Perhaps it's just because I heard a fascinating factoid about the Peanuts cartoonist- the character Lucy was a representation of his first wife while the "Little Red-Haired Girl" was a woman whom he fell in love with and planned to propose marriage. For those not familiar with the cartoon, Lucy was well known for being, um, not nice/prissy/other words which cannot be published on a financial blog. Her most famous schtick occurred on wonderful autumn days when she'd hold a football for Charlie Brown, encourage him to kick it, and then she'd pull it away at the last second causing poor Charlie Brown to go flying after running at full speed while trying to kick a ball. Quite a gal, ain't she? I absolutely could not help but think of Lucy late Friday morning in the trading world. As discussed in Friday's piece and on Friday's morning call, the presence of the Yankees parade in downtown Manhattan simply paralyzed market activity as many traders showed up for work early, but left for the parade as soon as they could. Stocks traded in an extremely tight range from about 10:30AM-onward as the parade and ceremonies did not end until early afternoon and really, who wants to go back to work on a Friday afternoon after a busy week and a good parade? So let's go back to Lucy. After what was an admittedly frustrating trading morning for me in not getting the moves in stocks I've come to almost expect, I at least did not fall into the trap of trading when there was nothing going on. What typically happens when stocks are at an equilibrium and traders are overaggressive is that these people enter and exit on minute movement and routinely lose. I mean, if the stocks are trading in 5-15 cent ranges and the things aren't going to go one's way immediately, why should one be in the situation/stock in which a move happens to occur? Thus, trades are made which result in 1-3 cent losses time and time and time again. The set-ups are there for Lucy to hold the football for day traders and thus scalpers act as Charlie Brown in failing to kick the ball repeatedly. When there is nothing to do, do not do it. This is important not just for Friday, but also because trading activity will trend down for the duration of the year as we approach the holidays. Maximize your trades when there are things to do, but please for your financial health- don't keep trying to kick a football you'll never be able to kick when things are very slow. Markets do go up and markets do go down...but markets can also do nothing.
Markets overseas were sharply higher overnight with Hong Kong up 1.5% along with the average bourse in Europe. Oil and gold are both way higher while the dollar is significantly weaker against the euro. The carry trade is in full effect at the moment. For the day today, look for the strength to hold unless the dollar strengthens (and there does not seem to be a major impetus for it to do so). Trading will be slower than last week as the newsflow is less and the weather is beautiful. So, focus upon only the best set-ups in a few of the earnings plays and stocks in the news (healthcare for instance) otherwise tread carefully.
Watch list:
11092009Eriklist.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
VRSN- island reversal to the upside after posting bad earnings
TRGT, EXEL- featured on “Mad Money” Friday night
RSH- will begin carrying AAPL’s iPhones in selected stores
OMG- closed near a high on good earnings
MFW- closed near a high on good earnings
STRI- rallied sharply into the close (except for last minute or two) on its first day as an IPO
EXLS- closed near a high on good earnings
DISH- decent earnings
FUQI- great earnings
KWK- decent earnings
TSO- decent earnings
Bad-The following stocks have bad news and/or a weak technical pattern
GOK- closed near a low after posting terrible earnings
STEC- closed near a low again after Wednesday's horrible earnings
DYP- closed on a low on its first day as an IPO
OSTE- closed near a low after posting bad earnings
RRGB- closed on a low after posting bad earnings
NAT- poor earnings
UNH- among the healthcare stocks likely to be weak at the outset anyway on the passage of the healthcare plan in the House on Saturday night
Earnings:
MON NOV 9 BEFORE
CRZO DISH ENER
FUQI KWK LINTA
NAT NHP ROK
SRZ TSO TTI
WIN WNR
MON NOV 9 AFTER
ARNA CLNE ERTS
FLR FRPT HEV
HMIN HOLX HR
MBI MDR MR
NTY PCLN SLXP
SOLR
Good luck today.Epiphany Trading, LLCwww.epiphanytrading.comErik R. Kolodny- Chief Markets Strategist Brendan P. Byrne- President Joseph R. McCandless- Managing PartnerD. Timothy Seaquist- Managing Partner
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