This will go down as one of the most torturous breaking of all time high by Dow Jones Index. The market seems to be in a state of suspension in anticipation of earning season. Volatility in individual stocks should pick up as the earning season hits in full force in next couple of weeks.
The earning season and pre announcement season is a good season . It is a season of opportunity for all kinds of traders be it day traders, swing traders or long term traders. Future prospects of companies get reevaluated during this season. Those who surprise or beat sometime find a good rally for six to 8 weeks. Sometime they launch multi month, multi year rallies. Those who disappoint find the market severely punishing them . Many of them go in to multi month or multi year funk.
Earning momentum and price momentum as strategies have statistical edge and much of growth investing is about identifying such opportunities. Most people believe that market are too efficient and things like these do not work. It is very good thing that people believe in that myth. That creates opportunities for those who can understand and operationalise strategies based on earnings.
During the course of the day I will talk about how I discovered earnings based strategies and about my first trade based on it . I bought the stock on earnings day and it tripled in next two months. It was in the midst of severe bear market. So stay tuned.
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