This earnings season is very unique. For the first in around 10 years, we have stocks reporting earnings during a major market correction. There are signs of a major trend change in the overall market trend, which has been in a non-stop bull market since 2009. You are going to see a lot of similar daily charts in the stocks we will discuss here. Many of these companies have had a strong run the past year, but are now pulling back strongly, in conjunction with the overall market conditions. Most of these will be on watch for a short play.

When trading earnings stocks, you should never try to gamble and guess what the earnings report will be beforehand. No one knows whether the report will be good or bad, or how the stock will react once it is released. Buying or shorting a stock right before an earnings report is pure gambling. All of the earnings plays we will talk about you should be trading AFTER the report has come out.  Here are 5 great earnings plays to watch for next week:

$UAA

UAA is always a great stock to trade during earnings season. It doesn’t have the biggest range normally, but during earnings a ton of range and volume comes in, making it amazing for day trading that day. There is no significant nearby daily support except for the $16 area. If it reports poor earnings and gaps down below this area, we will likely see a strong selloff. If that happens, this will be on the top of my watchlist for a short.

$TEVA

Very similar looking daily chart to UAA. Like UAA, it has history of making big moves, in both directions, in response to quarterly earnings reports. Last August it had a monster multi-day selloff in response to an awful earnings report, and it dropped from $31 a share to $19 a share in just 3 days. TEVA is a great stock for momentum traders, as it has great liquidity and range to trade off of. On all earnings plays you are looking to trade, you should always check how they have reacted in the past to earnings reports. For a complete checklist for trading earnings plays, checkout this guide here.

$SPOT

Spotify has had a strong run the past several months following its initial public offering in April. It has almost hit a high of $200 a share after IPOing at around $160. However, in October we have seen a major pullback, dumping to the $140’s in the past week. The stock has a huge intraday range. After the last earnings report in July, it moved over 10 points the next day. We will likely see a similar type of move next week as well, but possibly to the downside. It’s all time lows are at $135, and there is no other significant support besides the $140 level. If they have a bad report and gap below these levels, we could see a huge selloff.

$W 

Wayfair has been on a monster run this year since the poor earnings report it had in late February. It had a big selloff down to almost $60 a share, and has rallied all the way back to as high as $150 in September. There is very high short interest in this stock, with Citron putting out many high profile reports bashing this stock. However it has continued to squeeze despite the questionable fundamentals. It has pulled back in the past month, and it is approaching a key support area in the $105 area. If it has a bad report and gaps under this level, we would have a great shorting opportunity. This stock has a lot of room to fall.

$BABA

Alibaba has been a very strong stock the past couple years, running from around $85 a share to over $200 in just over a year. However since July, it has had a major pullback. The tariffs imposed against China and the departure of their founder Jack Ma have been partially responsible for the major pullback in the largest publicly traded company in China. This stock ia great momentum stock in general, and becomes even better after earnings reports. The $135 support is a key level. If they put out a weak report and it gaps under, we will likely see the selloff continue in the name.  

Free Webinar on Earnings Trading

Want to learn how to consistently profit on earnings plays? We are doing a free live webinar next week on October 29th going over the setups I use for earnings plays. During this 2 day online event, on October 30th, you will also get to watch me trade live to see exactly how I trade these setups.

Sign up for the webinar here.

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Did I mention that it also reports earnings after the market close today?

We entered $AAPL in the Trade Report service at $125. Our plan was to ride it into earnings, and if there was enough of a cushion, to do something we rarely do: hold through earnings. The stock currently sits at $133, which gives us an 8 point cushion heading into earnings.

Now even if the stock has a bad earnings reaction and gaps down, we have mitigated our risk. And if we get a positive response we’ll get a huge win. This is the type of risk I’m willing to take going into earnings.

For those who are not in the stock, watch for a break of the $133.60 high.

Come check out our FREE TRIAL for our Part Time Traders service.  This service is great for those that work and cant monitor the computer all day. We have indepth nightly reports on the gameplan for the day/week and all stock picks that I trade will be alerted and emailed to you.

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SPY mixed signals.  IWM cup and handle setup. The Weekend video goes over 12 great stocks not on the focus list.  AAPL, AIRM, PANW, MNST, SCTY, LDRH and BITA start the week’s focus list.

