How to Ride Post-Earnings Drifts to Profits
There are swarms of new traders hoping to find overnight success in the stock market right now.
Traders like Anubhav G., who joined in on the GameStop frenzy. According to The Wall Street Journal, he turned $500 into over $200,000 in less than three weeks during the stock’s meteoric rise.
But for every trader like him, there are plenty more who lost lots of money, too.
The news outlet also reported that Salvador V. took out a $20,000 loan to purchase the stock at the height of its buzz. But not long after, the hype finally crashed — and GameStop plunged 80%.
So, he learned the hard way what many of these new traders don’t realize: The chances of hitting a big payout by following a spectacle are no better than pushing your chips in at the roulette table.
And right now, the next hot topic traders are focusing on is earnings.
Four times a year, U.S.-listed companies report their earnings results. After these quarterly announcements, stocks tend to have some of their wildest price moves — double- or triple-digit gains in a single day.
But unlike most traders these days, I’m not one to gamble wildly with my money. And neither should you.
That’s why I take a smarter approach to trading earnings … one where the odds swing away from Wall Street and back to Main Street.
And today, I want to show you how simple it is…
Finding the Post-Earnings Drift
Many individual traders are looking to “get rich quick.” They make the mistake of trying to predict the overnight price moves in stocks based on their earnings announcements.
If you play the game this way, you’re doing exactly what Wall Street wants and throwing your money away at the thought of getting rich in a day.
But again, I don’t gamble on the spectacle of the event. I want to help you find consistent profit opportunities to grow your account over time.
That’s why I flipped the approach to earnings announcements upside down.
Over the past four years, I’ve worked on perfecting a tested phenomenon that can outperform the stock market.
I found it by compiling a massive spreadsheet that lists every S&P 500 company’s earnings announcement going back to 2006.
Four times a year. Five hundred companies. Twenty-eight thousand data points.
Now, it wasn’t easy. I devoted over $1 million and more than 12,000 hours into this research.
That’s how I found the “post-earnings drift.” Basically, it shows that stocks experience a directional drift well after their earnings announcements.
But I didn’t stop there. I dug even deeper…
My Proven Ultimate Trading Strategy
I looked at the price action of all of these stocks leading up to and after their earnings announcements to filter out all the noise.
And I discovered that the post-earnings drift is truly a rare event. Fewer than 1% of all U.S.-listed publicly traded companies demonstrated a proven trend after reporting earnings.
Most showed no consistency at all. But for the ones that did, I found that different stocks experienced different drifts over the years.
Some stocks had post-earnings drifts to the downside. Others saw strong rallies during their post-earnings drift period.
I even found a delayed post-earnings drift, where the first few weeks are volatile before the stock surges higher.
Through all this research, I realized there wasn’t a “one size fits all” approach. But if I wanted to find only the most profitable earnings trends, I knew I had to target the stocks with the strongest earnings drifts.
That’s how I narrowed it down to a list of 75 stocks. But even with just 75 companies, we still have plenty of opportunities to profit as they report earnings four times a year.
You see, my “Ultimate Trading Strategy” takes advantage of these companies after they report earnings. And it can help you rack up huge gains — without getting caught up in the get-rich-quick hype.
By sticking to this strategy, you won’t be tempted to chase any spectacles. Instead, you’ll already know where to look for opportunities to profit on earnings in a proven, smarter way.
In fact, just this week, it’s helped me spot new potential trades. And I want to share them with you.
That’s why I just finished putting together a special presentation that walks you through the three steps of this strategy: the Profit Trigger, the Profit Pattern and the Profit Window.
You won’t want to miss out. So, be sure to click here and sign up to watch this video today.
Chad Shoop, CMT
Editor, Quick Hit Profits