How To Play Company Earnings

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Every quarter companies release their latest earnings report for the previous quarter. At first glance, you would think simply beating or not beating expectations would be good enough for a stock, but in this market the actual numbers are almost irrelevant…

We have already put in about a solid week of earnings report from some heavy hitters (Bank of America, Intel, JP Morgan, and Goldman Sachs). Overall, the actual numbers were downright pathetic, but the market actually did pretty well.

Instead the market was driven by what these companies tell us (guidance). Whether the markets are just so bad that we are looking for any sign of positive news or these companies are really telling us the truth, perception is what drives the market, and, until we get that, trying to play earnings will seem impossible.

That being said, there are a whole new slate of companies set to report this week. I wanted to pass on this great article I found on AOL Finance that will give you a little bit more clarity on what to make of earnings reports, especially the ones coming out this week.