Stocks Poised For Big Gains This Earnings Season

Stocks finished modestly lower yesterday, but kept almost all of Tuesday's spectacular gains.

Recent volatility notwithstanding, a strong start to earnings season woke everybody up this week that the economy and the bull market are as strong as ever.

The saga regarding Saudi Arabia's involvement over the murdered journalist and the official action the U.S. and others might take in retaliation is still up in the air.

And so is the fate of trade talks (amongst other issues) between the U.S. and China.

But earnings season has suddenly risen to the importance it deserves when it comes to the direction of stock prices. And it likely will remain so for a while.

Position squaring ahead of the mid-term elections on November 6th will soon take center stage. Although, one could easily argue that the drop we saw last week already did that. Nonetheless, it's another potential bump in the road as the market seeks to regain its footing and resume its uptrend.

So why am I so excited for earnings season?

Because over the last 9½ years since this bull market began, the average return for the S&P during earnings season is 1.5%. And if the previous earnings season was up (which it was), there's a 73% chance the next earnings season will be up too.

Let's also not forget that October, historically speaking, is the best month for stocks.

So after the correction we saw last week, and so many great stocks trading at a discount to where they were just a week or two ago, the market is poised for some big gains. In fact, it's not uncommon for a positive earnings announcement to send a stock up 10%, 15% or even 20% or more in a single day. And with the odds of another positive earnings season in our favor, I'm especially looking forward to this one.

And you should too.

If you want to learn how to find potentially big winners this earnings season BEFORE they report, I encourage you to read our latest commentary...

How to Find Big Winners This Earnings Season

Best,

Kevin Matras

Executive Vice President, Zacks Investment Research

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