Apprenticed Investor: Surviving Silly Season
Monday down. Tuesday up. Wednesday up, then down, then back up again -- big. Thursday, down over 0.5% for each of the major averages at midday.
Welcome to earnings season.
It may seem there is no rhyme or reason to how individual stocks respond to earnings reports. If you have been frustrated trying to make sense of it, you are in good company. Many traders have found gaming quarterly announcements to be a futile exercise. My own personal approach is that without some sort of an edge, I'd rather simply
There are two keys to tracking earnings reports and the way a stock will trade afterward. The first is the expectations for the company's quarter. Not your expectations, rather the collective anticipation of analysts and fund managers for what the company will report and say during its conference call.But playing the expectation game is only the first step. Once you determine how high the bar is set, you must then consider the stock's recent action. Some results are anticipated well in advance of the conference call. A quick look at a chart is often instructive. We won't bother discussing a company like Kodak (EK), whose business has been eroding for a long time. The company simply missed its numbers. I'd rather look into why Citigroup (C) disappointed. There are two explanations worth exploring; depending on which one you prefer, one makes these stocks a hold, the other a sell. Some have blamed Citigroup's disappointment on the General Motors (GM) blowup. If you believe that's the case, then Citi's problems are probably behind it, and you can hold it until October's report.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV