As I saw Jim Cramer note Thursday night on his show, Mad Money stocks are going up when you might think they should go down and vice versa when reporting earnings.
His examples were Wal-Mart Stores (WMT), which delivered what otherwise looked like a solid report only to see its shares trade lower, and Cisco (CSCO), which delivered not-so-bad news only to see its stock rise on the news.
In such an environment, the already difficult job of reading the tea leaves in front of an earnings report becomes that much harder. In order to gain an edge, traders are wise to gather as much information as possible before making their moves.
One source that I may suggest is my Earnings Player Stone Cold Lock of the Week.
Over the last five weeks these option trades – one per week – have produced two option trades that have doubled in value and one trade that gained 50% in less than 24 hours of trading after earnings are released.
That sort of track record does not come easily, especially in a market like this. How did I produce such outstanding results?
In addition to following my five keys to trading earnings, I am always on the hunt for trends that can be used to reliably identify a winning trade. It is these trends or current market observations that can help you identify your own Stone Cold Locks.
Here are three market observations you can use to reliably trade the remainder of the current earnings season: