FRI. OCT. 9- Trading Away...

Let me preface this by noting that I am not a conspiracy theorist. There…I’m sure that beginning got your attention. But there is one market behavior very prevalent in the late 1990’s in particular that seems to indicate movement. In this roaring bull market of 2009, it is slowly beginning to make a comeback. There’s no name for it so I’ll make one up – “the trade-away.” Now, we sometimes see really bizarre prints on our charts. For instance, with PPD trading in the low 40’s on Tuesday, there was a trade down to 23 (since cancelled/busted). But yesterday featured a true example of the phenomenon. After stagnating for about two hours between 23 and 23.30, AONE broke to about 22.80 and got stuck. Suddenly, in one second, it printed 22.50 although the level II never really moved all that much. Oftentimes, what occurred in the late ‘90’s (you can draw your own inference if it was intentional) was that a stock would ‘trade away’ a significant amount. Then, what generally happened in that frenzied time is that someone would glance at the stock a few minutes later and think that the stock truly traded higher than it did (i.e. just off of a high). So, they’d buy a little which would spark more buying and it became self-fulfilling. Well, at 2:08PM ET yesterday, AONE ticked at 22.50. It did not trade below 22.75 for another 16 minutes. Guess where it went and paused. If you said, 22.51 at 2:28PM, you win a nifty silver dollar. This type of action- although rare in this more modern electronic day trading era- still can happen. So, be cognizant of the trade-away when and if it does occur because it just may give you a target for your trade- at a minimum, it can give you a good idea of where the stock can go.

Also, before I go forth:

As an addendum to yesterday’s piece, the credit discussed yesterday only applies to people with adjusted gross incomes of $150,000 or less. Also, there was an article in yesterday’s “New York Times” which posited that the worry may be overblown in that certain Congress members not only want to extend the credit, but they want to expand it. Thus, it shows how fluid things are and how rapidly they can change directions in spirits- and for the equity markets.


Markets in Asia were generally higher with Hong Kong up 1% and China having a catch-up rally of 4% after being closed for several days. The tone was weaker in Europe though with the bourses down fractionally. There’s a bit of an inverse to the trend in the external markets today with the dollar strong and gold weaker. The catalyst seems to be the Bernanke speech from last night in which he gave no clear path for an exit, yet also issued some comments in support of a strong dollar. Thus, futures are moderately lower today. With GS and AAPL weak yesterday, it was a caution light. Look for a choppier day today albeit a quiet one with a slight downside bias. Focus on the microcaps and largely keep powder dry in order to be mentally ready for a huge upcoming earnings season.


Watch list:
10092009Eriklist.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

CRNT- closed near a high after a brokerage upgrade

KSS- closed near a high after issuing positive retail data

HTZ- mentioned positively on “Mad Money” last night

THLD- positive data from a phase ½ trial of TH-302 at a melanoma conference

LIZ- closed near a high after inking a deal with JCP

TXIC- closed near a high after securing a manufacturing contract

UTA- closed near a high

CAGC- boosted earnings guidance

RIMM- upgraded at Baird

SCIL- boosted earnings guidance significantly

AVNR- positive phase III data over the high dosage of Zenvia

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

NCR- closed near a low after the CFO resigned

HOGS- share offering

AONE- closed near a low

AIG- closed near a low

AAPL, GS- closed near a low; disturbing that the leaders of two major sectors closed weak

VRSK- closed near a low

CAR, DTG- both mentioned negatively on “Mad Money” last night, particularly DTG

NUE- CEO gave an interview focused on jobs on “Mad Money” last night as he is clearly worried about a ‘jobless’ recovery

LAD- closed near a low…and then priced its 4 million share offering at 10 after the close

ELGX- closed near a low on a patent lawsuit; the company issued a statement after the close which implies it is a fruitless lawsuit

PAY- closed near a low

ACOR- poor commentary from the FDA re ACOR’s Fampridine

INFY- poor earnings

SPPI- poor Fusilev data









Earnings:

FRI OCT 9 BEFORE

INFY



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