Trading Post-Earnings Momentum

Mega-Cap Tech Follow Up

The core of mega-cap tech earnings are behind us, and I have to say I am more than pleased with the results. We knew growth would slow. Even though slowing growth isn’t great, what is great about it is that it was expected. What the stock market hates most is surprises! So, in this instance, because slowing momentum was expected, we ended up seeing some beautiful post-earnings moves in companies like Meta Platforms (META), Microsoft (MSFT), and Apple (AAPL).

Advanced Micro Devices (AMD) even initially traded lower, but then came out with news that it was partnering with Microsoft for AI chips. The stock retraced all of its post-earnings loss (the gap from $89 to $80), and is now trading up above the price it was before earnings. It is currently trading at $95. Talk about a recovery!

Check it out on the chart below:

Advanced Micro Devices (AMD) – 30-minute Chart


Trading AMD & MSFT

Now, this earnings season, I had some interesting situations occur. I traded these stocks with options over their reports. Now, people are usually afraid of getting assigned when trading options but I have never let it bother me too much because I always trade defined risk spreads. This means I never (okay fine, not always never, but usually don’t) sell naked options. Generally, I use trades like spreads or butterflies. You can get assigned on these, and I have noticed that it’s happened a lot more frequently lately. But, because I usually have defined risk spreads, I can maintain my original risk parameters even if I do get assigned. Thats, if I want to.

In the case of MSFT and AMD, I ended up getting assigned even more shares in my trading account, on top of the long-term shares I already buy and hold in my long-term accounts. AMD was the very first stock I bought for my son Leo in his first brokerage account. It’s also the best-performing stock in that account, by the way! I have added more over time, and I did add some more before the last earnings report as well.

So, I had some options positions that turned into stock, plus more stock. As a note, if you do get assigned, the best thing to do is to decide if you would like to exercise your additional options to exit your options trade with the same risk parameters you had when you got in the trade, or if you want to hold the stock. For MSFT, I took profits on 80% of the shares (just in the trading account, not long-term), and held the other 20 that I had been assigned at $285. For AMD, I had quite a bit more shares than I intended or wanted to hold, so I did go ahead and take my money and run on those shares without exercising any options on Friday at the close (again, just in the trading account). I was a little bummed I missed out on the 5% rally yesterday, and I still think AMD will make it up to $100, but first and foremost, you must control risk!

Cash Money Honey

Between all of these moves, I had my best trading week of the year last week. And, let me tell you, whenever that happens, the very first thing you have to do is check your risk because it’s incredibly common to begin thinking you’re a trading genius, throw on a bunch of risk, and lose all of those gains! So, if you had a great week like me, make sure you check yourself and step away from the mouse. Go outside, get some fresh air, spend time with your family, etc. Anything to distract yourself from the love of the money and bring yourself back down to baseline. Without that, you can’t trade objectively.

Anyway, those are my thoughts, but of course I couldn’t leave you without giving you a few more ideas.

Setups for This Week

The market is a bit choppy today with inflation data tomorrow, but there are still setups out there. As noted above, some of my favorite ones recently have been post-earnings momentum setups. These are tickers that either keep climbing or keep tanking after a big earnings move. How can you tell them apart? It seems crazy to try and follow a big move after earnings, when the stock has already moved so much!

Well, I use a combination of earnings stats with my Hot Zone tool, technical analysis, and short float. I like to check and see if the stock is running into a key support or resistance zone and pausing. If that is the case, there is usually no post-earnings momentum move. However, if the stock breaks these zones, especially on high volume with a nice trend, this is when we can see continuation. It also helps to have a ticker that statistically experiences a post-earnings move like Microsoft, quarter over quarter. I discussed the potential for a MSFT post-earnings move on Charles’ show, Making Money.

Yesterday, I stopped by CNBC’s Power Lunch to discuss some post-earnings momentum movers this week, including Zscaler and Tyson Foods.  In these instances, ZS was a good candidate due to the high short float, and TSN was a good candidate because of the support breaks.

Check it out in the link below:

If you want more ideas for potential big movers this week, check out my Earnings Watchlist. There are many tickers on here with high short interest, including Palantir, which is flying today, YETI, BYND, SEAS, CRCT, and more.


Have a great rest of your day!



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