A few weeks ago, I wrote this:
http://epiphanytrading.blogspot.com/search?q=opening+time
In the piece, I discussed the critical utmost importance of trading at the open during the summer earnings season in particular. Indeed, most of the major intra-day moves in the month of July have occurred between 8AM and 10:30AM ET. And sadly, I have had a few people come to me asking questions such as “I have had a dreadful few weeks of trading. Why is this?” Inevitably, after quizzing them, I find that they tend to trade after 10AM- namely when things are slowing. I remember as a kid on beautiful Tybee Beach off of the Savannah coast that the soft sea sand at the ocean shore mesmerized me particularly on days when the tides was coming in. Like the idiot child I was, I used to love to dig into the sand until I could see water coming up from the sea…these elaborate sand castles with phenomenal sand moats…and I’d love the non-random nature with which the water would fill the space back in. However, when I’d do the same thing when the tide was going out, I’d have to dig harder…and of course no water would come in filling the makeshift moats. I’d of course get fruitlessly frustrated. Well, you know, it is the exact same thing here. It is absolutely infuriating to me to hear things like “I’m gonna let it settle at the open.” It is infuriating because I know that with any preparation at all, most people can make money trading in that 8AM-10:30AM window during earnings season yet most people do not saunter in the door until after 8:30AM…and when they do, they are not doing what they need to do to truly prepare. Thus, they wind up trading in the sand as the markets are already slowing by 10:30AM with most of the major activity for the day having commenced. It genuinely hurts when I see people losing money because we’re all in the same boat here- we want to earn a living from this. The next phase of this is just as worrisome. The markets are in a bit of a summer lull after 10:30AM already many days right now…what is going to happen as August approaches after all of this volatility when the newsflow starts going down? The same people who come in at 9AM will be trying to dig those moats waiting for the tide to come in…and it just won’t. I of course learned both of these lessons the hard way. While I can never be accused of not arriving at work early enough, I did learn that I must know the newsflow because stocks can and indeed do have seemingly bizarre moves which can be much more easily prognosticated by knowing things like conference call times and quality of earnings. I also know from my early days trading that when I did not do as well as I could have during earnings season, I attempted to overcompensate by overtrading shortly thereafter. Thus, I continue to plea to be prepared early early early on as well as in the afternoons; leaving at 4PM will leave you totally out of the know as far as the afternoon earnings flow goes and arriving at 9AM does not allow for adequate preparation time in terms of review of the previous afternoon’s earnings much less the morning’s earnings. Also, as things slow after the next 2-3 weeks, should you not have done well in this critical earnings season stretch, do not try to make up for it when the newsflow slows…else you will likely make yourself even worse off.
Markets in Asia were hammered overnight. Tokyo fought the trend in finishing flat, but Hong Kong was down 2.5% while China was down over 5%. The weakness did not spread to Europe, however, with the bourses up about 0.5% on average; those exchanges were well lower yesterday though so they are playing catch-up to Wall Street which did not fall yesterday. Commodities are notably lower with oil down 2%. Futures are weaker in the early going, but well off of their lows; Dow futures are indicated down about 25 as of this writing, but were down 100 overnight. It is impressive that the markets have shaken off the weakness, but many companies with poor guidance are weighing things down. Look for a mild downside day…similar to yesterday, but weaker…much of the action will again be early, but it will be a bit busier than it has been as the day progresses. Earnings-related stocks are once again the way to trade.
Watch list:
07292009Eriklist.zip
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 specified.If 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
INO- H1N1 vaccine 100% effective in animal studies according to company
EFUT- announce strategic partnership with MSFT to provide a POS-ERP system in China
UTA- closed near a high
ICAD- closed near a high
ELRN- closed near a high; received formal FDA clearance to market its insulin micropump after the close
UFS- closed near a high
NSC- beat on earnings guidance; missed on revenues
WDC- great earnings
DWA- good earnings
MEE- good earnings
PNRA- good earnings
WCG- good earnings
MCK- great earnings
FIS- good earnings
FII- good earnings
IDCC- good earnings
CRI- good earnings
USNA- good earnings
CMP- good earnings
LIFE- good earnings
UHS- good earnings
XL- good earnings
RNR- good earnings
AFG- good earnings
CY, LOW, HD- on “Mad Money” last night
VECO- closed on a high
RCII- closed near a high
TXT- closed near a high
GD- decent earnings
HES- decent earnings
JNY- decent earnings
MHS- decent earnings
CCE- decent earnings
SLAB- good earnings
Bad-The following stocks have bad news and/or a weak technical pattern
TRMB- bad earnings
SPN- bad earnings
THQI- bad earnings and notes offering
CAVM- bad earnings
NLC- bad earnings
YHOO- formed search deal with MSFT…but no takeover
TKR- poor earnings
WLP- poor earnings
MCO- bad earnings
MT- bad earnings
PENN- bad earnings
SEE- bad earnings
HGSI- issuing 23 million shares at 14
PX- bad earnings
TDW- poor earnings
RCL- bad earnings
Earnings:
WED JUL 29 BEFORE
AMG AMT ARW
BHE BPO BWA
CCE CETV COP
CX DFG EQT
GD HES HSP
IACI JNY LAZ
MCO MDCO MDP
MHS MT MWV
NYB PAG PENN
PX RCL ROC
S SEE SLAB
SMG SO SPW
TDW TEL TKR
TWC TWX VPHM
WLP WYN
WED JUL 29 AFTER
AEM AFL AHL
AIZ AKAM AMKR
AVB CBG CBT
CCI CERN CLF
CTV CVD DRIV
ELY EQR ESRX
FISV FLS FMC
FORM GMCR GMR
GNK GVA HBI
HIG HIW HLX
ITRI LNC LPS
LRCX MTZ NETL
NTRI O OI
OII OIS ORLY
RYL SYMC TER
TRN TSO TTEK
URI V VALE
VAR VR WLL
WPI WSH XRAY
Good luck today.
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
Joseph R. McCandless- Managing Partner
D. Timothy Seaquist- Managing Partner
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