Trade Alert: Three Short-Term Earnings Setups
A recovery trade on AMD and two pre-earnings trades.
A Recovery Is Only Useful At The Right Price
Powell Industries (POWL 0.00%↑) recovered Tuesday after its post-earnings selloff, as we’d suspected it would.
Our POWL trade didn’t fill at the price we wanted, though, so we didn’t chase it.
Advanced Micro Devices (AMD 0.00%↑) is giving us another post-earnings recovery setup today. Its shares fell more than $44 overnight after Tuesday’s report, but this isn’t a bet on a complete retracement. We’re positioning for a more modest rebound over the next week.
AMD’s options chain is far more liquid than POWL’s, so we may have better luck getting filled today. We’ve still set a firm limit: liquidity can improve execution, but we still don’t want to overpay for the trade.
Two More Reports, Two Different Themes
Our two other trades today are pre-earnings bets. One is on a health insurer that was one of Portfolio Armor’s top names Tuesday night; the other is on an infrastructure contractor surfaced by an account on our Market Watchers X list.
The health-insurance trade combines strong technical ratings with a structure that pays us to enter. It can be modestly profitable if the shares hold their ground, while retaining much more upside if earnings send them higher.
The infrastructure trade pairs strong price action with a large backlog and improving earnings. We’re using a calendar designed to benefit if the shares rally toward the short strike after the report.
Full details below.
Today’s Top Names Trade
Theme: Health-insurance growth and a bullish technical setup ahead of earnings.
RSI: 53; Chartmill Technical Rating: 9; Setup Rating: 6; Fundamental Rating: 3 (we note these stats in trade alerts and in spreadsheets to track how well they correlate with trade performance).
