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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In today’s video, we have an important discussion on position sizing versus risk using my current $TSLA entry. We also talk about gap downs to support versus orderly pullbacks.  I also analyze $SPY and focus list stocks $BABA, $GPRO, $GWPH, along with other stocks setting up.

My focus list is, market analysis and trade alerts are all featured in the Market Speculator Part-Time Swing Trade Report. If you would like to receive the swing trade report and alerts, sign up for the free trial. Follow me on twitter or email me at SinghJD1@aol.com

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Since starting this site in 2008 I have talked to literally thousands of traders.  Ive had over 1000 students complete our 60 day Bootcamp  and tens of thousands take our 4 day starter course.  I get the question all the time on what are the traits that my students who are successful have.  All my great students turned traders all had these traits in common that separated them from the pack and it showed not just while they were learning how to trade but are still prevalent while they are doing this for a living.    Chris, Theo, Harsh, Tim Weintraut all these guys share some very important traits that showed when they were students and fledgling traders on their first accounts.

Path to Profitability Maribeth

Path to Profitability Chris Zielinksi

Path to Profitability Harsh Patel

1.  Passion

This seems easy enough right? Its not! You have to love this to be great and to get through the ups and downs.  I found that the people that get into trading just for the money never end up successful.  There are a ton of other and less stressful ways to make money in this world.  Every time I get a student who says they always saw themselves working for themselves some day so they got into trading tend to fail or say they are doing this as they want to make a lot of money they like the lifestyle.  Those guys never make it.  If you don’t live and breath this stuff all day all night its very tough.  You ever had a doctor , lawyer, teacher who just went through the motions like it was a job?  THEY SUCK! The passion is priceless.

2.  Unique Market Perspective

Every great trader has their own unique perspective on the markets. None of my students who are great trade exactly like me.  In Bootcamp class I trade my style of trading but we dig into everything.  We learn about trends & price action all the components that make stocks move in certain ways.  All these guys trade vastly different then me even though the core of what they do is what I taught them!  Tim and Theo are both swing traders of small cap stocks,  Maribeth is a heavy scalper who trades much more size then I do but with quicker entries & exits, Chris Z doesn’t even use indicators on his charts! He tends to trend trade with a mix of swings on stocks that are on bottoms.  A great student will develop a unique signature that fits their personality and risk profile they develop an edge that they can execute constantly.

3.  Process Driven

All these students never counted money.  They develop and refine routines non stop to build great habits. Then they can execute without thought everything becomes 2nd nature to them.   You see in our chat room all the time Harsh preaching its not about the cash its about the process.  If you do all the little things right at the end of the day you will have a nice profit.   When Maribeth was new and she had just been shellacked for a week straight in her trading when we were reviewing her trades Sunday as we always did she had this huge smile.  I asked  her “what the F-word are you smiling about?”  she replies back “if i can develop a process to fix my position sizing issue so I don’t go all in on certain trades, I’m going to be rich!”

4. A Goto Setup

All these guys have an Old Faithful –  A goto setup that is their own that they can count on day in and day out.   They know every single aspect about this setup and how to find them.  If you ask Maribeth anything about pr/earnings breakout she can even tell you the probabilities and variances of different intraday techniques to apply on the setup depending on the time of day.  She has hard stats on all of it and then depending on what she sees she knows exactly when to put the hammer on it.   Having a goto setup is also truly necessary as its a slump buster.  Great traders rarely slump and need to keep periods of draw-downs to a minimum.  One of the reasons you never see me have losing weeks or back to back losing days is that as soon as I have 1 losing day.  The very next day you see me fall back on Old Faithful to get me straight again.   One of the biggest reasons I see so many new traders struggle is that they jump around way to much before every spending enough time to master anything.  They go from guru to guru, website to website, scan to scan , indicator to indicator always searching for the holy grail.  Master 1 method , find 1 teacher and then learn every single detail you can about that before you move on.  Its the only way this can work.

5. Data Driven

My best students were masters at collecting data.  They collect data on everything from the probabilities & risk for their Goto Setups to their metrics in certain trading environments.  Chris Zielinksi is fantastic at this.  If you ask him at 10am what setups he trades the best he will have every setup that he trades well in the morning and its metrics along with which ones he needs to stay away from and why. He keeps spreadsheets and logs of all his trades and you can filter it in numerous ways so that whenever he is in a slump he can literally go back to his data and pinpoint the exact thing he is doing wrong and how to fix it.

6. Epic Worth Ethic

I know what your thinking “yeah I’m a hard worker” .  Every one of my students tells me that.  But when its really time to get to work a majority of the people always let life get in the way.  There is always a class, or a date, family event something that derails what you need to do.  And yes you need balance and to be well rounded and your family is important.  But in the beginning you need to live and breath this. When Maribeth first started to trade out of college she worked the night shift at a hospital so she would have her days free. She would work through the night and then drive straight home and start trading, I would every single day talk to her on the phone as she was driving back as I was worried she would fall asleep while driving. She would then trade all day then study with me after the market. We would run scans she would do her homework then she would sleep for a few hours then go right back to hospital! Guys there are going to be days you run 24 hour shifts, I still do to this day sometimes.  In the end it all comes down to HOW BAD DO YOU WANT IT.

