Planning for Upcoming Earnings (NFLX, IBM, etc.)

Yesterday, we created a game plan around trading United Health’s earnings (UNH). We said, if UNH gapped up, then probabilities suggest that UNH tends to continue in the same direction for an average of ~$4.35.

UNH did just that today – and we ended up continuing in the bullish direction for almost $6.98 from the open.

Discussion for UAL is available in yesterday’s post, here.

Below are some interesting statistics around earnings (using 2-yrs worth of earnings data) for tomorrow:

  • ASML Holdings (ASML) – Gap N Go (Bullish) 50% of the time
  • CSX Transport (CSX) – Gap N Go 75% of the time on earnings beat
  • International Business Machines (IBM) – Gap N Go 87.5% of the time
  • Netflix (NFLX) – Gap N Go 62.5% of the time
  • Crown Holdings (CCK) – Fills its gaps (Bearish preference) 87.5% of the time
  • Crown Castle (CCI) – Gaps down and fills its gap 75% of the time on earnings beat

Trade Plan & V-Score Targets

Below are some price targets, based on if the pattern that tends to happen repeats itself, and we get a move in the direction towards our bias.

The price targets are derived using the closest standard deviation, with the V-Score indicator.

TickerPreferenceBiasEarningsAvg $ MoveNearest SDNearest +/-1 SD
UALGap N GoBullish $            2.01 $        90.33 $                  91.29
UALGap N GoBearish $            5.09 $        86.18 $                  82.02
ASMLGap N GoBullish $            3.80 $      270.29 – 
CSXGap N GoBullishBeat $            1.85 $        70.51 $                  72.23
IBMGap N GoBullish $            3.48 $      153.39 $               163.95
IBMGap N GoBearish $            2.66 $      138.49 $               131.68
NFLXGap N GoBullish $            4.43 $      292.94 $               319.41
NFLXGap N GoBearish $            3.20 $      245.47 $               207.62
CCKGap Fills –  –  – 
CCIGap Down FillBullishBeat $      134.57 $               153.13

To be clear, we are looking for CCI to gap down, and then fill its gap, therefore leading to our “bullish bias,” despite a gap down.


Day Trading Brexit Deal News

In tonight’s video, we discuss a new rule that we added to our trade plan, as a result of seeing a continuous pattern after “Breaking News” events.

The rule is as follows:

If we have a Forex Factory news event, that is deemed to be considered “Breaking News” and “Important” (denoted by a red folder icon), then switch over to the Conservative Volatility Box.

We had a total of 5 trades that set up today, for a net P/L of -$1,925. 

Resources:

Sign up for a 30-day risk free trial to start trading with the Volatility Box.