One of the most important stocks in the market just announced earnings.
I sent an alert yesterday for a perfect trade setup!
Catch the next move.
This market is like shooting fish in a barrel…
The volatility is a constant. And with the right trade patterns, these setups drop right into our laps.
My trade yesterday, May 13, was on Cisco Systems Inc. (NASDAQ: CSCO). And I’m watching it today for continued momentum after the earnings announcement.
Here’s the chart from before earnings dropped. It’s up 30% since April 1:
This is one of the hottest stocks in the market. And after last night’s earnings report, the volatility today will be off the chain…
That means more price action to match our patterns.
My Trade on CSCO
You saw the multi-day chart…
What would make someone buy calls of a stock that’s so overextended?
Answer: I saw price action that I liked.
On May 13, CSCO opened near the all-time high. But I didn’t jump in blindly at the open. I waited until the price action showed support.
Do this every morning before your first trade.
Lo and behold, the price jumped above the highs from the previous day and started to consolidate above a key level:
When I saw this price action, I sent a trade alert to my students at 11:30 A.M. EST:
Here’s my alert overlaid on the chart:
I alerted my sell at 2:20 P.M. EST, when the chart pushed above my target at $100.84 per share.
A move from $100.25 to $100.84 isn’t even a full 1% of upside… but I’m not trading the stock’s shares.
I’m trading short-dated options contracts that expire in just a few days.
With these kinds of assets, the potential gain is exponentially higher than the stock’s face-value percent gain.
My Trade Today
CSCO was up 30% since April 1… before the earnings announcement.
That’s a big move.
But Advanced Micro Devices Inc. (NASDAQ: AMD) surged higher after its latest blowout report despite an already impressive run. The same thing happened a few weeks earlier on Intel Corporation (NASDAQ: INTC).
I’m not saying CSCO will definitely spike higher…
But if a stock this size delivers a number Wall Street isn’t expecting, the move can dwarf anything that happened earlier.
Before the market opens today, May 14, I’m marking the same things as always on the CSCO chart:
- The pre-earnings high: the first ceiling bulls have to break and hold.
- The nearest round number underneath it: solid support it could run into.
- Any past price levels that showed a momentum reversal.
Look at the earnings data, identify a direction, then use the chart’s levels to build smart positions.
And the moves aren’t over after CSCO’s earnings…
The next catalyst to hit the market.
Be good (and be good to others),
Ben Sturgill
*Past performance does not indicate future results. Not typical.
