Perhaps this piece would have been better yesterday, but I did not think of the topic until yesterday afternoon. As I am surrounded by Yankees fans who were all obviously happy by their team's win, it occurred to me that the average New York trader who is a Yankees fan is more likely to be in a good mood on the day after a World Series win than, say, the day of the win as they are apprehensive of the team's performance. Because many of these people are the same folks who will be trading the next day, I became curious as to whether the market reflects the mood of Yankees fans the day after a World Series is over. I looked back at every World Series a New York team has played in since 1981 and this is what I found. On October 28, 1981, the Yankees lost the Series and the S&P 500 fell 0.33% the next day. The Mets were New York's team in 1986; the night after they won, the S&P 500 rallied 0.21%. In 1996, the Yankees won their first title in 18 years, but won on a Saturday night; the S&P 500 fell 0.53% on Monday. In 1998, the Yanks won it all with the S&P 500 up 0.80% the next day. In 1999, following a 2nd consecutive Yanks sweep, the S&P soared 3.53% the next day. In 2000, the Yanks won (against the Mets) with the S&P 500 up 1.11% the next day. In 2001, the Yanks were shocked with a comeback against ace closer Mariano Rivera yet a rally of 1.14% occurred the following session. In 2003, the Yankees lost on a Saturday night with the market up 0.21% the following Monday. So, after spending 20 minutes compiling this data, what I learned was this: there is no correlation between a World Series winner in Gotham and the market's performance the following day. The loss in 2001 was devastating yet the market shook it off. The mood was euphoric in 1996 yet the market declined a couple days later. So, basically, yes- people do live west of the Hudson River! Do not listen to any of the pundits who indicated otherwise yesterday as the raw empirical data proves that baseball and stocks don't mix. However, there is one distinct pattern that I did find- something very relevant to today- volume does indeed very much slow during a Ticker Tape parade (either for World Series winners or any other wonderful reason). For those that do not know, a parade is typically held in downtown Manhattan following a very happy occasion- whether it be local or national (whether it be the dedication of the Statue of Liberty in 1886 or the parades honoring Generals Eisenhower and Nimitz following the conclusion of World War II). Well, the average person (particularly Manhattanite) is much more likely to look out of a window at a minimum, not work during the commotion, or even join the parade rather than sit in front of a computer terminal. The parade today is scheduled for 11AM so trading will be busy early, but activity will rapidly slow late morning; be aware that illiquidity will become an issue...and if you're so lucky enough to get to go, enjoy the parade!
Markets overnight were up a bit in Asia from about 1/2% in Tokyo to just over 1% in Hong Kong. European markets were a little lower all morning, but pushed down hard following the release of the jobs report with prices down about 3/4% on average. Oil is down 1 1/2%, gold is up 3/4% in trading just shy of $1,100, and the dollar is a bit weaker. Futures are down following the release of a jobs report which showed unemployment now has breached 10%. Jobs lost in October were worse than expected, but the revisions were a net positive. For today, look for a gentle downside open. If there is no pressure into the open, look for a pretty quick and violent shrot covering blip. But those first few minutes are key for today. By 10:45AM, trading will likely slow down dramatically. Get your trading in early- particularly pre-open, don't get caught up in illiquidity later, and focus on the stocks in the news this morning unless things are heated early in which case trade the financial and tech sectors.
Watch list:
11062009Eriklist.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
SBUX- good earnings
ATVI- decent earnings
SWKS- decent earnings
NILE- great earnings
NVDA- great earnings
JDSU- good earnings
NWK- closed on a high
MELI- closed near a high after posting great earnings
DGIT- closed near a high after posting good earnings
FSYS- exploded higher in closing near a high after posting phenominal earnings
BCSI - closed near a high after posting great earnings
SAM- great earnings guidance
H- closed near a high in its successful IPO
ENOC- blew away earnings estimates
ALTH, DNDN, ONXX- featured on "Mad Money" last night
AMMD- closed near a high after posting great earnings
ROCK- closed near a high after posting great earnings
HBI- closed near a high
WYNN- closed near a high
AMZN-upgraded at Sanford Bernstein
Bad-The following stocks have bad news and/or a weak technical pattern
LEAP -missed earnings guidance, but reversed after-hours...certainly something to watch today; ideally, it will open lower and if so, it is a buy thru unchanged
HANS- terrible earnings
CROX- poor earnings
WFMI- closed near a low after posting bad earnings
RIMM- closed near a low despite announcing a stock buyback
THOR- island reversal after posting great earnings
ANDE- closed on a low after posting bad earnings
VRSN- bad earnings
SUN- poor earnings
JAZZ- poor earnings
SD- bad earnings
CSTR- bad earnings
ALKS- poor earnings
LMNX- closed near a low after posting bad earnings
KFT- featured in "Sell Block" segment of "Mad Money"
AIG- beat earnings, but warned of "continued volatility" in reported results in coming quarters
RAIL- bad earnings
Earnings:
FRI NOV 6 BEFORE
AIG BAM EIX
FIG MIR PMI
PRX
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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