Next week kicks off the start of earnings season for first quarter 2014 and certainly expectations are downbeat. In fact, due to the blustery weather for the first two months results may put a ‘chill’ into the markets.
However, with all that said and the low bar set it’s still rather impressive to see stocks at/near all time highs. It says a lot about the belief in the U.S. economy going forward. I guess we’ll also find out if earnings results are already baked into the market.
WATCH FOR GUIDANCE
I’ll be looking for guidance and outlook during this earnings season, but more importantly playing the charts where technical patterns are clear and evident. This past month showed quite a few divergences – markets were mostly higher yet some of the higher beta names (see: biotech, social media, select tech) were taken out back and shot – twice. The winners of 2013 have turned into the losers for 2014, rotation is on. That may not last for too much longer as the higher beta names is where investors/traders get their big returns – quickly.
CHARTS ARE BEST GUIDE
It’s always an exciting time to play during earnings as the uncertainty creates anxiety around the speculation. The charts and technicals are always the best guide into playing names when then they report, and quite often volatility will rise which gives stocks that extra juice to make a big move post earnings. Options are a great way to leverage a big move while simultaneously defining risk.
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Bob Lang has been managing private options trading accounts for clients since 2004 and providing subscribers with guidance on trading options for income at Explosive Options since 2011. Connect with Bob Lang on: Twitter, Facebook, Google+, LinkedIn.
