VWAP Basics – Earnings
EARNINGS AND WHY IT MATTERS
Companies report earnings every quarter.
Most investors and financial news outlets focus on things like earnings per share, revenue, guidance, EBITDA…
To me, none of that matters.
I’m pretty sure I don’t even know what EBITDA means.
Remember, with VWAP trading, all we care about in Warlock’s World is VOLUME and PRICE.
So all those ratios and metrics? Throw ’em out the window.
I’m sure you’re asking…
But Kenny, if you don’t care about what the earnings report says, why do you care about the stock reporting earnings?
Ahhhhhhhhh I’m glad you asked, Blanche.
As a disciple of VWAP, I’m looking for stocks with high trading VOLUME.
The more volume, the stronger the corresponding VWAP signal will be.
At no point in the year do we see more relatively predictable volume and volatility spikes than during quarterly earnings season.
Earnings opens the door for Warlock’s World members to trade stocks they might not otherwise – stocks that regularly have LOW volume.
Let me give you an example.
In May, for instance, I guided the Warlock’s World community to an INSANE trade in Dick’s Sporting Goods (DKS).
DKS isn’t very high on the list of stocks that I would normally consider “good” for day trading.
The average daily trading volume for DKS is a paltry 1.9 million shares.
For comparison, the Invesco QQQ Trust (QQQ) – my favorite stock – averages over 81 million shares traded per day.
Higher trading volume usually creates larger moves for stocks, as well as being LIQUID.
Liquidity is what makes nimble day trading possible.
But let’s get back to DKS.
During Money Morning LIVE that day, I let VWAPians EVERYWHERE know that not only was I looking to go long DKS, but I gave a significant price level of $63.50.
The stock was above the 1-minute VWAP and appeared to be on its way to the multiday VWAP.
AKA the 1-minute multiday VWAP reversal.
DKS never broke back under VWAP, rising as high as $81 per share.
The stock saw over 38 million shares traded today.
That’s over 20 times its average trading volume.
Are you picking up what I’m putting down?
The stock reported earnings – so it’s on my radar for the day.
The stock broke the 1-minute VWAP (blue line) to the upside, giving me a reason to buy.
The stock then broke above significant price levels rising towards my target of the multiday VWAP (orange line).
DKS broke through the multiday VWAP. So I started adjusting the time frame of the multiday VWAP to continue to find new upside targets as the price continued to rise.
Even only 100 shares from the significant price level of $63.50 to the daily high of $81.30 would have yielded nearly $2,000 in profit.
My main point is:
VOLUME = LIQUIDITY
VOLATILITY = PRICE MOVEMENT
LIQUIDITY + PRICE MOVEMENT = VWAP TRADES
VWAP TRADES = $$$
That’s how I narrow down the over 8,000 stocks on the market to the 10 or 12 that I’m watching every day.
And there’s always stocks reporting earnings.
When people think about earnings, they think about the BIG names – Apple (AAPL), Amazon (AMZN), Microsoft (MSFT)…the list goes on and on.
They think about tech and big banks and companies like Walmart (WMT)…
They’re not looking at Dick’s Sporting Goods (DKS).
But you know what? I am.
Let ’em have the big dogs. When the time is right, we’ll trade those too.
But I can find WINNERS for my Warlock’s World members EVERY DAY.
Because I know what to look for, I know how to find the price levels, and I have the only trading indicator you’ll ever need in my holster.
And I’m not holding any of this back. I’m TEACHING members of my Warlock’s World how to be the best VWAPian possible.
You need to come trade with me.
Because the longer you wait, the more trades like DKS will pass you by.
Kenny “The Warlock” Glick