Earnings Season: The Devil is in the Details

Earning season is hear and all the clowns are out an about. Everybody is yapping what the move is going to be. Settle down and relax. The news media on the teevee tries to make it sound like beating estimates and guidance determines the fate of the stock price. Wrong. They take micro events of one stock try to say its a glimpse to come for the others in the same space. Wrong. Earnings is all about individual stories at work. Sometimes we are looking to catch the mopes that are the Wall St. analysts off guard. Sometimes we are looking for it to come in just right. Anyone who tells you they can foretell a price movement after earnings is a liar. A quality earnings report can be interpreted by traders negatively and the initial reaction could be a sell off and then the next day the stock is ripping higher. The tale to tell here is to do your homework.  The devil is in the details

Today and yesterday (that’s the day before today if you didn’t know) momentum stocks such as YELP, TSLA, GOGO, GRPN are all being created equal and brought to slaughter. As to why they are begin created equal beats me because they are all apples and bowling balls. There is an all out assault on momentum because Carl Icahn decided to take PART of his NFLX position off the table. He decided to lock in some of his 365% gain (because he is a smart man) and still keep money in NFLX (because he still likes it, ).  Trading 101. Today losers on CNBC like Scott Wapner are calling it the death to momentum. I would appreciate it if someone would rock him in the face, preferably in the nose or jaw area. I don’t have time to seek him out I am too busy making money. People are forgetting momentum stocks thrive on momentum and even the most erroneous piece of information can send people running to the doors. NFLX has been trading up all day today.  Momentum stocks are volatile in nature so when they go up a lot they go down a lot and everybody knows the laws of the universe things always come down faster than they go up. There is nothing ground breaking here.

Its almost predictable to see these stocks YELP, TSLA, GOGO, GRPN sell off into earnings because its wise to lock in gains and take some risk of the table because of the sundown earnings brings to the table. To start citing valuations and earning multiples as the reason the party is over is ridiculous because they haven’t meant a damn thing on the way up. If valuations and multiples meant anything to these stocks they should never have gone up in the first place so shut your mouth.  Momentum trading is not for the weak stomach. Buckle up and follow the price action all momentum is not created equal. No trigger, no trade.

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