By Barrie Einarson

Hello, all you trading enthusiasts! Barrie Einarson from Trade Ideas here with another exciting edition of “What Makes This Trade Great”. Prior to proceeding, feel free to explore my Home Page, where you can acquire Trade Ideas scanners at a discounted price of 15% using promo code BARRIE15.

If you’re a part of the active trading community, you’ll know that earnings season is a time that rouses all kinds of emotions in the market. It brings everything from unexpected windfalls to catastrophic losses. Let’s break this down with a live example, a stock that recently made waves – SGH.

Under-the-Radar Stocks

Firstly, it’s important to note, I’m not here to ramble about the Facebooks, Apples, or Microsofts of the market.

I’m talking about the ones that often go unnoticed, the stocks that lie in the shadows of the behemoths. Like SGH, for instance.

The Influence of Earnings Day

On the day of the earnings announcement, stocks similar to SGH tend to behave in one of two ways. Either they take a massive hit resulting in a plunge, as you can see here, or they enjoy a significant upward push, also known as a ‘pop’.

Ignoring these fluctuations, these stocks can appear almost dormant for three straight months. Only during the quarterly earnings, do they wake up and start showing signs of activity, sometimes quite drastic.

Dissecting the SGH Trade

Coming back to the SGH case in point, look at this chart.

You’ll observe the after-hours trading in the shaded area; it takes a major hit in reaction to the earnings report. Now, look at this tan area indicating the pre-market trading. The stock went on a nosedive before you even see a green candle, suggesting a potential opportunity for profit-taking.

You see, that’s my point.

What I enjoy about these, what I affectionately term, second and third-tier companies, is that they provide trading opportunities that you won’t get from the big guns like Apple or Microsoft. For example, SGH was down 45% on the earnings day. Unless something utterly improbable happens, you will not see a 45% move in stocks like Apple or Microsoft.

The Appeal of Earnings Season

So, you might be thinking, what is it about this earnings season that I love? Well, earnings season brings volatility, and heightened volatility can mean heightened opportunities for traders. As we get at the start of the new earnings season, get ready to find more stocks like SGH that might surprise you with their trading opportunities.

Let’s not forget, we are at the cusp of another earnings season. If you have not yet started, now is the time to delve into earnings trades and explore the potential gold mine underneath the radar.

And with that, let’s wrap it up for today. Have a fantastic weekend everybody, and let’s gear up for a profitable session on Monday. See you in the trading room!