This week we kick off another quarter of earnings season. I have coined earnings season, “Gap Season.”
I personally like to focus on earnings gaps. Ideally a company will report their earnings and would have either met, exceeded or missed their numbers. The stock will typically react to the news in either a bullish or negative way. This can create ample opportunities for the skilled, trained trader.
Here are some ways to be ready for some earnings gaps.
Getting Started
I get the daily list of post market earnings and premarket earnings for the next day from our friends at Briefing.com. I put the entire list in a separate minder so I can easily scan to find the ones that are gapping before the market open. I then look for stocks that are gapping on lots of volume in the pre or post market. Between 500,000 to one million would be ideal to show traders are already active before the market opens.
Study the ranges set in the pre and post market and pay attention to them once the market opens. They can give you insight into some bigger supply and demand areas you can possible look for setups into.
Bottom Line
Earnings gaps can provide some nice trading ranges.
