HOW GREEDY SHOULD YOU BE AFTER AN OUTSTANDING $2 TRILLION EARNINGS DAY $QQQ $MSFT $GOOGL $AMZN $INTC $EXPE $KLAC $SWKS $SBUX $WDC

It was the busiest day of the earnings season, and the market capitalization of the companies releasing quarterly reports topped $2 trillion.

Seasoned investors are asking me if this is the time to sell stocks. Those with less experience appear to want to buy. To me the answer is clear. Instead of giving you the answer right away, let us go through a process to reach the right conclusion.

Chart dating to the Great Recession

Please click here for the chart of the Nasdaq 100 ETF QQQ, The reason for picking this exchange traded fund is because most of the earnings released on the $2 trillion earnings day are from companies that comprise the 100 stocks that make up this ETF.

Notice from the chart that, since the Great Recession bottom, stocks have traded in a wide channel. Recently, stocks have broken out of this channel with force.

The background colors on the chart are generated from some of the proprietary algorithms of The Arora Report — green is bullish, red is bearish and blue is neutral. These algorithms are only part of the ZYX Change Method and ZYX Global Multi Asset Allocation Timing Model that I use to make decisions.

What happens after a breakout? Before I answer that question, it is important to remember what has come to be known as Arora’s Second Law of Investing: “No one knows with certainty what is going to happen next.” In my 30 years-plus in the markets, the only thing that I have found that leads to consistent success is to think in terms of probabilities and not certainties.

The probability is high that these stocks will continue to rise in the medium to long term, provided earnings continue to grow as they have this quarter and the economy remains as supportive as it is now. Does this mean you should be greedy and buy now? Not so fast. Read on.