Earnings Still Matter


With the market in turmoil, many traders are in survival mode, never mind looking for new opportunities. Yet there are still companies reporting earnings that show the bottom line is still king.

As an example, take a look at the chart below on Zoom (ZM), a stock that reported its numbers after the bell on Wednesday and moved higher by 7% on Thursday while the rest of the market tanked.

Some good news for traders is that, after the initial earnings pop - and with the stock extended - it pulled back nicely with the rest of the market on Friday, setting up a possible buying opportunity, so the potential to make a nice score when the dust settles.

I point out ZM as a way of saying that, once we get through this tumultuous period, all eyes will return to earnings. And, believe it or not, Q1 earnings season will kick off in just over a month.

Already we're being warned to lower expectations due to the coronavirus which, on the surface, makes a lot of sense. But what if we find a number of companies that actually beat earnings expectations in spite of the early market warnings? For sure, these are going to be the companies we want to identify as they are likely to be seen as "safe haven" stocks as we work through the current market turmoil.

As usual, at some point the market environment will improve. We just don't know when. In the meantime, keep an eye out for those stocks that do beat earnings expectations - like ZM - as they could end up presenting you with solid reward-to-risk opportunities. And, if you would like to keep appraised of important earnings-related information, with an emphasis on Relative Strength, just click here to subscribe to our FREE EarningsBeats Digest, which comes out every Monday, Wednesday and Friday.

At your service,

John Hopkins

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