7. NO Excuses

I had a student this that trades inside CliqueFundLP  tell me on Friday he only made 300 dollars because the market was slow due the $baba ipo coming and there isn’t going to be much going on till that happens.  WHAT WHAT! huh?!!!!  Every week there are dozens of stocks flying around you only need a few! $nete $rwlk just on Friday alone you can make a weeks worth of profits it just takes 1 play.  One of the great things Maribeth does each week is go through all the top gainers of the last week and figure out which ones she missed and why she wasn’t in that stock.  As traders we have a responsibility to be in the best stocks.  If your not or missed them go through your scanning process and figure out where the leak is.

8. Act From A Position Of Strength

All these students they had their lives together. They didn’t have the desperation that so many do when they trade.  So many people want to get into trading because they NEED to make money and do it right away.  That causes an unbelievable amount of mental errors and pressure that makes most people fold and make account busting emotional errors.  A big part of being a great trader is being opportunistic when you trade out of need when you HAVE to have a stock do something to pay your bills that’s when your most vulnerable and can never make the right decisions.  When your PRESSURED to make trades to make money you take out the biggest advantage we have as day traders which is being nimble and opportunistic waiting in the bushes for the right play. If your learning and have a job…KEEP IT!   If you can’t make money while you have a job its going to be nearly impossible without any income.   When I had a job all I could think of was when I stop working and trade full-time I’m going to make a million dollars that first year! No my trading was a disaster that first few months I lost my position of strength and needed to make adjustments.  Chris Zielinksi same thing he was making 1-2000 dollars a day while working and as soon as he stopped it took some time to adjust to not having that fallback

9. RESILIENCY

All great traders need to be resilient.  Every Bootcamp I tell my students the same thing.  At some point your going to want to quit.  You will be so overwhelmed and frustrated by how hard this is.  In the beginning it will be from absorbing all the information you’ve learned. Then you will go on simulator and trying to transition from coursework to seeing things live will drive you bonkers.   At some point you will go live and nearly blow up your account or blow it up. It will depress you and make you hate the world and yourself! 99% of the time when you lose its always mental or emotional errors that take you down. Its your own fault and that will eat you alive. You will want to quit and probably be pissed at me some point too.   Its at that moment that will be your inflection  point…how do you make the comeback that is the moment that defines you.  Same thing goes on a day to day basis. In our hedge fund where our students trade CliqueFundLP  one of the things I notice is that when a trader is new if they lose their first trade of the day or first couple traces of the day they unravel and hit their max loss.  Short memory is a must and each trade has to be taken on its own accord.

I think this is probably the most important trait I see.  Harsh is very resilient.  He blew up his first trading account while in college using his tuition money.  He literally lost his 10k in weeks! It was gone. But instead of dwelling on it he hit the books hard, came back in class and started over and did everything right.  Now he is killing it every single day.

Chris Zielinkski wasn’t hitting his goals recently and was so frustrated with his trading he bugged me everyday to come to my house and stay with me. When I finally gave him the OK he didn’t leave for 3 WEEKS! He literally let me bark at him nonstop for 3 straight weeks.  He sent me a text last week saying all his mojo is back and he is back to winning everyday of the week.

Theo- Blew up his first trading account in weeks that I gave him!  he was so bummed for a day and then just went back to work working on his process to fix his mental errors.  2 weeks later he sends me a text saying he had the biggest trade of his life making 13k in 1 trade.

Maribeth she took her account from 10k to 80k in such a short time it was such a big bull market.  Then she had 1/2 her account stuck in a stock that got halted for weeks and then crashed when it opened.  then crazily enough she actually got stuck in another halt and almost busted up her whole account.  With just a few dollars left she buckled up and went back to the grind taking the whole year to rebuild what she lost in a matter of days.  She never gave up.  The only thing you can control is your own attitude and both Harsh

10. They ALL Have A Mentor

Whether its me or someone else get one!  I was fortunate to find a great mentor, if it wasn’t for Paul J. Singh I’d probably still be a headhunter working in a cubicle. He runs the awesome swing service right here, you can find him on twitter too! There are tons of great teachers out there, find someone you mesh with that is willing to give you months of their time as that’s how long its going to take to get started.  Make sure they are accessible in some manner so that when those hard times come you can lean on them.  Don’t go for the guy that makes the most money that’s meaningless. find a guy with a big heart and a lock down method for developing skills in people.   You can’t learn this in 10 hours or even 20 hours.  This is a multi month journey that requires feedback and a community if you find that guy hold onto them for life!

GO GET IT FOLKS! The rewards of making this your career are life changing for you and your family. It will take work but there is nothing else like it. This is the best job in the world.

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