What A Doomed Yahoo Trade Taught Me About Trading Earnings Gap Downs (The Secret To Profiting From Bad News)

I do what any rational investor slash trader would do. I short the stock.

This didnt make good sense to me. Ive always tried to follow the guidelines of reasoning, and this is highly illogical.

Lets hop into my time machine.

Yahoos numbers are terrible. There is increasing competition from the likes of AOL, Altavista and a little guy named Google.

With no new favorable news, the stock reverses course and is up 2%. From there, it continues greater and is best back up to where I shorted it. Within a few more weeks it not just above where I shorted, however it has now put in a bottom and is trading like a momentum stock.

The poster child for the dot-com boom is on its way to dying a sluggish death. I know it, and so do the majority of people. This one is it if there ever was a stock setting up for a short.

The stock drops another couple of percentage points. Its a canine and everybody understands it, so I hold on for a bigger gain.

Then something strange happens.

Its the early 2000s and among my favorite go-to stocks is Yahoo (male how times change). The stock is gapping down big on earnings.

Why would a stock with horrible incomes and news go higher?

While in all my years of trading Ive never ever had the ability to come up with an acceptable answer to the why of this concern, I do know what typically takes place. Stocks with problem tend to go higher.

Years of screening profits gap downs has exposed 5 different setups that occur over and over once again, each and every single incomes season. We will go over these setups and more in next weeks profits course, as we prepare yourself for yet another revenues season.

In todays video I reveal you 5 examples of stocks that gapped down on problem and consequently went on incredible bullish runs.

If there ever was a stock setting up for a short, this one is it.

The stock drops another few percentage points. Without any new favorable news, the stock reverses course and is up 2%. From there, it continues higher and is ideal back up to where I shorted it. Within a few more weeks it not just above where I shorted, however it has actually now put in a bottom and is trading like a momentum stock.

Incomes season is starting up the 2nd week of July! If you desire to find out 12 of my favourite Earnings Swing Trading setups, together with my exact method to trading these setups every quarter, then checkout my live 3-day course I will be teaching from June 29th– July 1st!