Monday, November 21, 2011

3 Earnings Trades for a Gloomy Market

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tdp2664 InvestorPlace It looks like the market forgot to take its Prozac. Investors are in a gloomy mood that has translated into steep sell-off. The surrender of the congressional supercommittee is the latest trigger for anxiety. The major indexes were all down well over 2% in Monday trading. The year-end holidays are usually a good time to own stocks because investors tend to be more hopeful during the season. But this year might be different for all the obvious reasons: sovereign debt, economic softness and a lack of policies that support growth. It’s simply too hard to say where we go from here. It’s difficult to find any strategy that can really work in this market. Trading on technical indicators might be the closest thing to making a profit in this environment. Fundamentals and value don't seem to matter. Growth stocks are a crapshoot with some flying high and some, like Netflix (NASDAQ: NFLX ) and Green Mountain (NASDAQ: GMCR ), crashing back to earth. One way to eliminate the uncertainty is to trade stocks that are about to release earnings. In the immediate aftermath of an earnings reports stocks are more likely to trade based on actual fundamentals instead of some unrelated macro issue. Do your homework, and you can find trading opportunities that offer the potential of sizable returns. One of my recent trades was a short of Salesforce.com (NYSE: CRM ). After it reported results, its shares fell by more than 10% — making the trade a big winner. Forget about the gloominess of the market. Here are three trades of companies reporting earnings this week: TiVo The cable-TV digital recorder company reports earnings for the quarter ending Oct. 31 on Tuesday. TiVo



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