Does anyone out there know what the #1 fear of the general populace is? Many people would respond with “death or mortality,” but it’s not. The number one fear is actually public speaking. Imagine- the average person fears giving a 2 ½ minute speech in front of a roomful of people over dying. I am sure there are good reasons for that, but I digress. In the same fashion, the worst fear of most day traders I personally asked is ‘losing money.’ That is a totally reasonable and logical answer. But it’s not my answer. My worst day trading fear has not been an issue for five years; however, it is something that stuck with me for the seven months I experienced and I’ve made reference to it plenty of times. Namely, what happens if you show up to trade and nothing happens? Part of it is seasonal to be certain. But a bigger part of it is that nobody is quite sure what to do next. We’ve had an amazing decline and a good snapback rally in the last year. And now? Major players aren’t sure whether the recovery takes so they don’t want to buy stocks. Yet, many of the same major players are either chasing performance and/or don’t want to sell for fear of missing out much less a ‘what if the worst is over’ concept is ingrained as well. So, one gets what tends to happen after a huge move followed by a major countermove at a holiday time- an extended period of nothingness on terrible volume. Things flatline because there is a tenuous equilibrium in the midst of a trading range in which things move much slower than they’d been moving not long prior. For a day trader, it makes earning a living much harder (although not impossible). It makes trade selection much more important and forces one to use quick stops in only picking the best trades- and exiting them rapidly if they do not work. Even more important, the pool of opportunities just is not present on days like yesterday (unless of course one is willing to hold stocks for longer than, say, 15 minutes). When there’s a dearth of newsflow and a lack of market volatility, it’s very difficult to create something out of nothing. So, I stress the absolute importance of not scalping and more broadly in realizing that this lack of volatility shall pass but while it is here (and it may be awhile), mentally note that if the markets as a whole are quieter, individualized trading activity should be as well.
Markets in Asia were solidly ahead overnight with Tokyo up 2/3%. Things are quieter in Europe with the bourses hovering around unchanged. Commodities are marginally higher with the dollar marginally weaker. This hodgepodge combined with yesterday’s latest 200 point Dow gain is resulting in slight losses for the futures. For today, look for a much narrower day than yesterday in much choppier trade. Focus on tech, homebuilders (due to BZH’s strong earnings), and all other stocks with earnings and newsflow.
Watch list:
11102009Eriklist.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
REV- closed near a high after restructuring its debt
TRW- closed near a high after Moody’s changed its debt rating on the company
TTI- closed near a high after posting good earnings
PCLN- great earnings
HMIN- great earnings
IBM- closed on a high
STT- among the financials closing on a high
DUF- mentioned positively on “Mad Money” last night
BZH- great earnings
FOSL- good earnings
JASO- good earnings
TYC- decent earnings
AIG- Moody’s indicated AIG should be able to repay the loan from the U.S. government
AVNR- announced positive data on the safety and efficacy of its Zenvia
Bad-The following stocks have bad news and/or a weak technical pattern
FUQI- closed near a low after posting earnings
CHNG- closed near a low after posting bad earnings
TA- closed near a low after posting bad earnings
MELA- closed near a low after posting bad earnings
CFSG- closed near a low after posting bad earnings
CCOI- closed near a low after posting bad earnings
SRZ- closed near a low after posting bad earnings
MBI- terrible earnings
ERTS- lowered guidance
FLR- bad earnings
SDTH- warned on earnings outlook
URI- notes offering
EPR- share offering
MR- poor earnings
HOLX- bad earnings
SQNM- negative conference call
VOD- bad earnings
Earnings:
TUES NOV 10 BEFORE
ARM BZH FOSL
HEW JASO TYC
VOD
TUES NOV 10 AFTER
ATO CLWR EM
RAH STV
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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