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Deporre: How to Trade Going Into Earnings Season

Real Money columnist James 'Rev Shark' Deporre has a simple approach towards the markets as the fourth quarter gets underway.

James “Rev Shark” Deporre has a trading plan rolling into the last quarter of 2021, and he’s willing to share it with Real Money investors.

“It’s my belief that it’s better to react to shifting price action rather than try to predict what might happen,” he wrote recently on Real Money. “I not only avoid trying to predict where the market might be weeks from now, but I actively avoid even thinking about it very much.”

Rev Shark’s ultimate Q4 trading plan goal? "It’s fairly simple - watch the price action and watch how things are developing and make decisions based on that. “If I'm wrong, I try to cut my losses quickly and regroup,” he said.

Timing is everything on Wall Street. And a much-needed September correction at the weakest time of the year, trading-wise, has teed up the stock market for a big rebound.

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But that’s not all, Rev Shark said.

“In addition, the recent corrective action has helped to close the gulf in performance between big-caps and indices on the one hand and small-caps and secondary stocks on the other,” he said. “Much of the market has been in a bear market since February, but we would never know it based on the coverage in the business media. The recent weakness has helped to cure this inconsistency to some degree.”

Another harbinger - third-quarter earnings are coming up soon, and that coincides with more positive seasonality. “With many of my favored names coming off multi-month lows, I believe there will be some positive price action as the focus shifts to valuations and numbers.”

Rev Shark said his focus right now is finding stocks that should see positive news in the next month or so.

“The technical conditions combined with the news should produce some good upward movement,” he said. “I’ll continue to discuss stocks like urban-gro   (UGRO) , Butterfly Network  (BFLY) , and others that I think will have some positive news flow.”

Get more trading strategies and investing insights from the contributors on Real Money.