WED. OCT. 14- Optimization

On Thursday the 8th, someone called out a prospective trade of Linn Energy (LINE) around 3:15PM on our chatroom. For those that do not remember or know, LINE commenced a stock offering early last week and the stock grudgingly moved higher once the overhang was gone. The individual thought he could get maybe “10 cents” in it. Now, while I credit that person for pretty good chart recognition, this is a perfect case for another reason I won’t trade stocks in which I don’t think I can make at least 20 cents easily. Of course, the main reason is that I for one tend to lose in those situations because I feel that I need to acquire more shares to make it worth my while. Inevitably, when the stocks don’t move immediately, I exit and lose. But there’s another element these types of trade cost: time. When I am studying a situation such as that one in LINE, it certainly keeps me distracted. I am so jazzed up to buy a sizable position that I stop looking at everything else in waiting for that precise entry. Thus, my eyes wait for that aforementioned entrance…while there are better trades to be had. Basically, it is trying to force the action instead of letting it come to me. Not only do I tend to lose in that one huge position time and again as has happened so very often in the past, I miss out on other trades. Do the math: a small to medium loss while missing other good trades. Not a good calculation if one is trying to earn a living. So, realize that you’ve (and “you’ve” means “I’ve” as well as I learned finally about three years ago after 10 plus years of day trading) got to wait patiently for the optimal set-ups rather than some of the weaker ones…the poorer set-ups tend to not only result in frustrating (small) losses, they keep you from doing the trades you should be doing.

Markets overnight were ahead throughout the world from 1% in Hong Kong to 1 ½% average throughout Europe. Oil is at a 2009 high, up 1% with gold and the dollar down slightly. Futures are sharply ahead on the heel of strength in INTC and JPM. There’s no major reason to look for that to change other than a ‘buy the rumor, sell the news’ tenet which does no seem to be present this morning as the earnings reports from both companies were fantastic. Look to trade the stocks with earnings out as well as stocks in the corresponding sectors.


Watch list:
10142009Eriklist.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

OPTT- closed a bit off a high but up sharply after it signed a commercial services agreement with LMT to develop OPT’s wave energy systems for use in future utility-scale power generation projects

CSX- decent earnings

ALTR- good earnings

GPI- pre-announced strong earnings

ININ- closed near a high after issuing positive earnings guidance

CNO- plans to sell stock and notes, but issued warrants to Paulson & Co with a $6.50 exercise price

LLTC- decent earnings

MYRX- announced the development of an investigational new drug for the treatment of cancer, diabetes, and obesity

CIEN, TKLC, CSCO, NICE, DECK- on “Mad Money” last night

AMD, NVDA, SMH- may move in sympathy with INTC among many others in semiconductor sector

TRIT- closed near high of day

LVS- announced IPO of Macau division

ASML- good earnings

HST- decent earnings

JPM- good earnings

PKX- decent earnings

ABT- decent earnings

GWW- good earnings


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

HIG- among the weak life insurers closing near a low

BMTI- announced disappointing top line data from its Augment Bone Trial

RA- horrible IPO; closed near low of day

LEAP- closed at a new trend low

CSIQ-decent earnings guidance, but also announced share offering





Earnings:


WED OCT 14 BEFORE

ABT ADTN ASML

GWW HST JPM

PKX

WED OCT 14 AFTER

CCK LSTR XLNX


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