1 Earnings effect is most pronounced in stocks not widely followed by analyst. Widely followed stocks are traded using pre earnings drift method. 2 To trade earnings first and foremost one must understand what is earnings cycle, what causes earnings cycle and where is the stock currently in its earnings cycle. Earnings acceleration and surprises early in the cycle lead to rallies. Later in the cycle everybody knows about it and then the market starts anticipating slowdown in earnings. That is the reason CROX dropped post earnings. 3 CSCO had only 8% earnings surprise. That is not a significant surprise. 4 ORCL when it imploded last had a -5% surprise (a negative surprise). One does not need to predict the future to trade earnings, one needs to understand how earnings play a role in stock price cycle. One need to understand how institutions and large funds view earnings and how it affects their buy and sell decisions.The only thing that matters to them is earnings and future earnings potential. To understand that search on Google for Earnings expectations and Cinderella Strategy Trading earnings based strategies is what some of the most successful traders on the street do. It is not a secret. How to do it is also not a secret. There are many variations of earnings based strategies. Most of them are in public domain. In fact individual investors and small speculators have a bigger edge trading earnings than large speculators. Because size offers you flexibility to get in and out quickly. Earnings information is freely available. Analyst earnings estimates are freely available. Company earnings guidance is freely available. Earnings strategies work on long time frames, so it is not critical to get information instantaneously. Earnings effect shows itself over many quarter, so you have enough time to act on the information. Anyone who puts in time and effort to understand earnings and how it affects individual stocks and how aggregate earnings affect the overall stock market will never scare people with advise like stay away from earnings or it is risky to trade earnings.
Companies submit it to a PR distribution service like PR Newswire Business Wire PR Web Marketwire This is where it is first sent. These companies are wholesale distributors of press releases. They in turn send it to other media outlets. Companies also simultaneously post it in HTML format to their web site.
Thanks again easyguru. Looks like I now just need the fastest newswire I can get. I heard someone say that Reuters was the fastest when it comes to equities. Faster than Bloomberg actually. Is that accurate? Is going with someone like PRnewswire going to get me the same speed for less money? What's considered the smartest choice when it comes to picking a newswire for equities (besides bloomberg)? PS - I'm currently wondering if I should just ask easyguru these questions in a pm. Wouldn't want the rest of you to lose your amazing "edge."
I think you have found your preferred way to trade earnings. I am happy for you.. Good Luck in the markets.
Keep it simple. Here is a system that always buys reports a few days after they are released (always long side, always waiting to let the market correct). Then they sell about a month before the next report. Longer timeframe but profitable regardless. http://www.earningstrader.com/