Video Analysis (5 minutes):

The Weekend Video goes over some stocks ready to make big moves that are not on the focus list below that are worth watching.

Key SPY Pivot Levels: Round number $200, Old high 199,  50 dam 197.01, 197.50 and $196.50 gap fill and support levels

Under the Hood and Trading Game Plan:

Over the past three days SPY has given us mixed signals.  While Wednesday and Thursday gave us two of the worst closes since August 7th, Friday printed a strong close on an uptick in volume.  I will continue to manage my short position, but have no bias for my individual stock trades.  I will likely continue to trade with smaller position size until there is more clarity.

IWM is forming a big cup and handle formation.  An entry on pullback to $115, with a stop at $113.50 and target at the highs at $120 gives us a 2.5/1 reward to risk.

Nothing is clear and easy of late.  Here, the pattern is excellent, but we have to deal with the fact that IWM is lagging, not making highs while SPY and QQQ have.  I pay attention to these issues, but focus more on the fact that I am getting good reward to risk.

The current game plan is to manage the SPY short position.  I continue to look for long setups on momo stocks, but will not chase. B

Current Trades

I am still holding SPY short via SPXU and GWPH.

GWPH broke down below the moving averages, and is forming a range here.  My stop has been moved below this range, in anticipation of remount of the moving averages.  If looking to enter, a remount would give a good entry signal.

The Trade Results Journal/Spreadsheet is up to date.

The Focus List

Finviz link to easily follow the entire focus list.  Most positions entry charts remain as annotated earlier in the week.

I am reprinting the MNST/TWTR comparison from the Thursday evening Report because it is one of my favorite setups and somewhat rare (the post breakout rounded pullback).  MNST entry on weakness with target at $95.

I have talked about the MNST setup being similar to TWTR’s “rounded” pullback post breakout.  Notice just how closely it is following what TWTR did.  It pulled back into a rounded formation, started it’s move up, then consolidated a little before moving up again.  MNST is at that level of consolidating before the next move up.  I am looking for some weakness at $86-88, stop at $84 and target at $95.

SCTY remounted the 50 dma.  Friday held the breakout candle but swayed below before closing above the moving average.  Entry here with stop below Thursday low around $68.  Target $77 gives 3:1 reward to risk.

AAPL broke down hard from highs, taking out the key $100 level.  A pullback to the 50 dma would likely create extreme oversold stochastic levels.  Entry in the $96.50-97 range would offer a low risk entry in expectation of bounce.

PANW nice breakout pullback setup. Entry in the $85-86 range, target $92 and stop at $83.50.

AIRM is still trading within the post breakout range.  Enter at bottom with target at top.

BITA pullback to $85-86.  Target at $95 and stop at $80-82.

LDRH is in a bottoming formation and looks ready to break a 6 month range high.

Short Setups:

My focus now is shorting SPY via SPXU

Market Leaders

Most market leaders are acting in tune with the market and look ready to pullback.  PNLN has broke down and close to being removed from the list.

Please read the post 23 Laws of the Part Time Swing Trading the Market Speculator Way and How to Anayze Your Swing Trade Results  It is important to know these rules if you trade off the Report.

New subscribers and trial members please leave me any feedback/comments in the comments, via email (singhjd1@aol.com) or twitter (twitter.com/PaulJSingh).

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Good evening, team Bulls.

Yup, textbook technical reversal today. Even with the good earnings reports, the market faded all afternoon on continued worries about the debt ceiling and other issues I’ll get to below.

Before I dive into my market thoughts, I have to say Boyah, Cramer style, on the strong move in ISRG today. One of my all-time faves. OK.. got that out of my system; let’s move on.

What does the big picture tell us about today’s action and what we can expect the for rest of the week?

Let’s hit the facts:

• Housing numbers sucked this morning, proving once again that we can’t count on housing to push up the economy.  It appears that housing will follow, not lead.
• Earnings have been good, BUT the outlook from some of the market leaders has been mixed.  As discussed last week, earnings OUTLOOKS are more important than whether they hit their estimates, or not.  Most have been hitting/beating, but look at INTC‘s report today.. strong, yes, but the stock is down after hours because of their outlook on the PC market.  From CNBC:

Intel topped forecasts for both earnings and revenue, which the company attributed to strong corporate, mobile and emerging market demand. But the stock fell as the company slightly lowered its outlook for the PC market.

