After the market closed on Tuesday, apple reported a massive quarter that outdid even the most optimistic expectations. You would think this would translate to a price explosion, paying off investors who put their money on a sure winner.

Crushing every metric, should mean a massive after hours pop, right? Those $160 calls should be MONEY, right?

Think Again

It seems fairly routine that companies will crush earnings and you won’t see an immediate bump. Market makers suppress the price, wait for capitulation, and then it’s off to the races. When that is, who knows? But it typically results in some sort of inexplicable three month run.

A run that is not inexplicable at all if you see how they have historically manipulated prices after earnings.

The typical modus operandi is to sprinkle a little bit of doubt via some seemingly insurmountable obstacle to sustained growth that ultimately proves to be easily overcome.

Now are we really supposed to believe that a company with $2.5 trillion in market cap can’t leverage priority status to navigate this supply issue?

The reality is, it doesn’t even matter to the shrewd investor. More on that later…

The Setup

There will be a few decent earnings reports from time to time from companies with no where near the track record, solvent books, or foreseeable path to future success. Nonetheless, any earnings report showing the slightest resemblance of strength will generate a 25% after hours leap that makes no sense whatsoever.

This serves two purposes:

  • A bunch of people FOMO into it and then get washed out when it inevitably drops.
  • This serves as the set up for when a company like Apple absolutely annihilates earnings and nothing happens.

Don’t Get Cute

The mistake most of us make is to believe that there is some sort of formula that we can expect to operate from and that it’s not almost 100% emotional reactions to manipulation by market makers.

If you are going to invest at all, the best, most sustainable approach is to just keep stacking via dollar cost averaging. Trying to pick tops and bottoms or trying to play earnings is a very delicate game that even costs the most savvy and in-tune traders more than many of them would care to admit.

Stay frosty out there, folks.

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