If you listen to the media you’d think that investors everywhere are running stocks up on the announcements. When you hear things like:

Investors are bidding up XYZ stock on better than expected earnings

Or how about this one we saw today before the open:

STREET BUYING INTO EARNINGS!

The news media will say investors are buying up XYZ on better than expected earnings when that may not be true. They are not buying them up, those that pop on earnings are being GAPPED up and once they gap up they are being sold as they virtually make no headway after the announcment day or at least none to be worth a person’s while with the exception of the day trading crowd. Then considering the amount of technically extended risk one is taking by buying AFTER the fact and you understand why we say naaaa we aren’t chasing that bus.

Think about it. The whole move took place in the form of a gap up. The big volume on a daily chart LOOKS AS THOUGH it’s a good day and indeed investors are buying up the stock (this is what the media is keying in on). However after it gaps up it virtually goes nowhere. On top of that if things are so great and volume is so huge AFTER the GAP UP then how come they make no real headway after? Because it’s the sellers of peanuts selling while the media circus is in town.

Remember if you are a big institution and are long a few million shares and want to get out are you getting out on a bad day? You’ll blow the stock up on yourself. Or are you going to get out when you’ve got a ready, willing and able crowd to buy from you?

Some out there say that when the market sees bad news on the horizon they run the market higher. How’s that you ask? Simple, so the big money can get out. Ever hear of the phrase get out while the getting is good?

While on the surface that sounds all fine and dandy however our job at All About Trends is to look for trends in all shapes and forms. That said a trend that we are seeing is that EARNINGS POPS ARE BEING DISTRIBUTED INTO NOT BOUGHT.

On the surface one can look at the daily charts of a few names below and see what looks to be true (But Looks Are Decieving) when you look at the volume on the announcement day.

Let’s look at Intel:

_intcdailyearning.png

Wow, look at that volume! On the surface one would think it was great guns and people were buying. HOWEVER feast your eyes on the chart below.

_intcearnings5mins.png

See the gap up? AFTER it gapped up that is where the volume is coming in. Remember for every buyer there must be a seller. If everything is so great AFTER the announcement why is there big selling imbedded within all that great supposed upside volume?

Now let’s look at AAPL:

_aaplearndaily.png

HOWEVER look at all the volume when we zoom in and you’ll see there is actually more red bars on volume and price than buying volume and bars.

_aapl60minearn.png

Now let’s look at Alcoa:

_AAearnings.png

_AA5minearn.png

Moving on to Google:

_googearns.png

This is why we use charts and trendlines- they keep us from making emotional decisions based upon media hype.

_goog60earns.png

So what does this all tell you with regards to earnings gaps up? Are you better off being a buyer of them AFTER they gap up? Or better off being a seller if you own them?

Are you better off listening to the media hype? Or looking at the chart?

What does this say about CREE, AMZN, MSFT, NEU and NFLX who have all popped on announcements or shall we say gapped up on announcements?

To learn more, sign up for our free newsletter at www.allabouttrends.net and receive our free report “How To Outperform 90% Of Wall Street With Just $500 A Month”.