Three Bails, One Buy

Hey 5-Star Trader,

I joined CNBC’s “The Exchange” to talk about earnings destruction candidates.

What does the “earnings destruction” pattern look like? 

This is the pattern that appears when a ticker is more likely to fall going into earnings, due to a lack of earnings anticipation. This can occur both pre-earnings, while the ticker is in the Hot Zone, and it also likely continues post-earnings.

This pattern sets up nicely when the ticker:

  • Previously experienced an extraordinary run, likely driven by the pandemic, hype, and retail sentiment, and that run has faded, substantially, with the ticker losing more than 30% since the previous all-time high

  • The ticker has shifted into a downward trend on the daily chart and is currently under key technical resistance

  • The ticker has shown disappointing moves post-earnings. This means that even if the company beat earnings, investors weren’t pleased and the stock fell post-report

  • The company may have missed several EPS estimates in a row

  • The ticker has experienced a major gap lower on a previous earnings report

Some of the names on my BAIL watchlist include:

  • PayPal (PYPL)
  • Carvana (CVNA)
  • Wayfair (W)

My BUY list includes:

  • Caterpillar (CAT)

To watch the full segment, click HERE.

-Danielle =)

Up Next...

NVDA: The Gift that Keeps on Giving

Nvidia shares have experienced a meteoric rise, so all eyes were on its earnings report last week. Investors were not disappointed, as NVDA reported explosive growth plus a highly anticipated stock split. Why Stock Splits are Exciting NVDA’s reported 10:1 split will take place on June 10th, less than two weeks away! This event is … Read more

Read More

SPX 0 DTE: Part II

Hey traders! I posted a video on a neutral SPX 0 DTE strategy on Monday, and I had many questions, so I decided to do a follow-up video with a second example. In this video, I cover several questions, including the width of my iron condors, the length of time, the risk-to-reward, and more. Check … Read more

Read More

Trade Review: Using a Neutral 0 DTE SPX Strategy

  In today’s Trade Review episode, I cover a quick SPX 0 DTE trade from last Friday at market close. In this video review, I cover: Why I decided to make a bet that the market would trade sideways into the close How I analyzed the options chain and technical chart patterns Why I decided … Read more

Read More

Subscribe Today!

Want my up-to-date analysis, setups, top trading tips, and more? Be a Five Star trader, and join my free newsletter today!

Sign Up Now