My wife and I hold our kids to high standards.

Even though my son is only in the fourth grade, we expect him to maintain straight A’s on his report cards.

To do this, we review his progress reports thoroughly and look to work with him more on areas that he is struggling with.

Last year, he was the only kid in the third grade to maintain straight A’s all year. But it takes work from both my son and us to make that happen.

We have to listen to know where he needs extra work, like the multiplication worksheets we printed off for him. Or the grammar tests we made him on our own.

Had we ignored his frustration in those areas, his A’s would have likely fallen to B’s.

The communication between all of us was key. And there’s a similar dynamic between corporations and analysts every quarter when companies give us their progress reports.

It’s the four times a year we get to hold companies accountable and listen to their issues.

There was a disconnect between the last two quarters. But that is getting fixed this quarter.

And now we’re setting up for a major move in the stock market.

Let me explain…

A Communication Breakdown

A key part of my son’s success has been our communication. When we understand an area that he is getting frustrated with, and take the time to explain it, he excels at the subject.

The same thing is true with corporations and analysts.

When they are all on the same page, we can see phenomenal results from corporations.

What have we seen so far during this third-quarter earnings season?

Well, companies have been posting great results, beating earnings expectations more often than average.

However, we are seeing the reaction to positive earnings results being a less-than-average market return.

I pointed out this dilemma after the second-quarter earnings came to an end. I noticed more companies than average were lowering guidance, but fewer analysts than average were lowering their expectations.

In short, the analysts weren’t listening to the corporations’ frustrations — and the latest correction was us paying the price for that.

The great news is that analysts are finally reacting to what these companies are telling them. And it will set up excellent gains as we head into fourth-quarter results early next year.

Q4 Earnings Season Will Be Smooth Sailing

During third-quarter earnings, the disconnect between analysts and corporations boiled over. Companies were once again talking down their outlooks, even as their current earnings are coming in at fantastic levels.

That’s what we were missing from second-quarter earnings: the analysts’ reactions.

Analysts only heard what they wanted to hear. And it’s what created our volatile October.

Now that analysts have adjusted their price targets and expectations, it’s smooth sailing. Q4 earnings results will be more in line with what analysts are expecting.

The Q4 earnings season will be what the market needs to rally and escape the volatility still lingering from October. But I don’t recommend betting on a stock’s earnings report.

That’s nothing more than a gamble.

Before a company announces, we don’t know what kind of issues it ran into during the quarter, or how the company will portray them.

If your goal is to profit from the next earnings season, now is the time to stay invested.

If you want to profit from the results on individual companies, you’re best off waiting for them to announce solid earnings that confirm the rally. Then you can make confident bets and ride the trend higher.

This is a concept I have perfected to create huge profits that many don’t realize are possible. I’ve been sharing it with readers of my premium service, Quick Hit Profits.

And I’m excited about the opportunities that the fourth-quarter results are going to create.

Regards,

Chad Shoop, CMT

Editor, Automatic Profits Alert