Getting Ready for the Earnings Whirlwind
Thanks in part to JPMorgan (JPM) and Wells Fargo (WFC), we have the up morning that I (along with seemingly thousands of others on Twitter) were looking for. The economic reports were mixed domestically -- and those from China were even a little disappointing -- so the current action feels more like a good old fashioned oversold bounce. Plus, JPM's earnings report did not deliver any worse-than-expected news. So we have relief, weekly expiration and summer trading. If you were positioned correctly, then great, but don't get greedy. I don't believe this to be the change in the trend, but merely a one- or two-day reprieve.
As such, I will take off about one-third of the short iShares Barclays 20+ U.S. Treasury Bond Fund ETF (TLT) on this pullback. TLT triggered my entry of $129.52 in the last hour of trading yesterday and also again right at the close. This third Bollinger band trade structure on TLT tossed out yesterday has been a very good trade trigger since 2011. I will keep riding this one until it misses two or three times in a row. A trader should be patient on this type of entry and wait for the trigger, not anticipate it. Getting greedy to the downside can quickly result in losses on this kind of trade. This trade for me is about the percentage of success in small doses (also known as smaller profits). It is not a "go for the throat" type of kill, but more like death by a thousand paper cuts.
Next week is going to be a whirlwind for earnings, so I am starting to put together my list of trade possibilities. The best-looking charts are generally not exciting to trade for earnings. Names such as Johnson & Johnson (JNJ), Phillip Morris (PM), Altria (MO), Verizon (VZ), and Abbott Labs (ABT) while the worst looking charts are the names I trade much more often like Microsoft (MSFT), IBM (IBM), Intel (INTC), Qualcomm (QCOM), eBay (EBAY) under $38, Wynn (WYNN>) and Chipotle Mexican Grill (CMG).
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