Mitigate  Risk  During  Earnings

We are in the midst of a second quarter earnings season.  This week we have over 15% of the  $SPY  companies reporting earnings.  Stocks that are fundamentally strong with strong technicals will usually break out when earnings get reported.  If the institutions have a firm conviction in the stock, they will start bidding the stock higher.  They control  75%  of the total daily volume in the stock market.  Their conviction in the stock is what will move the stock up or down.  The fuel to spark a surge in the price of growth stocks is accelerated earnings and increased sales every quarter.  Its never the P/E ratios. 

Growth stocks tend to outperform the general stock market - using the performance of the  $SPY  as a barometer - by 2 to 2.5 times.  They also drop down by just as much when they top out and face profit taking by the institutions.  Institutions will start bailing out of growth stocks when they start seeing a deceleration in earnings and sales.  It was an ugly day in the market last Thursday and Friday.  $FB  and  $TWTR  each dropped down  -19%  and  $ABMD   dropped down by  -14%  when earnings were reported.   You would have to make  +25%  with $FB  and  $TWTR  and  +17%  for  $ABMD  to break even.  That's a very hard thing to accomplish.  Its best to lock in some of your profits and reduce the exposure to the market before earning are reported.  

Market  Sentiments

Currently we have just 6 distribution days between the  $NASDAQ  and  $SPY.  Market is still in a confirmed uptrend according to IBD (Investors Business Daily).  We are in a secular bull market right now as of July 2016.  Technically, 2015 was a year of consolidation.  The last bull market was from March of 2009  to  January  2016.  Market started taking off from the mid  Feb 2016  with a  "Follow Thru"  day.  Listening to all the talk of tariff in the media is just noise in the market.  Looking at the data tells a different story.  Here is the performance of the 3 indexes for  July:

1. $DJI      ... + 4.86%
2. $SPY    ... + 3.74%
3. $QQQ   ... + 3.48%

Tariffs would affect the  $DJI  components of the 30 stocks the most since these are large multinational companies.  $DJI  is the leading index infact inspite of all this talk of tariffs.  July performance is usually just  +0.32%  on an average when you look over the historical data over the last 50 years.  This is the 3rd year in a row now that July has done better than the average performance. 

Mentoring  Program

"Only I can change my life. No one can do it for me"

By ... Carol Burnett

 

Some of you that know me well personally in the local Tampa Bay area or from engaging with me on discussion on topics on social media, know that I have a passion for the markets.  I love to teach and empower the retail investors to out perform the market like I do.  Don't be struggling on your own out there in the market.  If you haven't quadrupled your portfolio in the last 10 years than you ought to ask for help.  Time is precious and we have a bullish market for another several years to profit from. 

Schedule a FREE 30 minutes of  'Discovery Call'  with us and let us help you to profit in the market.  Learn How to Out Perform the Market with Growth Stocks.

Happy Trading!

Amin