This has been a difficult weekend trying to look at my charts. I have been very busy and unable to go through my watchlist since the initial post on Friday. I will be out of town until next Sunday. I will try to get the posts up at the regular time now that the settling down process is done.
AMERICAN INTERNATIONAL GROUP EARNINGS PREVIEW:
AIG reports after the close on Monday. Fundamentally, it looks okay. I will score it at 7 out of 10. I like to see a score above 7.5 to consider a stock fundamentally bullish, but 7 is the lowest I can go (cutoff point). Also, AIG has a history of beatings estimates. Of its last ten reports it beat nine times. The only exception was in line with expectation. This usually doesn't translate to a move up though. I do not have revenue and guidance data except for one quarter. And I don't feel like going to dig them out. It will take too long. So I'm not sure why it dropped or was flat after some (good) earnings.
On the technical side, it is a lot more bullish than bearish. See AIG-WEEKLY and AIG-DAILY charts with my weekend review.
This means that I will buy September Call options going into earnings. Assuming it goes up, I will look to close the position when it closes any candlestick below the 5ema on Tuesday. (There are too many false signals associated with the 5ema, that is why I use it on earnings day ONLY.) But if there is wild movement the first one to two hours, I will use the 10ema. I like to see a smooth transition across the 5ema.
If the play goes against me, I will look to close the position as soon as possible based on the setup on the 15min chart or the location on the daily chart. It is better to use the remainder of the money in another earnings play than to let it sit ideally on a bad play waiting/hoping for a recovery. The only exception to holding will be if it moves very significantly against me that I have no choice.
COACH EARNINGS PREVIEW:
COH reports on Tuesday before market opens. SO I WILL MAKE THIS PLAY ON MONDAY. Fundamentally it looks bad. I will score it at 1.5 to 2.5 out of 10. The last past eight quarters: it beat earnings five times, came in line once and missed twice. It missed revenues in all eight quarters. This is not good going into the report. This was not the case prior to this eight-quarter (2year) period. It was very consistent in beating earnings and revenues. So this is a cause for concern.
On the technical side, it looks very bearish. See COH-WEEKLY and COH-DAILY charts with my weekend review.
So, based on the fundamentals and technicals, I will be buying September Puts. What I see with COH is exactly how I like my analysis to be for any earnings play. It is so clearly bearish that I have no hesitation buying Puts. This is however not a guarantee it will drop after reporting. No earnings play is a guarantee, but this is as close as it gets.
