Earnings Season Favors the Bulls


Recent headlines have focused on tax reform, health care reform, partisan bickering, the president's first 100 days. But in the background many companies have been coming up big when reporting earnings which is why the market has been so strong of late.

While the bears have been hoping for a big pullback the bulls have gone about their business with the NASDAQ hitting an all time high while the Dow and S&P, though lagging, have remained within easy striking range of their respective all time highs.

With strong earnings come high reward to risk trading opportunities as long as you are willing to be patient. For example, take a look at the chart below on EXAS, a company that we issued a trade alert on for our members based on strong earnings, that turned into a nice winner.

In this case we issued a trade alert to members on April 5 after EXAS had reported its Q4, 2016 earnings, moved up nicely and pulled back to key technical support. We hit our price target on April 20, a nice 10% winner. In the meantime, the company reported its Q1, 2017 earnings and blasted off, up 30% on its nice beat.

Now the stock is back on our radar screen but we can't chase it, not after its risen 30%. This is where patience comes in; we're willing to wait for a pullback (they always come) once we determine a suitable reward to risk entry point.

This is the beauty of tracking those companies that beat earnings expectations; traders like companies that show solid performance. So why not focus on those companies that beat earnings expectations and have strong charts?

One of the things we do at EarningsBeats is scan for companies that beat earnings expectations and add them to our "Candidate Tracker" which are then available to our members. Some of these will become trading candidates. If you would like to see a sample just click here.

It's easy to get distracted when trading with everything that goes on day to day. But if you pay attention to companies that report strong earnings you just might find a gem or two.

At your service,

John Hopkins

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