Everyone knows there are ways to trade earnings winners.
They just don’t know how.
I’ve been playing this same pattern successfully for over 20 years.
While the markets have changed, the same basic setup still works.
It’s one of my favorites to teach folks, especially new traders.
Although I saved the juiciest tidbits for my Challenge students, today’s blog post dishes out key ingredients to smash those earnings trade
Table of Contents
Analyzing the Earnings
How many times have you seen a company report earnings that beat analyst estimates, yet shares decline?
Makes no sense right?
I could spend my time on any company that beats earnings estimates.
However, I like to keep things simple.
Take Nerdwallet Inc. (NASDAQ: NRDS) for example.
The company reported earnings that our Breaking News Chat highlighted before the market opened.
While the company still lost money, it came in with EPS of -$0.01 vs estimates of -$0.08. And revenues of $152.8 million beat estimates of $144.4 million.
Is that good news?
I’d say so. I certainly don’t see anything negative.
However, it’s all about the market’s reaction to the news.
What the Pattern Looks Like
An earnings play setup needs to have quality earnings AND price action that confirms the move.
This is what that looked like with NRDS:
NRDS didn’t have a lot of premarket volume.
But, shares opened up about 13.5% higher than they closed the day before.
However, was the bullishness the stock showed on a Friday that created the setup for a Weekend Trade that I entered late Friday on a dip and rode into Monday for a nice gain.
I managed to snap up 1,500 shares about seven minutes before the close at $9.29, risking just shy of $14,000 unloading them first thing Monday morning at $9.65, a trade that took me less than 30 minutes of work.
Here’s another example of a much larger stock, Palantir Technologies (NYSE: PLTR).
Shares popped some 20% before the open after the company beat earnings estimates of $0.06 by one penny at $0.07 while revenues beat estimates of $556.1 million coming in at $558 million.
Again, this isn’t some monster headline-grabbing beat. However, the price action said this was a tradeable opportunity:
Shares took off like a rocket, not only holding their gains for the day but reaching higher the following day.
In fact, after a few more days of consolidating, the stock took another leg higher.
It’s not just about the earnings news itself but how the stock reacts.
Once you have those pieces in place, then you can select the right strategy to play.
Strategies to Trade the Pattern
Some earnings winners will run in the premarket, pullback during the main session, and then take another leg into the close.
Others will wait until the main session to run, either stair-stepping their way higher or finding a high where they pull back from.
I select the strategy based on the context of the trade.
Going back to NRDS, the run happened on a Friday, making it a perfect setup for a Weekend Trade.
That’s the same setup that worked for Direct Digital Holdings (NASDAQ: DRCT), another Weekend Trade.
WOW $DRCT is now a 15%+ winner from my https://t.co/NFpygler5m alert on Friday afternoon. Over-the weekend https://t.co/tEScp5d7Hv pattern + earnings winner, sometimes it really can be that easy/simple. Study up & retweet this if you learned from this SOLID weekend setup!
— Timothy Sykes (@timothysykes) November 13, 2023
This same weekend setup worked again with Udemy Inc. (NASDAQ: UDMY) just a few days before, where I scooped up 3,000 shares for $12.275 on Friday, risking a bit more than $36,800, and sold them Monday at $12.66 per share.
What about the ones that didn’t happen on the weekends?
For those, I selected a different kind of setup.
Take BIO-key International Inc. (NASDAQ: BKYI) for example.
This true penny stock didn’t start moving until almost 30 minutes into the trading session.
I didn’t try to chase it.
Instead, I waited for a classic morning panic dip buying opportunity.
Panic dip buys are one of the first strategies I teach Challenge members.
They learned how to identify the patterns that work and then apply the correct setup.
Discover the Secret to Mastering Earnings Winners
Tired of watching earnings winners slip through your fingers? It’s time to turn the tables.
While others scratch their heads at market reactions, you could be capitalizing on these opportunities.
🚀 Join our exclusive LIVE training and unlock the strategies that have powered successful trades for over two decades.
🚀 Learn how to spot the subtle cues that signal a big move – from NRDS’s unexpected surge to PLTR’s rocket-like ascent.
🚀 Experience real-time breakdowns of earnings plays, understanding why some stocks soar while others don’t.
🚀 Don’t just play the market – master it with proven techniques for every trading scenario.
Are you ready to transform your approach to earnings winners? Eager to apply strategies that have created millionaires? Your journey to trading mastery begins here.