Stay focused, make sure you’ve got some cash to work with and that you’re feeling scared heading into earnings

I’ve had some intermittent Internet issues off and on all morning (try saying that five times fast).  But we’ve got our backups now finally backing us up, so I’m back.  Let’s jump in.

It’s a rather flat start to the week, despite the newspapers writing headlines like “it’s a flat start to the week despite some better than expected economic number”.  I was listening to Bloomberg TV on my drive in this morning and I honestly heard an economist on there arguing over whether the ISM actually indicates growth at 51.6 as reported today or if 51.5 is the threshold despite the fact that “everybody knows that 50 is the reported threshold of growth”.  I have a degree in economics.  I know what they are trying to pretend they are talking about.  But guys like that talking about stuff like that are obviously of no help to anybody in the world who’s trying to make money in the markets.  I’ve have many a dinner and many an interview with some of the biggest hedge fund managers in the world, guys running billions of dollars, and I’ve never anybody discuss, much less trade with, information gleaned from a discussion about the threshold of growth in the monthly ISM numbers.

So let’s move on.  As for our positions, we’re now entering earnings season and I’ll be looking to make some pre-earnings trades, using probably mostly near-dated calls of various near-the-money strike prices as well as using the post-earnings moves to both build and trim existing long term core holdings.

I’m not going to make any big bets in the first few days of earnings, as I’ll want to see how the stocks react to various “better than” or “worse than” earnings reports from individual stocks, but feet to fire, I’m looking for tech in particular to have some big 10-20% or more pops after anything remotely “better than” expected.  That is, expectations from how I read things in the analyst reports I read every day, as well as in the stock price action of late, are very low heading into earnings season.  But let’s not just assume that…let’s see some proof in the post-earnings action pudding.

Stay focused, make sure  you’ve got some cash to work with and that you’re not overly invested such that you’re feeling scared heading into earnings.