Earnings Announcements Will Create Trading Opportunities

In the coming week, traders need to watch the earnings calendar. We are still early in the earnings season with only 190 companies having reported so far but according to Bespoke Investment Group, reports have been followed by high volatility. The average stock is up 0.45% on the day they report according to Bespoke’s analysis. Not all stocks have been up and many of the misses have resulted in large down moves.

Traders can take positions ahead of the earnings reports or they can watch for the mean reversion trading opportunities following the reports.  Adtran (NASDAQ: ADTN), for example, fell sharply after announcing its earnings. ConnorsRSI became oversold as the stock fell and the stock’s rebound could have delivered profits for traders on the long side.

According to Standard & Poor’s and Bespoke, some of the important reports to watch this week will include:

•  Monday: Halliburton (NYSE: HAL) is expected to show a 22% earnings gain and Bespoke notes the stock has gained an average of 1.67% on the day after earnings reports.

• Tuesday:  United Technologies (NYSE: UTX) is expected to report a 12% earnings gain and Bespoke reports an average one-day gain of 1.03%.

• Wednesday: Boeing (NYSE: BA) is expected to post a 13% gain in earnings and has moved an average of 0.60% on earnings days according to Bespoke.

• Thursday: Amazon.com (NASDAQ: AMZN) is expected to report a loss and Bespoke notes the stock has gain an average of 1.46% the next day.

• Friday: AbbVie (NASDAQ: ABBV), which was spun off by Abbott Laboratories (NYSE: ABT) at the beginning of the year, will report and has gained an average of 2.43% on the day of the earnings announcement according to Bespoke.

Other stocks should also provide trading opportunities over the next few weeks as earnings season continues.

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