c07 JWBT016-Busby October 1, 2008 21:9 Printer: TBD
96 STRATEGIES TO WIN
FIGURE 7.5 Daily chart of Apple that spans most of the month of January 2008.
When earnings were reported, Apple shares dropped.Because earnings generally are announced after the stock market
closes, other than options, I use the index futures to make most of my
plays. This is how I do it. I follow the same strategies as noted earlier. That
is, I identify big players on the S&P 500, the Nasdaq 100, and the Dow 30.
Once their numbers come out, I trade the index after hours. If a big tech
stock listed on the Nasdaq 100 reports worse-than-expected numbers, I can
trade that news by shorting the Nasdaq in after-hours trading. Of course, in
addition to trading on the basis of earnings, I also do my usual analysis for
trading futures before executing a trade. If all of the indicators are against
my move, I wait. I know I cannot fight the market. I want to correctly iden-
tify the direction of the current and move with it to profits.Caution
Trading news can be tricky. Prices may jump and gyrate wildly on news.
Therefore, as noted earlier, I never recommend that beginning traders
trade news events. It is simply too risky to do so. Before trading news,