Volatility Box – October 15, 2019
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:
[su_list icon=”icon:check-square-o” icon_color=”#333333″ indent=”0″ class=””]
- 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
[/su_list]
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.
[su_table responsive=”no” alternate=”no” fixed=”no” class=””]| Ticker | Preference | Bias | Earnings | Avg $ Move | Nearest SD | Nearest +/-1 SD |
| UAL | Gap N Go | Bullish | – | $ 2.01 | $ 90.33 | $ 91.29 |
| UAL | Gap N Go | Bearish | – | $ 5.09 | $ 86.18 | $ 82.02 |
| ASML | Gap N Go | Bullish | – | $ 3.80 | $ 270.29 | – |
| CSX | Gap N Go | Bullish | Beat | $ 1.85 | $ 70.51 | $ 72.23 |
| IBM | Gap N Go | Bullish | $ 3.48 | $ 153.39 | $ 163.95 | |
| IBM | Gap N Go | Bearish | $ 2.66 | $ 138.49 | $ 131.68 | |
| NFLX | Gap N Go | Bullish | $ 4.43 | $ 292.94 | $ 319.41 | |
| NFLX | Gap N Go | Bearish | $ 3.20 | $ 245.47 | $ 207.62 | |
| CCK | Gap Fills | – | – | – | – | – |
| CCI | Gap Down Fill | Bullish | Beat | $ 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:
- Click here to download the Smarter Earnings indicator (FREE)
- Click here to download the V-Score indicator (FREE)
- Click here to download the Market Pulse (FREE)
- Click here to download the Simple Breakout Tool (FREE)
Sign up for a 30-day risk free trial to start trading with the Volatility Box.