IT’S EARNINGS SEASON AGAIN: TIME TO TRADE THE NEWS

For me, earnings season is one of my favorite seasons of the year. The good news is that we’re in the midst of earnings season as we speak, and the season is bringing with it plenty of opportunities for traders to trade with the news, taking advantage of wide swings in value in the process. Today, we’ll talk about why earnings season is a great time for trend trading with the news, a couple of big moves that we’ve seen this earnings season, and what investors and traders alike should be watching for ahead.

WHY EARNINGS SEASON IS A GREAT TIME FOR TREND TRADING WITH THE NEWS

As mentioned above, earnings season is upon us, and it’s bringing with it a great time for traders to start trend trading with the news. So, why is it that earnings season is a good season for trend trading with the news? Well, the answer is relatively simple.

The entire concept of trend trading with the news is based around the idea that the news moves the market. Therefore, by following the news closely, traders have the ability to pinpoint potentially profitable trading opportunities, taking advantage of the movements caused by the news. Well, there are few pieces of news that cause movement quite like earnings related news. The reality is that on a financial level, investors know little to nothing about any company’s day to day operations. However, when earnings reports come around, approximately once every three months, the financial data surrounding publicly traded companies is updated with the public.

As a result, earnings season tends to cause dramatic spikes in the values of assets. Of course, if earnings beat expectations, that spike will likely be an upward one. However, if earnings miss expectations, we can expect to see a downward spike in the value of the stock. Savvy traders take advantage of these spikes, working to generate a profit in the process.

BIG HITTING EARNINGS REPORTS SO FAR THIS SEASON

So far, there have been a couple of hard hitting earnings reports that have created compelling opportunities for traders. Here they are:

• Twitter – Twitter reported its earnings today, and the report proved to be an overwhelmingly positive one. During the third quarter, Twitter blew away expectations. During the quarter, Twitter not only beat expectations with regard to earnings and revenue, the company also showed compelling growth in both daily active users and monthly active users. As a result of the strong earnings report, Twitter found its way toward the top. In fact, the stock gained by more than 90% in a single trading session.
• Celgene – Celgene Corporation is another company that reported its earnings today, but the results were on the other end of the spectrum. During the third quarter, the company did pretty well when it comes to earnings and revenue. However, by greatly reducing expectations for long term growth with poor guidance, the company led to fear among investors, sending the stock spiraling toward a nearly 20%, single-session loss.

WHAT YOU SHOULD BE WATCHING FOR AHEAD

As mentioned above, earnings season is the perfect time of the year to start trend trading with the news. So, if you’re looking for a great way to find potentially profitable opportunities in the market, look no further. Simply watch for earnings reports and make educated decisions as a result of the reports that are released.

This article was written for marketing purposes and does not constitute investment advice. The information in the article represents the general views of our experts and does not take into consideration the personal circumstances, investment experience or financial situation of any reader.