AA Kicks Off Earnings Season and a New Trade Season

And perhaps we'll play the earning leaks again. Last quarter we had an obscenely high success rate of 90+%, mostly on what I believe to be leaked earnings of some fashion or another.

I had this email today about AA's earnings due out tonight, which disappointed and sent AA lower by 1.7% in after hours trade. Again these are fairly quick trades, sometimes they take a day after reporting to materialize or be internalized by the market. In any case, here's the email thread I received and answered today regarding AA's earnings which I believe there to have been market action directly related to them, whether it was through fundamental analysis of institutions or a leak, I don't know, I lean toward the latter more then the former because of the longer distribution period.

"I believe this reports soon, any indication from 3C?" (AA)


"Most of the charts look negative, although there could be other reasons for that then a leak such as the dollar strength, the overall market looking very much the same the last week, etc. "


The charts....

 AA 60 min. showing some November accumulation and a rally from there, there's a couple of divergences that led to small shakeouts but the trend is solidly down while AA advances-this is distribution into higher prices, that's the whole point of the accumulated position; to sell into higher prices. At the same time it gives AA an atmosphere of strength going into earnings, but just as we saw with last night's breadth charts, price is the headline-it's not the story.

 AA 30 min. Shows very much the same thing, accumulation and then distribution.

AA 15 min. The 15 min chart is probably the best example of what happened in AA, accumulation at lows, selling into the highs.

AA 5 min. The lateral trend on the 5 min chart show distribution

AA 1 min. Usually a 1 minute chart is not that informative for the purposes of discovering earning's leaks, but taken with the other charts, the attempt this morning to break free of the range you see in the 5 min. chart above as AA gapped up this morning was a definite hint as it was promptly sold and the 3C divergence into that gap up is quite clear and quite negative.


So we may play some earnings trades if anyone is interested, email me some equities that are reporting, either after the close or in the a.m. and we'll take a look for any obvious signs of leaks.