In this video, I'm going to be talking about how to grow your account by buying earnings losers. We love losers. We are going to be going through the step-by-step process on how to profit off negative earnings releases. But why folks would we want to do this? Why is it that someone would ever recommend buying a loser? Well remember folks, every reaction in the stock market is an overreaction.

Thus, a negative earnings report will give us an opportunity to buy in at overreaction laws and write the subsequent correction. But before we get into it, the only thing that I ask of you in return for this video is that you hit that ravishing like button. Also, I should mention and by the way I just found this out that that subscribe button is also ravishing, so you should probably hit that if you haven't already. Okay, so I want to start with Doc You Now Doc.

You had a negative earnings release in June and it proceeded to get beat down like a rabid dog, reaching over reaction lows and over selling on the RSI. Now this was a top loser. It shot down about 20% on that day. Then a few weeks later, it returned completely to where it had been before the perceived negative earnings report even came out.

This allowed folks who bought in at the discount to write the subsequent price action all the way to a full recovery. We can argue all day about whether or not this reaction this initial arranged reaction was deserved, and in fact, I did argue this back in. June If you look back at that video. But the reality, the reality is that when a piece of news comes out, it always results in an overreaction.

Folks always see it as either really good or really bad and the market needs time. Do you factor in the actual impact of the move? so it over reacts to it and this gives us opportunities as traders. This particular case, it ended up completely recovering, but in some other cases it'll stop correcting at a lower level such as right here and I'd even argue that this was the immediate correction and then later just continued because investors realize that this reaction was completely fabricated. But if you were looking at this on the day of the overreaction, you would have needed to wait for signs of a reversal and ultimately a confirmation in order for it to make sense to take a position.

It's the 180 day chart that we were looking at, but if you were looking at the closer time chart, you will want to spot an intraday reversal and a confirmation of directional strength. Because remember, at the end of the day, we don't just buy stocks because the stock market makes it look like they've been discounted. The stock market has a lot of tricks, it's leaves and it will Juke you out if given the opportunity. Sadly, a lot of people assume that the stock market is their friend.

But if you were lonely, go get a dog because the stock market is going to eat you alive. If given the opportunity, it will leave you on the street. Thus, gently put, You need to see signs of Prai strength before taking a position. Just a discount is not enough.

You need price strength. Okay, next example: So Oracle had a bad earnings report back in March They got beat down after hours when the report was released. started off slow the first ten minutes of open and then started running up. Now, this allows you to buy in upon early signs of a reversal aka confirmation and then ride and ride.

the price drinks back up as if this had never happened. It was also oversold, which was another dead giveaway that we had a lot of elevating factors at this overreaction. But it's important not to just buy stocks because they've been beaten down and I really want to hit this point home. We don't just buy stocks because they've been beating down.

We were looking for elevating factors that show that this is and I just beat down and it is about to recover. We already know that every reaction in the stock market is an overreaction, but this does not mean that this was necessarily the bottom. It could have kept running remembered. the stock market plays dirty, so make sure that you're waiting for signs of a recovery.

Okay, next example Kirkland had a poor earnings report a few weeks ago. It got be down to overreaction lows and then boom. A week later, it had already completely recovered to the point it had been at before the breakdown. Like magic, like magic, it was like this beatdown had never happened and this is why.

I Love tough losses folks. these opportunities are quite beautiful. Ok next PIR and now PIR Got beat down upon a negative earnings release And the beat down doesn't look like much compared to the run-up that happened afterwards. But the beat down was actually from 1350 to 8, which is essentially a 40% drop.

That's a big beat down. Once again, it dropped to oversold, which is a huge elevating factor because that means it dropped too quickly and once it hit overreaction lows literally. Three trading sessions later, it had completely regained all of its price and then continued running far past that again. this is because the stock market is an irrational beast.

In every reaction in the stock market is an overreaction. Ok, zooms Z u M-z Zooms got beat down after a perceived poor earnings report and then started running up upon market open and later that day almost completely regained everything it had lost. Are you seeing any patterns here yet? Or is it just me? Maybe I'm schizophrenic. Okay, with that being said, not all earnings plays are created equal now.

MDP is going to be a lot more. This play is going to be a lot more of what your average poor earnings play is going to look like. It'll get beat down, hit overreaction lows, and then in the end it'll correct to a point that was much higher than the overreaction lows, but not back to where it was before the earnings release came out. Unlike the ones that we talked about prior to this that recovered completely after a negative earnings release.

many negative earnings reports will actually have a long-term impact on the share price, and rightly so because it's negative. Some of it will always be due to an overreaction because the stock doesn't know how to factor in a negative earnings release when it first comes out. And in the case of MVP, we could see that both times it overreacted on negative earnings, it regained three-quarters of its profit. So folks, based on these examples, you could see why we love buying top losers.

