Since last week’s post, little has changed in terms of the overall market outlook. The market remains range bound and choppy. The distribution day count is elevated, with seven on the NASDAQ and six on the S&P 500. The NASDAQ is testing both the top of the trading range and the psychological 5,000 mark.

 

With earnings season rapidly approaching it is important to be mindful of the earnings calendar. On MarketSmith, you can find the EPS due date for any stock on the bottom right of the daily chart. To get a list of all the upcoming earnings reports, use the screener tab to filter for the desired dates.    

 

 For current positions, it is crucial to have a cushion on the stock before thinking about holding through a report. One can either hold a full position if they have a solid cushion, sell part of the position to mitigate risk, or just sell all together to avoid the risk. Remember, holding through earnings does not have to be an all or nothing proposition. Gauge your average cost in the individual name and your portfolio’s performance year-to-date in order to make the most informed decision.

 

Investors should be extra careful with the current uptrend under pressure and the added volatility of earnings. A 50% loss requires a 100% gain. Defensive investing preserves profits. If you have at least a 5-10% cushion on the stock and are up on the year, then holding through earnings is an option. However, you must remember that the secret is to lose small when you lose and win big when you win.

 

For more information on earnings season, watch our webinar “Make the Most of Earnings Season”:

Click here to access the MarketSmith earnings webinar

 

Also watch our “Building Effective Stock Screens” webinar:

Click here to access the MarketSmith stock screens webinar


As always, if you have any questions please call us at (800) 424-9033 or email us at reachus@marketsmith.com

 

Best returns,

The MarketSmith Team