Trade Alert: Earnings, 8/2/2023

Four bullish and four bearish trades.

The Cheesecake Factory is the subject of one of our bearish trades today. Its decor always reminds me of the Emperor’s place in David Lynch’s Dune (1984).

A Packed Earnings Week Continues

Recall that we’ve been looking at four metrics when placing these earnings trades:

1. LikeFolio’s earnings score based on social data. The higher the number, the more bullish, the lower (more negative) the number, the more bearish.

2. Portfolio Armor’s gauge of options market sentiment.

3. Chartmill’s Setup rating. On a scale of 1-10, this is a measure of technical consolidation. For bullish trades, I want a high setup rating; for bearish trades, a lower one.

4. Zacks Earnings ESP (Expected Surprise Prediction). This is a ratio of the most accurate analyst’s earnings estimate versus the consensus estimate.

Last week, I said I was looking for 1 or 2 of the other signals to agree with the social data, but I was also using my judgment based on past performance of these signals. Performance of the social data signal was stronger than the other signals last week, and where it was wrong (SNAP 5.99%↑, for example), other signals such as Zacks ESP were wrong too. So my judgment this week has been to lean more heavily on the social data and place more trades based on it. That said, I’ve been posting the other signals here if you’d like to use them to decide which trades to take. And there are so many companies reporting toward the end of this week, that I’ve gone back to looking for more confirmation from other signals for today’s trades.

We’ve got eight trades on companies releasing earnings after the close today or before the open Thursday, four bullish:

1. Social +50, PA Options Sentiment Bullish, Setup 3, ESP +30.04%.

2. Social +36, PA Options Sentiment Neutral, Setup 9, ESP 0% (neutral).

3. Social +22, PA Options Sentiment Neutral, Setup 7, ESP NA.

4. Social +21, PA Options Sentiment Bearish, Setup 8, ESP 0%.

And four bearish

1. Social -24, PA Options Sentiment Bearish, Setup 3, ESP -2.67%.

2. Social -29, PA Options Sentiment Bullish, Setup 3, ESP 0%.

3. Social -57, PA Options Sentiment Bullish, Setup 5, ESP 0%.

4. Social -74, PA Options Sentiment Bearish, Setup 8, ESP -1.14%.

Details below.