An Earnings Play

Above you are seeing 2 charts, both 3C 15 minute. The first is the SPY. Remember I said that most stocks will trade in sync with the market to a large degree. The second chart was submitted by a user, this is ERJ and they report earnings after the close today.

Note how much worse the negative divergence in ERJ is then it is in SPY. This leads me to believe that institutional money is moving out of this stock before earnings, which to me implies that ERJ will not react well to earnings, which may make it a decent short, but to get the most bang for your buck you'd need to enter it before the close with a short trade.

PLEASE REMEMBER THAT THIS ENTIRE EARNINGS/3C  THING I'VE BEEN DOING IS EXPERIMENTAL. THIS IS THE FIRST QUARTER I'VE USED IT TO SEE INSTITUTIONAL MONEY BEFORE THE FACT. THAT WOULD MAKE THIS A VERY SPECULATIVE TRDE WITH THE ABILITY TO GAP HIGHER IN THE MORNING SHOULD EARNINGS BE GOOD WITH A GOOD REACTION SO PLEASE KEEP THAT IN MIND WHEN TRYING TO DETERMINE WHETHER YOU'D LIKE TO TRADE IT.

THANK YOU TO THE MEMBER THAT BROUGHT THIS TRADE TO MY ATTENTION.