Earnings season is about four weeks away. In the meantime, we are always on the watch out for earnings warnings. These warnings usually result in a gap down or a dumper for the stock’s price. I want to go over how to play these earnings warnings in this article.
 
 The rule of thumb of dumpers is to wait out the first 10-15 minutes after the 9:30am EST market open to allow the 3 minute 5 period moving average to catch down to where the stock is trading. Once that 3 min 5 tests, it will either base and cross up on the stochastics to form a channel tightening rise to the 3 minute 15 period moving average OR it will reject and form a 3 min mini inverse pup breakdown to the lower Bollinger bands and beyond.

 
 JBL had an earnings warning Jun 13, 2006. It gapped down over five points. We waited out the initial opening action until the 3 minute 5 period ma caught down. At 9:49am we took SHORTS at 25.95 which was just below the 25.97 (the 3 min 5 resistance). We placed stops at 26.10 coil resistance. The 1 minute stochastics slipped to trigger a 3 minute mini inverse pup and inverse pup as long as the 3 minute 5 was not violated. This set up a nice lean down to pare 25.55 stinky 5s, out + .40 and LOCKED the 25.25 overshoots on the 1 minute LOW band mini inverse pup leans, out + .70 on the rest.

 
 Markets have been getting steamrolled. As of this article, Nasdaq has been down seven straight days. QQQQs has a monthly mini inv pup with lower bbs at 35.15 with weekly 5 resistance at 38.18. Any bounces need to be sold at the weekly 5 and shorts can be initiated there. Monthly lower bbs are decent spots to nibble longs intraday.
 
 Good trading gang!