On Thursday afternoon the 15th, there was a lot of chatter of Grainger (GWW) as a buy thru 96 around 3PM ET. One person in our chat room noted that there was no volume in it. The response to that comment was “see that regarding the volume, but still keeps going.” These two comments show the underlying difference between a proper trading mentality and a proper investing mentality. Focusing on the latter comment first – if one is a long-term investor, it is true that volume does not matter. If the stock is going up and has broken no significant channels, the level of activity does not matter all that much at any given moment at any given level. However, this is the polar opposite sentiment one must have in order to be a day trader. When one enters a trade, one must know where one is wrong…not where one is right. Let the market dictate where you are right. For instance, if I bought 3,000 GWW at 96 and it streaked to 96.20 and stopped, I’d look to take half off as rapidly as I can as efficiently as possible. However, when I enter a trade, I do have the confidence in it to think I’ll be right but by the same token, I’d like to be able to exit rapidly if I am wrong. In the previous five minute bar, GWW had traded in a 23 cent range but only on 20,000 shares. What that told me was that if I have 3,000 shares (or even a small 1,000), it is highly possible if not likely that I could lose a lot of money very fast (at least $300) if a 96 offer failed to move. Indeed after hitting 95.99, the stock fell 36 cents in four minutes. So, when you are looking at a trade set-up, be well aware of where you are wrong rather than where you are right when you enter the trade else you will be shocked at how big your losses can be due to a lack of mental preparation.
Markets overnight were mixed in Asia with the Nikkei down just under ¼ percent but the Hang Seng was up 1%. In Europe, the bourses were up about 1% average; they were lower before Wall Street bounced Friday afternoon post-Europe close so it’s a little catch-up. Oil, gold, bonds, and the dollar are all little changed. Futures are up mildly on the heels of Europe’s gains plus a little mini-reversal of options expiration activity. Overall, look for a fairly quiet Monday (unlike 22 years ago today) with the focus on stocks in the news and those releasing earnings.
Watch list:
10192009Eriklist.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
USEG, ROYL, HUSA- among the small cap energy stocks closed near a high
CRIC- had a decent day as an IPO; closed near a high
COGT, ARMH- mentioned positively on “Mad Money” on Friday night
HRS- closed near a high after being awarded a $400 million plus Army contract
ICE- closed near a high
CYT- closed near a high after issuing positive earnings guidance
TLCR- received FDA approval for Proloastin-C
HGSI- received $75 million milestone payment from NVS for Zalbin
CMED- got China OK for SPR System
ETN- good earnings
HAS- decent earnings
GCI- decent earnings
RNN- positive study results for depression treatment
TRBN- positive phase 2b TRU-015 study
Bad-The following stocks have bad news and/or a weak technical pattern
LEAP- closed at another new trend low
AAPL- mentioned negatively on “Mad Money;” if it trades higher early Monday morning, will likely be trade of day thru unchanged
IDCC- U.S. Int’l. Trade Commission found no violation of NOK infringing on an IDCC patent
MMR- poor earnings
WFT- in-line earnings; was up over a dollar on Friday night
PETS- in-line earnings
ENDP- negative FDA regulatory status update of Foresta
Earnings:
MON OCT 19 BEFORE
BBT ETN GAP
GCI HAS WFT
WFT
MON OCT 19 AFTER
AAPL ATHR BSX
JEF LNCR MMR
PKG STLD SWI
TXN UDR VLTR
ZION
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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