Live: Tuesday, March 13, 2018

3/13 – 3:50 p.m. New York time

I entered no new positions and exited none.

3/13 – 1:05 p.m. New York time

I am rejecting trades on both X and HAS without a full analysis. In both cases, implied volatility is below my standards within both the range of the most recent broad movement and within the past year.

I shall continue to monitor those two symbols, as well as the other 34 symbols that are part of this two-week span, and shall add additional weeks of earnings announcements as time passes.

3/13 – 10:20 a.m. New York time

Alcoa Corp. — symbol AA — publishes earnings on April 26, traditionally marking the start of the 2nd-quarter earnings season.

My strategy, now as in the last season, is to enter a trade more than 30 days prior to the earnings announcement, with the goal of getting out with a profit by the time the announcement day arrives.

I look not only at the direction of the stock chart itself, but also how it fits in with the trend of the broader markets.

I judge the broader markets to have entered a major downtrend on Jan. 26. So I shall be looking for stocks with negative earnings expectations and a downtrending chart according to the Elliott wave count.

For my first round, I took a look at the weeks beginning April 23 and April 30

I first selected 34 symbols having weekly options, the metric I use to select out the most liquid of the batch.

I next used theĀ Zacks earnings surprise predictor (ESP) and ranks to find stocks with poor expectations. For the screen, I looked for an ESP of -3, signifying fairly strong expectations of negative earnings surprises, and ranks of neutral to bearish (3, 4 and 5).

As a final batch screen, I selected out those symbols whose Fisher Transforms signaled a downtrend.

That gave two results: HAS and X. I see that X is more liquid, so I shall analyze that first. If it fails for some reason, I shall take a closer look at HAS to see if there’s a way to make it work. I’m aiming for only one trade from this batch today.

I have no exits from current positions in sight at this point.

By Tim Bovee, Portland, Oregon, March 13, 2018


Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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