With earnings reporting season about ready to kick off in full force, what does an investor or trader do? With the way the markets have rebounded from the May/June correction, the bulls can feel pretty confident about going long this market. However, the bears could argue that all you have to do is look at Friday’s anemic jobs report and all is clear to begin shorting this market. No matter what side of the market you’re on, it is always very risky to place bets before earnings reporting season or before a given company reports their quarterly results.
What I have learned over the years is that it is best to sit on the sidelines and wait to get a clear picture of not only what corporate America has earned, but even more importantly, what their future outlook is. With the inherent volatility that comes with quarterly results, and by sitting on the sidelines, it is probable you will miss out on a big move either direction. However, historically speaking, once the direction has been identified post earnings, there is usually a follow through in the same direction that one could capitalize on while also reducing the risk of being on the wrong side of the trade. Of course before you do anything, always make sure to conduct proper due diligence and consult with a professional investment advisor.
All the best.