• The debt ceiling is still in focus and center stage
• Tons of data tomorrow.  If you’re looking for a good reason for today’s fade into close, here it is.  Since trading is about minimizing risk while maximizing opportunities, today was NOT a day to swing heavy. Why?  Too many variables.. in other words, too much risk.  Tomorrow’s Phili Fed number is very important..VERY.  Let’s not forget we’ll also see Initial Jobless Claims, Continuing Jobless Claims, Bloomberg Consumer Confidence, and CB Leading Index.

So, let’s put it all together from a risk standpoint:

Risk is back OFF and volatility remains giving day traders a huge edge over swing traders.  Tomorrow, alone, economic data could move us in either direction.  Earnings could do the same. And, the big hammer (debt ceiling) could smash us to new lows or propel us to new highs.  In other words, hell if I know where we’re going in the near term.  However, having said that, I do think it would be very wise to stay very close to your long watch list.  If the debt ceiling is raised, I believe we have a bull run.  Until then, I’m not looking to take too many trades home with me at night. Instead, I’ll watch the Boom Factory where the real action is.. Swing traders will get their edge, I just don’t see it yet.  Some will work and some won’t.

Technically speaking.. textbook:

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Summary:

With even America’s pride and joy consumer company, AAPL, showing signs of weakness, it’s hard to go long heavy here. AAPL needs to hold current levels or it could fall fairly significantly and scare all of the technology long traders out of their positions.

I also have an eye on BBY and durable goods orders this week.

Favored Sectors on Friday: There aren’t many.  Most traders are removing risk.

Top Friday Sectors:

• Uranium
• Tobacco – careful – FDA put a smack down news report out.
• Rare Earths
• Communication Services
• Gold and Silver

The Trade: I’ve shortened the time frame on my trades and not exposing more than 10% of my portfolio to swings. I’m also very heavy cash.  Throughout the day, I reduce long exposure risk by jumping in and out of SPY Puts.   Play defense, not offense.

SPX:

Currently sitting heavy on SMA100 and 23.6% retracement.  Friday’s tall upper shadow is not impressive implying traders were exiting on volume.  Looks like SPX is trying to build out a bear flag, so we’ll need to watch SMA100 very carefully.  A fall below could shake out the nervous longs and send the market quickly to the next strong support  level at 1226. Neutral to Bearish.

USO:

The weekly shows the obvious resistance level.  Watching the ascending the triangle.  Japan pulling down oil while Libya and global turmoil pushing it up.. net – prices holding steady for now.

COPPER:

Looks a lot like the SPX, but the new downward channel is more obvious.  JJC is stuck between SMA100 and SMA50 and we’ll need to see a break above trendline resistance for copper to start looking a little stronger.  Copper can be used as a temperature of the overall growth in global markets.  So, if copper starts moving up while the SPX falls/holds steady, consider that a bullish divergence.

EEM:

Watching the EEM will give you some view into the risk trade and related confidence in ecomonic growth.  Investors are less likely (generally) to dump money into EEM if there are fears of gloabal strength.   A fall below horizontal support at SMA200 is very bearish – especially for small-caps (also considered riskier).  So, keep and eye on EEM to help measure your risk in small sized equities.

GOLD:

GLD is still in an uptrend and it’s probably time to start getting your gold and silver watch list together.  If GLD pushes through 140, there will be news coverage and buyers will likely jump in.  Watch GLD closely this week.  Silver has an even cleaner and strong run up – same story… Watch, for breakout in silver names as well based on the ETF setups.

The post Market Snapshot appeared first on Bulls on Wall Street.

Currently, the simple  AAPL trade is still intact.   The impressive run started back in September with the larger market move and hasn’t looked back since.  Even with the Jobs news, the overall pattern continues to hold.  It’s all about SMA50 and the bullish channel.  Right now, we’re right smack in the middle of the channel, placing me in a neutral position.  We’re too close to the recent highs for me to play to the long side, but a break of 365 will likely bring in buyers, including me via Call options at the April strike near the top of the channel (Monday channel top should be 370).  Until 365 gets taken out, I’ll just watch.

On the hourly chart, 360.30 offers up an opportunity for longs to participate on break of resistance.  If you have a little more risk tollerance, you might consider this as a trade for move to 365 via option Calls or you might get a good price on April Calls for 370.

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