thinkTank: Finding Movers and Shakers with Sentiment, Earnings Analysis, Charts

Identifying stocks, options, or futures to trade can be a daunting task. Earnings analysis, sentiment indicators, and charting techniques may help narrow down your choices.

https://tickertapecdn.tdameritrade.com/assets/images/pages/md/Education tools: tools to help you find stocks to trade
5 min read
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Key Takeaways

  • Find earnings candidates and analyze volatility and price movement from past quarters
  • Analyze bearish and bullish sentiment using the Sentiment Zone Oscillator
  • Compare price movement between two futures contracts to determine which one might be stronger or weaker relative to the other

Deciding what to trade can be one of the most challenging aspects of trading. How do you find stocks with the greatest momentum? Should you look for price reversals? How do different assets move relative to each other? Here are some tools you could use to narrow down your choices.

Earnings Analysis: Be Prepared

Earnings season is a big one—active traders live for it. That’s when stock prices can make big moves up or down. It can be a time of potential opportunity, but also a time of risk. You know when earnings will be released, but what you don’t know is what those earnings numbers will be. And that means you’ll have to prepare for the uncertainty. Here’s how you could find earnings candidates. 

Fire up the thinkorswim® platform from TD Ameritrade (live account). See figure 1.

Identify earnings candidates by comparing price and volatility info
FIGURE 1: FINDING EARNINGS CANDIDATES. The Earnings sub-tab offers various data points that can help you compare price and volatility information from past quarters. This information could be used to get some idea of price direction and momentum for upcoming earnings. Chart source: the thinkorswim platform from TD Ameritrade. For illustrative purposes only.
  1. Select the Analyze tab, then Earnings.
  2. Enter the stock symbol of the company expected to release earnings.
  3. There are three ways to view the earnings info—Fit All, Zoom, and Compare. Fit All (default) displays all the data points on your screen. Zoom displays intraday so you can zoom in on stock price and options volatility (vol). In the Compare view, you can overlay price and vol data of past quarters to compare the results.

In the Fit All view, you’ll see the:

  • Market Maker Move indicator
  • Price chart
  • Volatility (historical and implied)
  • At-the-money (ATM) straddle
  • Earnings-per-share (EPS) data

Knowing how vol moved around past earnings data doesn’t mean it’ll do the same thing when future earnings are released, but you may be more informed about the direction and magnitude of the price move.

Sentiment Zone Oscillator: Level Up or Down?

Some traders consider overly bullish and bearish sentiment as indicators for potential reversals. It makes sense. You wouldn’t want to go long at the end of an uptrend or short at the end of a downtrend. The Sentiment Zone Oscillator (SZO) indicator, available on the thinkorswim platform, could help you identify overly bullish (overbought) or bearish (oversold) conditions (see figure 2).

Use sentiment analysis to determine if a stock or index is overly bullish or bearish
FIGURE 2: SENTIMENT INDICATOR. From the Charts tab and the Studies menu, add the SentimentZoneOscillator to determine if a stock or index may be overly bullish or bearish. Chart source: the thinkorswim platform from TD Ameritrade. For illustrative purposes only. 
  1. Pull up a chart of a stock or index from the Charts tab.
  2. Select Studies > Add Study > All Studies > SentimentZoneOscillator.
  3. The indicator is displayed in the lower pane with overbought and oversold levels marked.

Comparing Charts: Power of Percentages

When trading futures, instead of looking at a chart of one contract in isolation, it may be helpful to compare it to a chart of another contract. For example, you may want to look at price movement of the broader indices, or at how crude oil (/CL) contracts are trading relative to the S&P futures (/ES). On the thinkorswim platform, you can choose to show price as a percentage, which helps make an apples-to-apples comparison of price movement between two contracts. You’ll need to enable this in the chart settings dialog box (see figure 3).

Compare price movement between two futures contracts using percentages
FIGURE 3: COMPARING CHARTS. It’s a good idea to have prices displayed as a percentage when analyzing valuations between two contracts. This makes it easier to see which contract is stronger or weaker. Chart source: the thinkorswim platform from TD Ameritrade. For illustrative purposes only. 
  1. Select the gear icon on your charts.
  2. Select Price axis > Show bubbles as percentage > OK.
  3. Enter the symbol of a futures contract, in this case /ES, in the symbol box.
  4. Select the Studies icon > Add study > Compare with. If you don’t see the symbol of the contract you want to add to the chart, you can create a custom symbol.

After making your selections—and it’s a good idea to make the colors of each plot different—you should see the charts displayed together on a percentage basis. This helps identify which contract is stronger or weaker relative to the other. Analyzing such relationships could be useful in making trading decisions.

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Key Takeaways

  • Find earnings candidates and analyze volatility and price movement from past quarters
  • Analyze bearish and bullish sentiment using the Sentiment Zone Oscillator
  • Compare price movement between two futures contracts to determine which one might be stronger or weaker relative to the other

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