As we are plunging headlong into Earnings Season, we are about to get a reality check. The markets have been pushing upward for weeks now, based primarily on expectations for increased earnings.
Today, the markets felt a bit of turmoil as Johnson & Johnson became the first big-time disappointment. But no catastrophic collapse yet.
But there’s only a matter of time until the “Big One” hits.
All Trader’s should pay close attention to earnings in the Financial Sector, especially among the big banks and investment institutions.
Just as the financials led the way on the plunge in 2008, they are likely to do the same (albeit at a lesser extreme) in October 2009.
It’s hard to imagine that the banks will be able to hit their earnings estimates, given the continual stress that they face in their Credit Card portfolios, residential real estate loans, and the recent beginning collapse in Commercial Real Estate.
Look for loan losses and reserves for loan losses to be up this quarter, non-performing assets to be on the rise, and profitability to fall short of the estimates.
So if this actually happens, what does that mean for a Trader.
You guessed it! VOLATILITY!
Excellent trading opportunities will abound during the Earnings turbulence. Wild swings in the markets will be the norm over the next few weeks, and don’t be surprised by a large and sudden drop in the markets as all the unfounded optimism makes way for new-found pessimism as company after company fails to hit their earnings marks.
Of course, for a Trader to take advantage of the upcoming Volatility, they have to know HOW. Here is one place that you can learn to trade with DEADLY precision.
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