Something that many traders do not realize is that once one is in a trade, one must focus on the future of the trade rather than looking back. Sounds obvious and easy, right? Not so much. Let’s use a real life situation to get to my point. Pretend you have, say, two young daughters. You take said children on a trip to visit some friends 100 miles away. About 75 miles into the trip, you encounter the worst traffic jam you’ve ever seen. Your young kids (and older spouse) are screaming for the three hours you are stuck. You can wish all you want that you stayed home, but it doesn’t change the fact that you are immobilized in New York Thruway torture. Conversely, you get to your friend’s place in 1 ½ hours as there was no traffic, your favorite meal is waiting for you when you get there, and your children love your friend’s kids; it is a terrific outcome but one that could not have occurred had you stayed home. So it is in Tradingville. When I enter into a position, I don’t even look at where I entered it most of the time. Why? My entry price is not going to change my situation. If I paid 60.01 for RIMM and the stock is at 60 offer (and a refreshing one at that), should I let the fact that I have a two or three cent loss impede my judgment? Of course not. If I need to exit, I exit. Conversely, if it went to 60.05, my only decision in the stock is to watch for a pause and/or reversal in the stock to exit a piece of my position. Once again, what I paid for it has no bearing on my decision to exit. I exclusively base my decision on the future. There is actually another practical reason for all of this: when I look to see my fill, it distracts my attention from watching the stock performance in the here and now. How can I know what the stock is doing if I am taking time to be see where I entered? So, the bottom line is quite simple: when you enter into a position, focus on the future rather than what has already happened.
Markets overseas were quiet overall with prices up about 0.5% average in Asia and down ¼% on average in Europe. Gold is up 1%, oil down ½%, and the dollar quiet. This mish-mosh is leading to a very muted picture for futures. With no earnings of consequence out this morning and no major news, it’s a pretty difficult set-up today. Trade will likely be thin and in a narrow range with the bias to the upside. Focus on the microcaps on news and megacaps on relative strength plays otherwise stay on the sidelines.
Watch list:
12022009Eriklist.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
CAGC- closed near a high
AXU- closed near a high after announcing positive drill results
RDN- closed near a high
GES- closed near a high after posting good earnings
WHR- closed near a high after being featured on “Mad Money” on Monday
SNTS- FDA approved new drug application for Zegerid OTC capsules and received a milestone payment
DYAX- announced FDA approval of Kalbitor for treatment of hereditary angioedema in patients aged 16 and older
BIOF- closed near a high
TSTC- closed near a high
JOSB- decent earnings
GIII- good earnings
NVAX- positive H1N1 vaccine study
KERX- received FDA fast track designation for KRX-0401 for treatment of multiple myeloma
Bad-The following stocks have bad news and/or a weak technical pattern
AAPL- sold off late in day due to iPhone rumor re margin pressure; closed near a low
TRIT- closed near a low amid an island reversal
SEED- closed near a low amid an island reversal
PLX- closed near a low following announcement of its deal with PFE
IOC- island reversal after announcing positive Antelope-2 well flow
Earnings:
WED DEC 2 BEFORE
none
WED DEC 2 AFTER
ARO PSS SNPS
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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