Due to this constant release of earnings reports, stocks have a much greater likelihood of rapid and often destructive price swings.
The Earnings Run Strategy
- Locate a company that has a good track record of releasing positive
earnings report surprises. Make sure that the firm is expected to beat
analyst's earnings estimates in their next quarterly earnings report.
You can find plenty of good candidates in
The RightLine
Report .
- Check the
RightLine Earnings Calendar to see when the company is
scheduled to release their earnings report.
- Two to three weeks prior to the earnings calendar date, check the
stock's chart to see if the stock is trending higher or bouncing from a
recent dip in price. If it is, use the RightLine
Risk
Control Calculator, to determine the optimum number of shares to
purchase.
- Buy that exact number of shares, then wait as prices rise due to the
anticipated positive earnings report. Check the price action daily. Sell
most or all of the shares for a profit to the group of incoming buyers
just prior to the earnings announcement.
- If you sell most but not all of your shares, wait for the expected "good" news announcement that occurs on the earnings calendar date. Then sell the rest of the stock on the final surge in prices caused by investors and rookie traders buying the "good" news in the earnings report. This surge usually takes place just after the earnings report is released.