The late, great mcaplin23 used to post on Earnings Day Eve his plan for the next day (check them out here, here, here, and here) – which I learned from when I was a beginner and have always looked forward to for many different reasons.  They were always entertaining, informative, and you could just sense he wanted to jump through the screen and strangle some of you.  Now that he is not posting (but still lurking), I thought I would take it up this time.  Despite a few differences of opinion, he and I always respectfully got along on and off Protrade and I fully expect to get a message from him ripping this post to shreds :-)  Anyway, I hope this will serve as a thread to discuss strategies and be helpful to those new to Protrade since our last earnings day in November. 

Mcap would want me to mention that all data from this post can be found at www.protradereport.com.  Swing by tonight as we will live blog the National Championship game and continue to talk about earnings day strategies, movement, etc., all the way through the reset tomorrow afternoon.

First, the short-term impact of tonight’s game.  The winner will instantly be the top NCAAF buy, while the loser will be a marginal short.  The way team stocks have been reacting, you can’t go wrong holding both if you aren’t up for daytrading the game.  

Now, after FOX signs off after another wretched game presentation tonight, what do you do?  There are several schools of thought, and many ways to make money on earnings day.  Here are some tips and what I plan to do.

1.  Make up your mind what you are going to do now.  If you are still window shopping tomorrow morning, you are going to get stampeded by the market and left wondering why you didn’t make any money.

2.  The market will move faster than normal, while the site will run slower than normal.  This is one of the greatest frustrations of traders on earnings day.  Be prepared for this.

3.  There will be 1000 posts on the message board tomorrow, most of them the pimp of the minute.  Don’t get caught up chasing every one.  There are plenty of ways to see what is really moving, I’m sure there will be a TR, and I’ll be chatting about it all day at my site.

What should you invest in before/after the reset?  That is for you to decide.  But here are several methods to consider.

Some traders like to always move to the sport with the next earnings day.  That is obviously the NFL in early February, followed by NCAAB in early April.

Other traders look for the biggest shorts on the table.  There are several NHL guarantees out there, and those NFL guarantees are still looming, although not as attractive as 24 hours ago.

Several traders will take the guaranteed money in NCAAF, rotating out the top buys/shorts quite often during the day.

The big aspect often forgotten on earnings day are the great buys in the other sports.  There are 70 stocks between NCAAB, NHL, and NBA that I currently have as 20%+ regular season buys.  When you consider potential playoff earnings, there are some steals out there to be had.  Unless your port is $1.5 million+, you have to buy something, so watch out for these.

So what will I do?  I am going to enjoy the Florida-Oklahoma game tonight and then have my port set up for the overnight.  Looking at the retiring sport of NCAAF, on the whole the remaining percentages are underwhelming.  But the outliers are definitely worth a port spot for me.  By outlier, I mean that most guarantees are with tenths of percentage points of each other, but several are quite a ways out.  Here is who I plan on holding until they move in line with the others:

After these slots, I will hold the safe NFL guarantees overnight and mostly watch how the morning activity starts off.  Usually the market will focus on a similar group of stocks for a while (such as NHL shorts), and then move on to another group.  I will stay on top of the movement and use my remaining slots accordingly.  A fair amount can be made during the afternoon - but stay on top of it as they will turn on you in a heartbeat and leave you wondering what happened.

Assuming that the reset is at 5:30 EST (which it is more often than not), about 30 minutes before then I will assess the market and make a list of my post-reset targets.  I will then rank this list in order of preference and then spend a few minutes opening up a tab on my browser for each stock I am going to buy or short and have it ready at the “execute” screen.  Next I will fill my port with NCAAF guarantees.  As soon as I have them bought/shorted, I immediately load up a sell/cover “execute” screen for each one.  There are not many opportunities to make $20k+ in 15 minutes, so I ALWAYS take the guarantees – I may not hold them during the day, but my port will always consist of 100% guarantees at the reset.  Opponents of this strategy say that you miss out on the big movers at 5:30-5:35 while you cash out, but you avoid that by having the “execute” screens ready – you can change out each slot with two clicks.  As soon as the reset occurs, I alternate selling/covering the retired stock with buying/shorting another (in the preferred order I set up earlier).  The site will be very slow, but in 2-3 minutes I can completely swap out my port without missing out on a ton of movement.

Keep in mind, this is just my method – there may be something better for you.  You definitely must have a high-speed internet connection to pull this off.

I think some of the biggest movers are going to be the NCAAB buys, NHL and NBA injury shorts, along with what is left from the NFL guarantees.  I am partial to the NCAAB stocks as that market is the one I have found the most enjoyable.  Many of you have seen me mention that in other posts and ask me about it - there is no describing trading in February-March.  I went from $82k to $556k in 30 days last year, and I can’t wait to do it again.  There could easily be 100% gainers available for purchase tomorrow afternoon if you are willing to hold.

Once again, there are many ways to make money on earnings day, and I encourage you to pick a strategy and stick to it.  Talk strategy below, or come over to www.protradereport.com and talk strategy and FLA/OK there.

Please Trade Responsibly

Utkman