Listen to Earnings Reports before you trade Stocks (C, COF)

Citigroup and Capital One Financial earnings reports had a huge impact in their stock charts this week. Both earnings reports beat the estimates and stock prices advanced considerably. First came the Q3 2012 earnings for Citigroup on Monday morning, announcing $1.06 earnings per share compared to the EPS estimate of $0.96.


That earnings report resulted to a 5% gain for C stock on Monday, printing a breakout on the daily chart. The resistance level that was penetrated was first indicated on April and was confirmed a week ago. Citigroup’s stock climbed a bit more the following days, before sellers took control of the market on Friday.

Given the trading activity following Citigroup’s earnings report, what should we expect for COF stock next week?

Capital One Financial Corp. earnings report conference call took place after the market’s close on Thursday. COF stock was trading close to the 50-day EMA on that day, patiently waiting for the earnings report to come out. The report actually surprised the stock market, since the announced EPS of $2.01 was way ahead of the average estimate of $1.66! That surprise is easily spotted on the daily stock chart of Capital One Financial.


The COF uptrend was further improved by the earnings report and the stock price printed new highs on Friday’s closing bell. Confident shareholders welcomed the open’s gap up as well!

C stock gained 2 dollars more in the couple of days that followed the earnings report. Will COF stock price follow the same path and shoot for new highs on Monday and Tuesday? Given the already established uptrend, I wouldn’t be surprised if that is the case. I suppose traders who adopt a swing trading strategy are already long COF, while traders who look for breakouts will either buy COF shares on Monday’s open or have already bought COF stock on Friday!

Disclosure: I have no positions in any stocks mentioned.