Whenever I found myself somewhat unprepared for a pop quiz (i.e. it was more important to win that extra game of basketball the night before than to read that extra chapter of Cost Accounting) in college and somehow came out of it unscathed by earning a “B” or higher, I felt a surge of energy. Usually, I’d take it as dodging a bullet and knew with utmost confidence that as long as I was prepared for the major exams, I was going to be fine and earn an “A” in the class. Well, particularly after yesterday’s performance, only one word came to mind: “impressive.” Overnight on Sunday night, the proverbial kitchen sink was thrown at the market as much as it has been in the last six months. The Asian markets were down hard, the dollar was falling anew against the yen, there was the beginning of the spectre of a Chinese-American trade war, the markets have technically been overbought according to many people, and futures indicated a 100 point Dow decline at one point. At worst, the Dow was down about 70 yesterday and every major benchmark average finished higher with the NASDAQ and S&P 500 both up about ½%. That was some pop quiz that the markets passed. Now, just as I indicated that the dollar-gold relationship may not cause the markets to tumble immediately, I am also not saying that the markets are off to the races shortly as I am a day trader and not a market forecaster. But yesterday’s performance re-taught us two lessons. First, one must pay attention to the newsflow but equally as important how the market reacts to the news flow. Second, if indeed the market keeps performing as it did yesterday and money managers continue to trail the market averages overall this year, we could have some impressive year-end rally. More relevantly to us day traders, there will likely be some stunning intra-day moves if this market keeps up (ala ZOOM’s 200% plus gain yesterday). So, keep your eyes open and be ready for these zany moves because just because ZOOM was up 6 points when it hit 10, it did not mean it couldn’t be up 10 at 14…and this type of phenomenon may well continue to happen if the market continues to act as it is.
Markets throughout the world were lightly mixed overnight with every major average within 1/3% of unchanged. Oil is up about 1%, gold flat, the dollar up a bit, and bonds a tinge lower. There was positive retail sales and PPI data this morning which has propelled futures marginally higher. It looks like another relatively stagnant day of trading today with prices on both sides of unchanged. But there remains an undeniable bid underneath the market so things should maintain the positive bias and focus upon the microcaps and news-centric stocks.
Watch list:
09152009Eriklist.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
ZOOM- exploded after announced better than expected earnings results from its acquisition target- Gold Lion
AIG- closed near a high
AUXL- closed near a high after the FDA indicated AUXL’s Xiaflex is effective
DNDN- up on takeover rumors with SNY the likely acquirer
PCX, BTU- closed near a high in a strong coal sector
HGSI- closed near a high amid vague takeover rumors
LZ- pre-announced earnings to the upside
ARG- on “Mad Money” last night
WXCO- closed near a high
MSO- signed a deal with Home Depot
LXRX- completed phase 1 trial of its LX4211 diabetes drug
BCRX- announced Peramivir partnerships with several foreign partners
CYTK- positive phase IIa data for its heart product candidates
AIM- good earnings
CBRL- good earnings
Bad-The following stocks have bad news and/or a weak technical pattern
CUZ- share offering
GNW- share offering yet stock trading higher pre-open…rumors of an upgrade, but no confirmation as of this writing
BRNC- island reversal
BBY- missed earnings on quarter; guiding a tinge lower for the year
Earnings:
TUES SEP 15 BEFORE
BBY CBRL KR
TUES SEP 15 AFTER
ADBE
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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