This is what I call “Sweet Week.”
A full 34% of all companies in the S&P are reporting earnings this week.
That includes all the household names that people associate with their favorite brands, products they use every day, and services that are essential to our economy.
In other words, huge mega-cap stocks with incredibly liquid options and a ton of interest from investors.
And for traders like us, that means there’s a ton of opportunity right now.
These are the top companies reporting this week…
So there is a ton of opportunity right now in the world’s biggest stocks – you just have to figure out the best way to play it.
That’s what I want to talk about in a special video I’ve put together for you today.
But before you dive in, there’s something going on right now that you need to pay attention to…
Why Aren’t Markets Punishing These Earnings Losers?
According to data from Bank of America, investors aren’t punishing stocks as much as usual for missing on earnings.
With more than half of companies having already reported, companies that miss estimates are dropping 2.2% – that’s lower than the 2.4% norm.
What’s more, in intraday terms, these poor performers saw a 0.6% increase in their stock price the day after earnings.
So stocks that report earnings misses aren’t being punished as harshly, and are recovering quickly from selling confined to pre-market or after-hours trading.
Case in point, McDonald’s (MCD)…
MCD reported earnings yesterday, missing on just about every estimate from the bottom line to the top.
Today, the stock has popped as high as $264.66, a 1.4% increase after a dismal report.
I can’t say I know why investors seem eager to prop up companies that are missing on earnings so badly this quarter.
But I can say that this is a reminder of what I’ve been telling you for the last couple of weeks…
This is why, as a trader, I NEVER hold my trades through earnings announcements.
Investors are irrational. Markets are irrational.
So you never know if the outcome you’re betting on (a beat or miss on earnings) frequently produces the opposite effect in the stock price – for reasons unknown.
It’s possible that investors were so pleased that MCD announced an extension to its $5 Meal Deal promotion in the face of persistent inflation that they ignored everything else.
But that doesn’t explain why this kind of thing is happening across the board, at least according to the Bank of America data.
So instead of trying to figure out why markets are acting irrationally, I would much rather take the opportunities it’s giving us.
In today’s video, we’re going to go through the list of top stocks reporting this week – and try to figure out whether we want to be options buyers or options sellers during earnings “Sweet Week.”
Just click below to get started now…
Good trading,
Tom Gentile
America’s Pattern Trader