Recently, an inexperienced trader asked me about a stock that traded lower after reporting great news. As any experienced trader will tell you, often that is a great opportunity to get short. Yesterday, Facebook reported amazing earnings with a slew of positive metrics. In the after hours it traded to a new all time high above 137. Yet, I got short in the after hours around 137 and then added to the position in the pre-market below 135. In this morning’s video I discuss my trading plan for the day and possible patterns that Facebook might follow.

Facebook has a history of gapping higher initially following a strong earnings report then selling off very hard. Many investors buy in the weeks ahead of an earnings report anticipating a good number which will allow them to sell at higher prices. Watch today’s AM Meeting where I discuss.

Steven Spencer is the co-founder of SMB Capital and SMB University which provides trading education in stocks, options, forex and futures. He has traded professionally for 20 years. His email address is: [email protected].

No relevant positions

FREE TRIAL AM MEETING & ALL OF SMB’s TRADING TOOLS