Earnings Season is almost upon us, and I’m already looking for stocks that might form our favourite OVI post earnings setup in the next few weeks.
Remember, this is one of the best – if not the best – setups you can wish for because of the logic behind the pattern.
- A post earnings gap means a company has exceeded analysts’ expectations.
- This can mean a particular stock gets on the radar of hedge funds and institutions.
- These entities have huge buying power, but cannot buy all at once, hence the consolidation phase of the setup being so important.
- The more aggressive entities will start building leveraged positions where they can take advantage of stocks they now see as being rapid movers.
- We typically focus on bullish stocks for my post-earnings strategy, but where a stock gaps down at earnings, we can be witnessing a decline that will be precipitous if the current shareholders are moved to sell their positions, or leverage to the downside.
- You can exploit these earnings scenarios by way of stocks and options.
- It is helpful if the stock is already broadly moving in the direction of the post-earnings gap.