no matter how good they are, the stock could drop fast.
A great example, and one I wrote about in a blog post during last earnings season was NVDA.
The crazy thing about the NVDA story is that the company still beat expectations, but the beat wasn’t big enough!
Imagine never being able to please anyone!
And of course, investors showed their disappointment by sending the stock tumbling.
How to Trade Earnings Winners
Screening
During earnings season I’m screening every day for stocks that meet three simple criteria: they’ve reported earnings, have more than 50,000 shares traded in pre-market, and are up more than 5%.
The “up more than 5%” part is important because it means the stock was indeed an “earnings winner” in the eyes of the market.
Remember, it only matters how the market reacts.
To successfully screen for stocks that meet the above criteria, you need a robust trading platform.
My top pick is StocksToTrade.
It has the trading indicators, dynamic charts, and stock screening capabilities that are incredibly useful during earnings season. It also has a selection of add-on alerts services, so you can stay ahead of the curve.
Grab your 14-day StocksToTrade trial today — it’s only $7!
Study the Fundamentals
Like I said, earnings season is a great time for big stock moves in swing trades.
But unlike day trading, where we are only focused on that day’s price action and could care less if the company is even around next week, you must study the company’s fundamentals and their SEC filings.
Sounds like a heavy lift, doesn’t it? It’s a lot of work, especially if you’re a part-time trader (which is what swing trading is perfect for.)
Fortunately, I’ve created a system that does all that work for you.
It’s an AI bot called IRIS and I designed it just for swing trading.
Subscribers to the program get weekly analyst reports, training webinars, and best of all, access to the IRIS system itself.
The tool operates much like ChatGPT to produce screeners, trading plans, and more.
Master your swing trading strategy with our AI-driven tool today!
Have a great day, everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade
P.S.
As a trader, do you want to be stuck on your laptop all day, every day?
I’m guessing the answer is no…
My colleague and seasoned trader, Tim Sykes, has developed an under-the-radar style of trading that will unglue you from your computer.
It all happens over the weekend when the markets are closed…
Tim has made thousands in profits from this strategy.