The January earnings season is particularly important to investors worldwide, as most companies report their fourth quarter earnings and deliver, not only the next quarter's guidance, but the full year outlook. David Forbes, a 23Traders analyst also backed the sentiment saying, "The earnings season in January is one of the major catalysts for volatility at the start of the year. The pre-and-post earnings announcements also offer traders numerous lucrative trading opportunities that should be fully taken advantage of."
As the earnings season kicks off next month, volatility in major stocks will be triggered and Forbes has highlighted where his eyes will be trained on and the strategies he will implement:
- Retail Stocks - The January earnings will factor in performance during the festive season; a great time for retail stocks as consumers open up their purse strings and go on endless shopping sprees. There is even more to hope for during this season, after a string of healthy consumer numbers, falling unemployment numbers and improving average wages. Specifically, Forbes will focus on Wal-Mart, Amazon and Best Buy, whose stocks often see bullish momentum over this period.
- On most other stocks, particularly the traditional volatile tech stocks, Forbes will be keeping a close eye on companies such as Twitter and Apple. He pointed out that such stocks usually swing both ways, with moves mostly independent of the earnings itself, and majorly driven by market sentiment. Since the short-term moves will likely be wild, it would be important to manage risks rather than engaging in a guessing game. The straddle strategy, which is non-directional, and involves opening both Call and Put trades with variable parameters helps eliminate variables and investor concerns, such as will the earnings beat estimates, will the company deliver a positive or negative outlook or any other common stock considerations.
If you wish to learn more about David Forbes' strategies and analytical insight into the upcoming earnings season, you can open a free account at https://www.23traders.com
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