Where I’m Seeing Ample Opportunities
Today was failed attempt number
two for the market to break out of its recent trading range to the
upside. The first attempt was on April 7. I don’t know how long it will take
before we finally see the range broken. I also don’t know which way it is going
to break. I do believe that the longer it takes to break this range, the more
violent the subsequent move will eventually be. A case can be made for either
direction, but I’m not taking sides just yet.Â
What I am seeing is ample opportunities on both
sides of the market. Rather than worry too much about where the market is
headed, it’s many times best to trade the signals in both directions, and worry
more about trade/risk management. I’ll feel much better about picking sides and
positioning myself more heavily one way or the other, once this range is
resolved.
With earnings season in full swing this week, I thought I
would quickly stress the importance to you of knowing when stocks on your
watchlist are going to report. Not only those you hold a position in, but also
those that you are considering for a trade. I always keep a spreadsheet
with all the stocks I’m active in or considering trading. It contains all of the
vital statistics I look at. During earnings season, there is always an extra
column titled “Earnings Report Date.â€Â
If you know when earnings are due, you can then use that
information to help you manage the risk in your trade. For example, stock XYZ
breaks out of a nice-looking cup & handle today, but earnings are due
tomorrow. If you didn’t know this, you might take on a full position and then
unwittingly put yourself at the mercy of the report. Knowing this, you could
consider either a smaller position size, or taking a quick scalp on part of the
position. This would help you lessen the blow if the news was bad.
This goes for short positions, also. When news is due, keep
a close eye on your shorts. Otherwise, you might end up with a wedgie!
Best of luck with your trading,
Rob Hanna