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Monday, March 23, 2009

MON. MAR. 23- Patience, Patience

With the exception of professional gamblers/poker players, when people are at casinos, they are there for one reason: entertainment. In absolutely no way do I think that the stock market is the equivalent of a casino; furthermore, I get really riled up when someone with no knowledge of how this stuff works equates trading to straight-up gambling. The two corollaries are that 1) trading is of course like gambling when one has no idea what they are doing. Whenever new traders began trading, inevitably, they think they will be able to ‘beat the system’ and go out and promptly lose a lot of money very fast after doing no homework and asking next to no questions. But my point here is the 2nd corollary: why is that even otherwise reasonably intelligent people when bored at the casino whether the cards are ‘bad’ or they are just playing the slots feel compelled to simply keep playing even they are losing net-net? How many times have we waited on friends to be done or stayed inside while others were smoking or whatnot and plunked down another X amount of money at the blackjack table even when something seems amiss or just mindlessly plunked coins into a slot machine? When you do that, net-net, you’re gonna lose. Guess what? It is the SAME thing in the day trading world. When there is next to nothing going on as occurred much of the late morning and early afternoon on Friday, why is that people feel compelled to push buttons? The answer of course is obvious: we as day traders are here to earn a living and if we don’t push buttons, we can’t earn a paycheck. I get that. However, the other answer is that we are sitting in front of these nice computer terminals so we feel compelled to try to trade. Well, if the markets are not moving, why would you begin to push buttons? Certain types of trading such as strict ‘rebate trading’ work at times like the two hour quiet stretch late Friday morning/early Friday afternoon, but if ones try to make something out of nothing while trading, one gets less than nothing. Thus, when things are really slow, there are so many better things to do than push buttons and lose: pay your bills, work on taxes, and so forth. Keep an eye to the screen always, but all that forcing things will do is lighten your wallet.

Equity prices shot higher overnight in Asia and Europe; markets in Asia were up 3% to 4% across the board while markets in Europe are higher by about 2% on average. The catalyst is that Treasury Secretary has offered up a new bank initiative in which the government will work with private investors to purchase up to $1 trillion of “toxic assets” in order to get the system going again. Now, there are many questions- what will be the pricing mechanism, which private firms will step in, and such, but the equity markets love what they’ve heard so far. Look for a very strong open; the rest of the day will likely be dependant upon any details that sift out about the plan so trade with the details. If nothing new comes out, prices will likely plateau and give back a little, but not much so trade very carefully.


Watch list:

032309Eriklist.zip

It’s important to note that almost all if not all of the stocks on the ‘bad’ list will open higher today in the strong market so be well aware of the general environment today.

Reiterating-
Please understand that if the ideas do not get to the hoped for set-ups cited below, more often than not, one should not blindly trade the symbol next to said idea.
If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified-



Good- The following stocks have good news and/or a strong technical pattern

FCH, AA- rallied hard into the close in finishing on/near high

MCD, KO- mentioned on “Mad Money” on Friday night

PCZ, SU- SU buying out PCZ at a ratio of 1.25 shares of SU


Bad-The following stocks have bad news and/or a weak technical pattern

MAC- closed at low of the day

JPM, WFC, PNC, USB, STT – among the big banks closing at or near lows of the day, but will likely open sharply higher today

XRX- closed near low of day after issuing earnings warning Friday morning

PRU- continued its freefall after being downgraded by Moody’s; closed near low of day

WGOV- closed near its low

PDLI- closed down sharply; it fell dramatically in last five minutes of day

CNQR- closed near a low after CEO disclosed he had forged his education degree in SEC documentation

CPHD- broke hard in last few minutes of day in closing near day’s low

KSU- broke to a new trend low

WRE- closed at low of day

CAI- broke to a new trend low

BXP- had major reversal in REIT sector last few days in closing near a low

BMR- closed at a new trend low

MTH- has fallen over 30% in two days; closed near a low

TIF- beat for quarter, but warned for year



Earnings:

MON MAR 23 BEFORE

TIF WAG

MON MAR 23 AFTER

FMCN PVH SONC


Good luck today.

Epiphany Trading, LLC

www.epiphanytrading.com

Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President

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