Trading CFDs: Apple, Google and Chipotle stocks


23 July, AtoZForex.com, Lagos – "Don't trade right after you see the headlines and listen to what the darned CFO has to say,"- Jim Cramer. It’s the earnings season, which therefore creates opportunities for trading CFDs. Especially, for a diversification of traditional currency traders. Trading such earnings reports can be a tricky play. Jim Cramer had advised against trying to trade such releases after hours, or jumping the gun.

A great example of why traders should not try to catch every move during such reports was perfectly displayed in the actions of Chipotle's stock, during its recent earnings release. The company’s stock had been under pressure after weaker than expected guidance last quarter. However, in anticipation of Tuesday’s earnings report, the stock ran up ran up approximately 10 percent, based mainly based on expectations that the worst might finally be over.

Here is a description of the stock reactions during the release: "One minute after the drop of the report on Tuesday, the quarter was immediately labeled a miss, causing an immediate 50 points plunge."

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Trading CFDs Chipotle Mexican Grill, stock (Click to zoom)

"Afterwards, the stock fluctuated up and down as the company conference call ensued, staying majorly low," as the CEO Steve Ells spoke. The stock lifted temporarily as the co-CEO Monty Moran discussed throughput, a term describing how quickly customers can go through the Chipotle eating experience. It dropped right back down once he mentioned labor costs would go higher to pay employees better to improve customer service.

The stock finally took shape when Chipotle's CFO, Jack Hartung explained that the month of July was actually very strong and that pork shortage that has been hindering the company will be returning to stores. These positives weren't even included in the numbers, as July is not covered by the quarter it just reported. Thus, the earnings beat expectations, and the same-store sales numbers are actually on the upswing, resulting in the stock recovery and a surge after he explained that Chipotle intended to buy back stock with all of the cash it has accumulated on its balance sheet. In fact, it had already put $100 million to work over the past three months. The stock gained 7.7 percent in one day.

Cramer's moral of the story?

"Wait, don't trade right after you see the headlines and listen to what the darned CFO has to say," the "Mad Money" host said.

Other recent opportunities arising in the equities markets include:

A surge in Google Inc. shares to a record on Friday after the Internet-search giant showed signs killing two major investor concerns: Can it make money from mobile phones and can it be managed with more discipline? This resulted in a 16.3% jump in Google’s share price, a remarkable increase for a company of its size. Its $468 billion market capitalization makes it the second-most-valuable U.S. stock, behind Apple Inc.

Speaking of Apple, the shares tumbled a few days back, wiping out $32 billion in market value, after disappointing iPhone sales rekindled concerns over whether the company can keep making must-have products.

Personal Story:

Those of you following AtoZForex know that we are closely collaborating with Mr. Yagub Rahimov, who has been nominated as the best trader of the year couple of times as a professional trader in the last 6 years. As a family rule, he has a tradition of giving or receiving shares for special occasions. The analysis he made to buy 300 Google shares at $540 on the 30th of June gave over $20K profit opportunity.

In a small conversation he mentioned that it has been a couple of years that they are giving blue-chip companies' shares as birthday presents to their close family members. Yagub commented that: "When you buy someone a present you just occur the cost without committing any future, however every birthday is a new beginning. By giving a stock to a family member we are just investing in each-other's future and when the opportunity comes we sell to bank the profit, just like the Google opportunity."

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