Hey 5-Star Trader,
It may seem like earnings season is still weeks away, and while the actual reports themselves don’t pick up speed until mid-April, the tradeable opportunities start right now!
Core companies, including Microsoft (MSFT), Netflix (NFLX), JPMorgan (JPM), and more are already in what I like to call the “Hot Zone” – the moment of key opportunity prior to earnings.
Why is the Hot Zone so important?
Once companies get within two to three weeks of their report, attention picks up – along with the news cycle. This inevitably causes more volatility, and one of three events will occur:
- Market participants anticipate a positive earnings release, therefore raising their interest in the stock and oftentimes causing them to invest in shares prior to the report. Investors may invest prior to the report in anticipation of a big beat or upwards move post-earnings. This action on a larger scale can cause the stock to rise prior to earnings.
- Market participants don’t have a strong bullish or bearish bias, as the company may lack big moves or surprising announcements. As such, the earnings report itself isn’t a major catalyst for price, one direction or another. Without much interest, the stock can remain back and forth going into earnings.
- Market participants anticipate bad news or negative momentum upon the report. This could either cause them to sell the stock prior to the report or just hold off on buying it. In either case, this typically causes the stock to fall prior to earnings.
Right now is the key moment in time to begin researching and planning out trends that fit your trading style, so you can jump on them and ride the action!
Take a look at this graphic below:
You can see how there are so many companies ripe for opportunity right now – already in the Hot Zone. As we finish up this week and enter next week, even more companies will be entering the Hot Zone. If you want to learn more about how I take advantage of this seasonal time frame in the market, join me today where I’ll go over many of these – live!
I look forward to seeing you there.
-Danielle =)
