Tackle Today: The Earnings Dance
January 14, 2021
≈ Play that Funky Music ≈
Traders,
Since the dawn of modern markets, companies have engaged in a quarterly ritual on Wall Street. It’s a dance of sorts where investors set the tempo and companies see if they can impress spectators. Missteps are punished, sometimes mercilessly. Meanwhile, those who dance the jig with adroitness receive praise and ever-higher stock prices.
Such swift results generate overnight gaps in price, thus making holding a short-term trade into earnings a risky roll of the dice.
You might think you can guess the winners and losers ahead of time, but such nonsense is born of an oversized ego and ignorance. With time you will discover these binary events are the ultimate 50-50 proposition. And there’s no way to shift the odds in your favor – at least if you’re guessing direction.
So don’t. For our weekend Scouting Reports (which focus on swing trades), we have a 10-day rule for earnings. If the announcement is scheduled for the next ten days, then no matter how juicy the setup or pretty the pattern, it’s disqualified.
If you want to modify the rule slightly for your trading, then feel free. As for us, ten days is good enough.
#TeamTackle
Chart of the Day
WDFC Daily Chart
WD-40 (Ticker: WDFC) posted earnings last week and the price gapped from $270/share to $310/share overnight. Because earnings can create gapping price charts, traders tend to stay away from them when holding directional short term trades.
Video of the day
Trade Masters Recording from Last Night
If you missed our Trade Masters webinar, catch the replay here. Coach Emily and Greg went head to head to see who could find the best trade ideas.
Traders Lounge 11 AM EST
Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.
Halftime Report 12:30 PM EST
The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day and fun in a way that only Matt and Tim can deliver.
Cash Flow Club 8:30 PM EST
Join our weekly Cash Flow Club to learn options strategies from one of the Coaches at Tackle Trading.
Financial freedom is a journey
The Tackle Today series is brought to you by Tackle Trading.
Sign up now and gain unfettered access to all of the quality content and powerful Scouting Reports that our Pro Members enjoy for 15-days absolutely free with no strings attached and let us show you what your trading has been missing.
# Sign up now for a 15-DAY FREE TRIAL #
Legal Disclaimer
Tackle Trading LLC (“Tackle Trading”) is providing this website and any related materials, including newsletters, blog posts, videos, social media postings and any other communications (collectively, the “Materials”) on an “as-is” basis. This means that although Tackle Trading strives to make the information accurate, thorough and current, neither Tackle Trading nor the author(s) of the Materials or the moderators guarantee or warrant the Materials or accept liability for any damage, loss or expense arising from the use of the Materials, whether based in tort, contract, or otherwise. Tackle Trading is providing the Materials for educational purposes only. We are not providing legal, accounting, or financial advisory services, and this is not a solicitation or recommendation to buy or sell any stocks, options, or other financial instruments or investments. Examples that address specific assets, stocks, options or other financial instrument transactions are for illustrative purposes only and are not intended to represent specific trades or transactions that we have conducted. In fact, for the purpose of illustration, we may use examples that are different from or contrary to transactions we have conducted or positions we hold. Furthermore, this website and any information or training herein are not intended as a solicitation for any future relationship, business or otherwise, between the users and the moderators. No express or implied warranties are being made with respect to these services and products. By using the Materials, each user agrees to indemnify and hold Tackle Trading harmless from all losses, expenses and costs, including reasonable attorneys’ fees, arising out of or resulting from user’s use of the Materials. In no event shall Tackle Trading or the author(s) or moderators be liable for any direct, special, consequential or incidental damages arising out of or related to the Materials. If this limitation on damages is not enforceable in some states, the total amount of Tackle Trading’s liability to the user or others shall not exceed the amount paid by the user for such Materials.
All investing and trading in the securities market involves a high degree of risk. Any decisions to place trades in the financial markets, including trading in stocks, options or other financial instruments, is a personal decision that should only be made after conducting thorough independent research, including a personal risk and financial assessment, and prior consultation with the user’s investment, legal, tax and accounting advisers, to determine whether such trading or investment is appropriate for that user.