But I love talking about them because aside from wearing sandals, one of the biggest reasons that traders fail is because they buy overextended positions. If you go to any trading forum that's focused on earnings plays, you always see advice such as buy winners sell losers But the law of overreacting applies here as well. Just like negative earnings results in an overreaction. So do positive earnings.

You see the original run up and then boom. a correction. but this is sort of the reality of the stock market. A lot of people had this idea that just because something is up 20% that means that it's going to be more valuable than something that's only up 1% or that's just been discounted, It is now running up when I see something that is up 40% and is showing signs of weakness I don't immediately think to myself, hey, look at that that went up 40% I need to buy in so that I can get the next 40% I don't think that I don't think that I'm looking at and I'm like, wow, this is overextended.

Cannot justify buying into a position just because it's up 40% in a day. That is not a justification, but so many people do this, and so many people lose money as a result of this. When a stock runs up like an inflamed batchi no matter what the catalyst, eventually it's going to have to correct itself. Hey long term, maybe it will continue going up right? Maybe the long term value is higher than what it's at.

Now then the short run, the Banshee will burn a inflamed banshee stock. can't just keep running up indefinitely. But the point is that while buying earnings, losers can be looked at as rebellious. The truth is that it is one of the best ways to make money by trading earnings points.

I have A and how to trade earnings winners. You can make a ton of money trading our needs winners, but it's a lot more complicated because you have to trade the initial reaction and most of the reactions happen in the after-hours or the pre market. If you are trading over reactions, it's a different story. Anyways, folks, if you understand this and you understand what it is that I'm getting at I invite you to take an active approach to your learning by commenting below: I Love Top Losers! This is especially important if you don't usually comment because trust me, you will remember that one time that you actually did take the time to comment and take an active approach to your learning and reiterate into your mind a great concept.

and next time you see a discount upon earnings, you'll look at it from a different perspective. I Love-love-love Top Losers. Okay, but with all that being said, I do not want to create the perception that all negative earnings releases ultimately have no effect or a little effect on the value, because that can't be further from the truth. Some of them do have a long-term impact on the value, but this video isn't focusing on long-term investing, we're focusing on trading.

So we're trading off the initial overreaction and every reaction within the stock market is an overreaction. Having said that one before, so the question is not is that an overreaction, but how long is that overreaction going to last? in the case of Ulta, We had this infamous sell-off last month after a perceived negative earnings report. That sell-off kept going and once We hit oversold an overreaction lows, it went up a bit and Boom Blew lower than Overreaction Loves and it is only now that we are starting to regain its price strength. This is a chart of a more justified sell-off, but it was still an overreaction.

The immediate overreaction showed here, but the overall overreaction lasted almost a few weeks. We have already seen it regained over a quarter of its loss without any justified reason because investors are still trying to figure out how to value this negative earnings report. This original sell-off over factored in a sell-off and then it needed to be corrected afterwards. Okay, and there are, of course, different levels of overreactions.

For example, a negative earnings report in a stock that has already been going down long term isn't going to be as fun or lucrative to trade. For example, with Sprint, it had already been going down before their earnings report and when the earnings report came out and expedited the process. That being said, every reaction in the stock market is an overreaction and after the Beatdown that day, it corrected itself about 25% upwards as marked by this four-hour candlestick, and it ultimately did regain nearly half the value before eventually beating down lower so it wasn't over reaction. Again, every reaction is known for reaction.

We've established that I've said it a million times, but you can see that every reaction isn't created equal. There are good and bad points That's true for everything that you're trading with in the stock market and being able to tell the difference is what's going to lead to more profitability. But knowing that every reaction is an overreaction will allow you to buy in upon everyone else's fear and then sell out when everybody else is excited. The key has always focused.

Do have a plan and make sure to focus on buying and upon confirmation and selling out upon validation. All right folks. Well I do hope that this video was helpful. If you have any questions, feel free to reach out to us in the comment section below or join our free zip trader circle Facebook Group I Post lightly watch lists and we post a ton of other content that can be useful to you as a trader, so do not hesitate to join us if you haven't already.

Anyways, have a great day and I'll see you in the next video. Okay, had a quick bonus for anybody who would like to find Earnings plays upcoming Earnings plays. All you have to do is go anyway for your website fin viscom, go to screener, go over to all, and then go down to earnings date and then you could type in or tap which or any date is relevant to you say next five days and then you can scroll through the list, plug them in to your platform, and choose which one is relevant to you.