A few days ago, just ahead of the weekly oil inventory numbers, somebody asked me what I thought the data would be. My immediate answer the more I thought about it was one of the better instinctual responses I’ve given: “I am not an oil analyst. I cannot begin to guess what the data will be.” Basically, if I am to make it in this business, I have to play to my strengths and recognize my weaknesses. Thus, if I don’t read through reams of data and I’m not on the phone all day long studying oil, shipping, and production, how in the world am I to begin to hazard a guess as to whether there was an oil inventory build-up or drawdown in any given weak? My only idea off the top of my head was this “Well, XOM is trading near a high of the day with oil down $2.50 or so a barrel right now. Thus, if the data comes out poorly and XOM fails to sell off, it’s likely a buy at a new high.” When one puts all of this together, it leads to one major point: as day traders, we are largely reactive to news rather than proactive. SINA reports their earnings tonight; if I cannot give a detailed description of their business off of the top of my head, how am I supposed to know what their earnings will be much less how the stock will react to the news before I actually watch the action? However, if SINA were to report earnings which missed the expectations of the analysts who actually study SINA for a living and the stock opens lower, I know I’ll buy the stock if it gets positive on the after-hours session because the stock didn’t decline on negative news. This makes me distinctly reactive. Thus, as you go about your trading day, the best way to work is to not have an intellectual discussion as to why the price of widgets is going up or down, but wait for the development to occur and trade off of it based on what you see on your screen rather than what you think should or should not be.
Watch list:
11162009Eriklist.zip
Markets in Asia were strong overall overnight with Hong Kong up 1.5%. European bourses are strong as well- about 1 1/4 % on average. Bonds are strong, the dollar is weak, metals and oil are strong… all systems go for an extension of the carry trade. This is leading to nice gains for the futures. Barring a dollar reversal today, there is absolutely no reason for anything to change. The focus should be on the relative strength plays (i.e. the stocks acting much stronger or weaker than the markets) and the microcaps with a number of small stocks trading higher.
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
RUE- closed near a high on its debut as an IPO
NLST- ramped higher for a 2nd day in closing near a high post-introduction of its 16GB, 2 Virtual Rank memory module
NANO- closed near a high after receiving more metrology orders for high-brightness LEDs
ANF- closed near a high after posting good earnings on Thursday night
URS-closed near a high after posting good earnings on Thursday night
IOC- closed near a high after announcing positive data from one of its oil wells
ZOOM- closed near a high
CSIQ, TSL- closed near a high in a strong solar group
CLF- closed near a high
CRM- closed near a high
ESE- island reversal after posting dismal earnings
PBR- decent earnings
SVA- received purchase order from Shanghai government to supply hepatitis A vaccine Healive to the Shanghai citizenry
NABI- announced licensing agreement with Glaxo for NicVAX
ABT- reported positive statement on its Arbiter 6 study; MRK could lose ground on this
C- hedge fund manager John Paulson announced a stake in the company
LVS- announced it hoped to generate 30% of its Macau revenue from non-Chinese customers after 2011 upon opening a new complex in Macau’s Cotai area
IDSA- decent earnings
PRX- received final approval to market generic Ultram ER
DVN- announced plan to reposition company as high-growth onshore North American exploration and production entity, i.e. they will divest itself of all Gulf of Mexico and international assets
ITW- upped 4th quarter revenue guidance
Bad-The following stocks have bad news and/or a weak technical pattern
AONE- closed near a low on a follow-through move following disappointing earnings last Tuesday night
IGS- received complete response letter from FDA on anthrax treatment relating to HGSI’s biologics license application meaning the FDA needs more information to process the application
LOW- poor earnings guidance
PARD- pivotal phase III trial of Picoplatin in small cell lung cancer did not meet primary endpoint
Earnings:
MON NOV 16 BEFORE
LOW PWRD
SOL SVA
MON NOV 16 AFTER
AGO LFT PSUN
SINA ZOOM
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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