Top Earnings Trades – Late Bloomer Day Trade ($3,100+)
Great news. The first 4 earnings eruptions setups in Q3 earnings season have all been winners using the entry/exit rules in the new earnings eruptions course.
On a couple setups we had to relax the rule for the average volume but the higher price of these stocks made up for the lower average volume in total dollar liquidity per day.
Now usually you will make the bulk of the profits on this trade within a half hour. You read that right. The big profits are usually made within a half hour after entering the trade with this big news event.
However, the earnings eruptions trade will occasionally move sideways after reaching the entry point and then break out strongly later in the morning.
I have seen this on several top growth stocks this year. One notable example was NFLX earlier this year and ADBE last week. On Friday we saw it occur again on one of the most overlooked top growth stocks in the market – ALGN.
We featured ALGN breaking out of strong consolidations ahead of 2nd quarter and 1rst quarter earnings this year before explosive moves higher. And we featured it again in the Weekly Alert a couple weeks ago ahead of the Q3 release. Those using our target entry and exit points cashed in on Friday morning with a nice 15% to 20% profit within 2 weeks.
But the stock also met all the criteria in our earnings eruptions strategy before the bell on Friday. We mentioned it on twitter and stocktwits as well on Thursday evening.
What was interesting about this trade though is that it reached the technical entry point in our #1 intraday pattern and then moved sideways for about an hour and a half. Similar to what ADBE, NFLX and other top growth stocks have down this year after a big earnings beat.
What is exciting about this behavior is that I know I can use a much tighter stop-loss if we get that break later in the morning (only if we have a tight consolidation earlier in the morning) with a very high likelihood of success. So I treat it as a separate trading setup that I can play with an even larger position size.
Now I can see experienced day traders out there rolling their eyes because generally a late morning day trading pattern breakout is a terrible trading setup.
Don’t get my wrong. Usually you want to short these breakouts on stocks that have moved earlier in the morning. However, if the gap is strong enough and the stock meets all the requirements in our course, its actually a great trading setup if it has not rallied yet and basically moved sideways in a tight consolidation from 9:30am to after 10:30am. The stocks we trade are a special breed.
Of course, the stock has to hold our 2.5% stop-loss throughout the morning, but a late morning breakout on these events (again, only on the right stocks) is a great opportunity. Generally these move at least 3% from the breakout point and rarely move .6% below the ideal entry point. So its a fantastic risk/reward and a very nice day trade.
Again do not confuse this with an ORB – opening range breakout. Those may work 50% of the time in my experience with a tight stop with a much smaller average gain during the day. Certainly not enough to make it worthwhile. In fact, nearly all day trading setups are a waste of time except for the one covered in our videos.
You have to make sure the stock meets all the requirements including the price of the stock and the size of the gap to make it a high percentage, low risk trading setup with huge upside for a day trade.
So the earnings eruptions trading setup is red hot again this quarter. The video above will go over more details about how we play our #1 day trading setup during earnings season. Again, its not a swing trading setup, where you hold for weeks usually, like we feature in the alerts. This is more of a day trading setup that often continues to trend higher for 2 or 3 days.
Unlike stocks under $10, this type of stock and catalyst does not need an artificial pump to work so it actually works much better for people who are not doing the pumping. The slippage is miniscule compared to those strategies on low float penny stocks. And the win rate is MUCH higher with a tight stop-loss so its easy to take larger position sizes as you can see in the video demo above.
What’s even better is that they are coming up more and more as earnings season heats up. And it looks like it will be a very good one for those who carefully learn all the rules in the earnings eruptions strategy.
Watch the video above to see another live example of what I found to be the #1 day trading setup in the market.
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