We’re in the middle of an important earnings season.
The market hangs in the balance.
And today’s announcement could send it either direction.
I have a plan to trade this volatility…
Major tech indexes like the Invesco QQQ Trust (NASDAQ: QQQ) are under pressure as AI stocks keep slipping from the highs.
The sector wide fears caused the QQQ to make lower lows week after week, while barely staying above support from earlier this year.
The announcement today could confirm this weakness or reverse the trend.
Either way, there’s a trade to make from the incoming volatility…
The #1 Stock I’m Watching
Intel Corporation (NASDAQ: INTC) steps into the earnings light today, July 23, right after the close.
If we rewind a few months and nobody wanted this stock. It sat in the discount bin while every other chip company pushed higher.
But look at it now. INTC has climbed more than 90% in the last 6 months and it just reclaimed $100 support…
On Tuesday, July 21, the stock jumped more than 8% after Fortinet signed on as the first outside customer Intel has named for its foundry.
After the close today, Wall Street is expecting revenue near $14.4 billion and EPS around $0.21, a full 180 degree turn from last year’s loss of $0.10 a share.
But the number I care about sits deeper in the report: foundry data.
External foundry revenue crawled in at just $174 million last quarter. Every dollar above that line will tell us that Intel is building its business instead of bleeding cash.
The options market expects a swing of 12% – 15% after the data drops tonight.
2 Ways To Play This
Unlike some of my contemporaries, I will gamble in the market.
I call these trades “earnings lottos”.
Nobody knows how a stock will react once it drops earnings. That’s what makes it a gamble.
An earnings lotto trade has two main functions…
- It allows us to trade some of the most explosive setups in the market.
- It reminds us of the consequences that come from trading without a plan.
I only gamble with money that I’m prepared to lose.
And win or lose, I remember that these plays are inherently risky. I’ll never rely on a blindfolded trading strategy like this. It’s something that I like to do for fun, or to take the edge off.
Like my bet on the NY Knicks this year…
The other way I’m looking to trade INTC, a process that uses an actual strategy, I’m waiting for the earnings to drop to play the reaction on Friday and into next week.
I’m expecting INTC to gap up or gap down.
It’s possible the price doesn’t react much to the announcement… but it’s unlikely. There’s so much volatility and pressure in the market, everyone’s ready for an outsized reaction.
Once the crowd shows us where the sentiment lies, I’ll look at the possibility of a reversion trade. Remember, I like to go against the crowd to catch momentary pullbacks and rallies.
When a stock gets stretched too far in one direction, there’s always a pullback coming.
It’s the same pattern over-and-over again. The price action is so simple, I taught it to an AI…
Stay Street Smart,
Jeff Zananiri
*Past performance does not indicate future results, Not typical.
