Hope everyone had a safe and enjoyable New Year/End of the Decade. As we begrudgingly head back to our day jobs and the calendar year-end cleanup, I thought I’d drop a new Top 5 for January while I had some time…As I mentioned last month, I would not expect the same level of returns as last year’s profits, and with some potential uncertainty with Trump’s impeachment and the new election, I would predict a sell in May and go away year. Which makes earnings season plays the way to go in 2020 (along with commodities, particularly those tied to inflation – oil, gold, etc).
For a brief lesson on how to play earnings, in a month following the quarter-end (i.e. January) keep track of when Companies are slated to post earnings (usually after-market). In the final trading session before a Company releases earnings there’s usually a leak. Therefore, watch closely in the last hours of a trading session before the Company is required to report. Since my belief is we continue on in this bull cycle which started March 2009, any dips are considered buying opportunities. The big guys know this and once they receive validation of a leak will manipulate the Company’s share price based on whether they believe earnings have been met and prospects remain bright or there are signs of Company weakness.
Therefore, if a stock you’re tracking sets all-time highs an hour before it’s about to announce earnings, sell. It’s actually a sign of weakness as large institutional investors are pumping the stock one last time before having a reason to drop it significantly after-hours and in the next couple of trading sessions. Conversely, if the stock price of a Company you’re tracking drops before earnings are announced, it’s actually a sign of strength as the same large institutional investors will be pushing the stock price down in an effort to pop it after earnings are announced. Anyways, onto the Top 5 for the new decade…
Purely Speculative – GUSH, OILU
Worth paying attention to (I’ll admit I’m not a big fan of gold, but with interest rates this low you can’t ignore any signs of potential inflation around the bend ) – UGLD, JNUG