How To Trade Apple's Earnings Today

After the close of business today Apple, Inc. (NASDAQ:AAPL) will report its fourth quarter earnings. I thought it would be interesting to go back and look at the last three years to see how you would have done if you just used this simple trade strategy.

The premise is simple, when both the weekly and monthly Trade Triangles are in sync, i.e. when they are both in the same direction, you would take a position on the close in the direction the Trade Triangles were indicating. You would then exit this position the following day on the close.

So here's what is needed to make a trade in Apple before today's earnings report is released. The position is taken the day Apple, Inc. (NASDAQ:AAPL) releases its earnings report, i.e. today.

(1) Both the weekly and monthly Trade Triangles are in sync.

(2) Take a position on the close in the direction the Trade Triangles are indicating.

(3) Exit the position the following day on the close.

These are simple, straightforward instructions. As an old mentor of mine used to say, "They don't pay you any more for making it complicated."

So how has this worked in the past?

Here's a spreadsheet of how the market reacted the following day after Apple released its quarterly earnings beginning on 1/23/13. I tracked a total of 12 quarters and only showed ideal trading conditions in 6 quarters. Out of those 6 quarters using MarketClub's Trade Triangle approach, this strategy showed profits in 4 quarters for a 66% win streak. Total gains came to $18.52, while losses clocked in at $3.96. This indicated for every dollar that was put at risk you made $4.67 back, not a bad risk reward ratio. Had you used options, the returns would be significantly higher.

Apple Earnings

Based on the current Trade Triangle formation, you would be taking a short position in Apple on the close today. This is the first time since 2013 that both Trade Triangles are in a negative position. That trade back on 1/23/13 produced a profit the following day of $9.06.

Can history repeat? No one knows for sure, but certainly the indicators are there and Apple is in a downtrend at the moment. The only thing that would neutralize and negate this trade would be if Apple were to trade over $105.85. Otherwise, this trade is a go.

Just remember there are no guarantees and trading only percentages and odds. It would appear at the moment the odds are in your favor.

Stay focused and disciplined.

Every success with MarketClub,
Adam Hewison
Co-Creator, MarketClub

4 thoughts on “How To Trade Apple's Earnings Today

  1. The record that you show for the play on Apple dividends traverses the 2 for 1 distribution.
    How has this changed the size of the potential gains and losses for this strategy ?
    Best wishes for a prosperous New Year and keep the good ides coming.

    1. John,

      Thank you for your positive feedback. We are simply dealing with earnings and how MarketClub's Trade Triangles can help predict how the earnings will shake out.

      Nothing complicated.

      All the best to you.


Comments are closed.