Investors should not complain. It has been a heck of a start to the year on top of a great end to 2011. It is only natural for stocks to dip – nothing goes up forever.
With that macro backdrop knowing that the bias for stocks at the moment is lower creates a tremendous trading opportunity for those focusing on companies releasing earnings reports. With a ceiling on the upside there is simply little to lose by being primarily on the short side of earnings season.
Look no further than the companies mentioned in this column. The majority of the names listed here over the last month are exhibiting significant losses when earnings or guidance disappoints and limited upside if there is a pleasant surprise.
Until the market dips at least 10% this dynamic will continue. Investors should not try to over analyze the current environment. It really is rather quite simple.
It may only be the end of April, but sell in May and go away is absolutely in play. We are already seeing cash move to the sidelines in advance of what may be a very big decline. Selling today is only likely to accelerate over the next few weeks.
Trading earnings in this environment can be very lucrative then.
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Here are 5 companies reporting earnings this week and one of them is my Stone Cold Earnings Lock of the Week: