Hey 5-Star Trader,
We are almost two weeks into April and the earnings reports are starting to pour in. The Nasdaq and key FAANG stocks along with tech are rallying going into the earnings reports which is setting the “Hot Zone” (my key earnings strategy) on fire. However, despite the uptick in the market, I’m choosing to exit some of my trades.
Timing your exit is crucial…
Though the market is rallying, I want to urge you to be careful in how you’re timing your exit when trading an earnings report. I’ve noticed with this setup, these runs tend to start early and don’t actually rally up all the way into the day of the report. As such, with the Nasdaq at new highs (and currently struggling at the 14,000 key area of resistance) I have already taken profits on most of my trades, with additional stop losses on Netflix (NFLX) and Snap Inc. (SNAP). My mistake here was getting in a little too early as it was right before the market pulled back. In the end, they just barely came back in time for expiration.
More action on the horizon…
While the first wave of “run into earnings” trades has come through, I’m now out of those and looking forward to the next slew of companies reporting through the end of the month.
I am specifically focused on cybersecurity stocks and recent Initial Public Offerings (IPO). Cybersecurity has pulled back along with tech, and we have seen renewed momentum into this area. Datadog (DDOG) is rallying into resistance, but I’m watching for a break above the 50 SMA and a potential breakout.
Zscaler (ZS), is another name I have my eye on. We have seen it trade above the 50 SMA and it’s primed for a breakout.
As for IPOs, Upwork (UPWK) is one of my favorites. I am buying shares and trading this in the options market.
Other names that are heating up in the “Hot Zone” include TWLO, TTD, and RNG. While the market is a bit extended here, I’m still hunting for potential breakouts on names that are getting pulled back.
Interested in trading some of these tickers? Join me for my live trading, where I’ll be taking a deeper dive into the action of the market and exploring which trades will enter the “Hot Zone.”
