Two Earnings Reaction Trades for the Early Bird Tuesday

Many of you know that I like to trade around earnings reports with options. Sometimes that is just not possible though. In particular there are two stocks that report before the open Tuesday that have very bullish charts, but the options activity is just too illiquid to put together a low risk, high reward potential trade. When that happens you just have to sit back and watch right? Wrong! Just like any other situation you can prepare for the outcome and be ready to react when the news hits. The two stocks I am looking at are CIT Group, $CIT, and Harte Hanks, $HHS. Lets take a look.

CIT Group, $CIT

CIT Group, $CIT, has been in a rising channel in the upper half of the Bollinger bands since early December. It broke above the 200 day Simple Moving Average (SMA) and October high 8 days ago without missing a beat. The shorter 50 and 100 day SMA’s suggest the trend is higher. The Relative Strength Index (RSI) is bullish while the Moving Average Convergence Divergence (MACD) indicator is positive but fading back toward zero. A move higher over 38.20 continues the uptrend while a break down below 37 is likely to send the stock even lower. Watch the reaction to earnings in the pre-market trading tomorrow and trade accordingly.

Harte Hanks, $HHS

Harte Hanks, $HHS, has also been trading in a rising channel, this one since October, with the latest leg advancing 18% since early this year. It ended the day before reporting printing a doji, signaling indecision, very fitting. But is also has a bullish RSI that has made a new high and a MACD that is positive and growing. The 50 and 100 day SMA’s have both crossed bullishly thorough the 200 day SMA and looking to the left there is a real void in previous price history between the current level and at least 11.25. A move over 10.35 triggers the upside and an move below 9.85 retracement lower. Watch the earnings and reaction and be prepared.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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