Trading The Day After Stock Earnings

Often a “day 2 play” yields the best trading opportunity post earnings. Whats moved today and where’s the trade?

Good evening to traders. Earnings season is in full swing. Let’s take a look first at Taylor Wimpey, UK building stock company. They are flying today, up 8%, classical move on earnings, really. A gap up, a little bit of consolidation and just an afternoon rally. Loads of demand coming in for this stock. Let’s have a look on the daily. For a daily perspective, we are pushing up now to this resistance level. Sorry, resistance level was prior support at that 170 area up here, from pre-Brexit. That’s a pretty key level to look for. Do we continue on? I don’t know, but what I will say is this: When you have an earnings move and you close in the top third or the top quarter of the trend, and vice versa for a down move, you’re way away from the volume where the average price, that white line is the View app. By the way if you haven’t got charts with the View app on, get this chart package that I’m using, a free package. I’ve included a link for it below, but the View app is included in that and I think it’s essential for when you’re trading intraday, from an intraday perspective because you get to see what institutional level is.

But anyway, we are pushing high, pushing on, everything’s going nicely, so what is a good way to trade these sort of stocks? Well, if you’re not trading them during the day, then the next day is the day 2 play. What I like to look for in a day 2 play, and considering if you have the filter that you close on highs, you close above resistance, so Taylor Wimpey may well tag all of these. If you look on a day, we’re going to close above resistance potentially, we are going to close on highs potentially or in the top third, then the next day sets up for buying some sort of pullback. Now, whether you look at the open end to see a dip at the open and then look to buy a turn double bottom at the open, or let it drift a little bit further, start to find some support and then look for an afternoon push back up, then how ever you wish to play it, that’s kind of what I look for on a day 2 play. I look for the same direction move and I’m looking for buying in to weakness if I’m looking for longs, and look to selling into strength. I’m not looking to chase any longs. If it carries on pushing and pushing and pushing then I’ll let it run and I’ll put it in my swing trade alert for a multi-day green candles and then look for a couple of red pullbacks to the 5 period or 20 period to take it from a swing perspective.

But from an intraday perspective, if I see strength on day one, I’m going to look for continuation of strength on day 2, by looking for some sort of pullback. So that’s on my watch list. Taylor Wimpey, good interesting building stock and it has been so hammered, after Brexit. I remember I was trading that on the Brexit morning and it was a very quick trade because it was very, very, very active and volatile as you know if you were trading it, but we’ve recovered quite a lot.

Anyway, let’s move on to another UK stock in a similar sector, well property sector, not a builder; Rightmove. Now again, Rightmove have just great numbers, they’re up 8%, nearly back to all time highs. What a stock this has been, it just got a complete, massive uptrend on pretty any time frame you’re looking at. It’s not as strong intraday actually, as Wimpey but we have to be fair to it. We have come up right against this cluster of resistance from the prior weeks. And for me, I want to see, it’s a slightly different set up but I’d like to see it clear that and then maybe trade on a breakout perspective rather than getting involved in it because it has been a resistance level quite a lot – a pretty strong level. If it clears in a few days time and you could get a pullback, that looks interesting. I suppose on the flip side of this, and as I say, I always look at stuff from a neutral trading perspective without a bias, but If for some reason we end up unwinding on Rightmove, it doesn’t look like it at the moment, but things can happen and it’s always nice to be prepared. If we come down and we take out that low, the low that we put in today from the earnings move, then that may open up a little sneaky short. I wouldn’t want to overstay my welcome on it, but I’m going to set an alert for that and that’s something that I’ll look for. So, for Rightmove I will set an alert for intraday low today and I’ll also set an alert for above there so as you can see on the chart, that’s how I’ll bracket it, and then I’ll reassess the situation. Until that, Rightmove goes off the watchlist and only comes back on when those alerts get set.

A couple of things in the UK today; we’ve had Apple and Twitter earnings out. Twitter has been smashed down between 10 and 12% at the moment, see what happens the rest of the day. Apple has done quite well, better than expected, rallying up above that 104 level. So, plenty of stuff going on, let’s see what happens tomorrow, have a great trading day, see you the same time and same place tomorrow evening. Take care.