Following their respective earnings releases $CREE and $NTAP both gapped lower. Yet during our morning meeting I discussed trading $CREE on the short side and $NTAP on the long side. What was different about their price action that caused me to focus on a particular bias? If you look at the longer term charts below they seem fairly similar yet after their gaps they moved in opposite directions. This is a VERY important aspect of short term trading worth mastering. If you can develop a feel for which direction a stock will move after an earnings catalyst you have a huge advantage over most short term traders. It can allow you to responsibly take on more risk.
In my next webinar on September 5th I will discuss in detail how to develop this feel. The webinar will be exclusively for SMB Trading Tools subscribers and my friend Ron Roll’s #DTBC subscribers. I can assure you that the webinar will offer great value to your future trading both in avoided losses and better preparation to make gains following an earnings gap.
Steven Spencer is the co-founder of SMB Capital and SMB University and has traded professionally for 17 years. His email is [email protected].
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