On Tuesday, there were a number of good trades to be had. However, while I am proud for properly taking on many of the plays during that trading session, I am ashamed for missing one of the finer quick hits of the day. I fell into a trap that is so easy for all of us to fall victim to- the dreaded level II scourge. Sometimes, despite having a well thought-out plan with everything going one’s way in terms of technicals and fundamentals, one can stare at their level II screen and scare himself/herself out of something great. Such was the case with shares of A Power Energy (APWR) on Tuesday. Before the open, the company announced it had signed a licensing agreement with a fairly major Chinese developmental wind turbine entity which gave APWR the exclusive right to manufacture, operate, and service wind turbines in China and The U.S. effective immediately. APWR rallied to 18.95, up a bit over a dollar by 10:40AM ET. For the next two hours, it traded in a very narrow range yet held just below its high. The lower band kept creeping up as well so as to make the whole thing look like a flag on a chart whereby there was a 5-7 cent range for an extended period of time. Thus, I know if I was short and the stock took out its old high, I’d sure be scared. As the stock went 18.95 offer (finally matching its high of the day), I had my hand on the buy button ready to purchase several thousand shares. Then as it ticked 18.93 and 18.94, offers came in and pulsated in and out at 18.95. Despite the fact I knew the worst I was going to do was lose about five cents due to the narrow range, I withdrew my hand from my mouse. I then had the distinct pleasure of watching the stock rally 27 cents. Thus, while the level II is a definite tool to utilize, don’t let it override everything else because many times, you’ll miss out on something really special.
Markets in Asia were down about 0.6.% on average after China initiated steps to tighten credit putting seeds of worry in the heads of people like Chinese real estate speculators. Markets in Europe are down about 1/3% on average. Gold and oil are a bit weaker with the dollar notably stronger. Futures are down slightly. It’s just not a good set-up overall for equities yet there’s no real pressure. Look for a near repeat of yesterday with prices not far from unchanged despite some movers within the averages. There are divergences everywhere; AAPL and BAC are up as of this writing with things like AIG down. The retail sector is a true potpourri of individualism. Not an easy day as things likely will remain range-bound overall so be careful.
Reiterating-
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
VVUS- hosting conference call this morning regarding its positive Qnexa phase II results
BBBY- great earnings
ZUMZ- boosted earnings guidance significantly
RUE- boosted earnings guidance
SHAW- good earnings
BMTI- strengthened rhPDGF-BB supply agreement with NVS
POT, MON, MOS- sector staged a nice rebound after MON/MOS issued poor earnings
WOR- closed near a high after posting great earnings
X, FCX- among metals stocks closing near highs
SOLF- closed at its high
CIT- closed at a new all-time high
WBSN- decent earnings
ASEI- closed near a high after being featured on two CNBC shows on Tuesday night
USEG- closed near a high after announcing positive oil well data
CBLI- closed near a high after receiving a patent for a radiation protection drug
DLTR- closed on a high
RODM- closed near a high
INSP- decent earnings
ENER- mentioned positively on “Fast Money” last night
LEN- good earnings
LTD- better-than-expected same-store sales data
YMI, GNVC- upgraded at Roth with a 6 target on YMI and 4 on GNVC
M- positive retail guidance
ARO- positive retail guidance
TJX- positive retail guidance
OSIS- signed 10 year agreement with the Port Authority of Puerto Rico
KSS- positive retail guidance
SHLD- positive retail guidance
JWN- positive retail guidance
ROST - positive retail guidance
TGT- positive retail guidance
BAC- upgraded by Credit Suisse
Bad-The following stocks have bad news and/or a weak technical pattern
TSRA- revenue warning
SMSC- lukewarm earnings
RECN- poor earnings
ID- poor earnings
IVR- share offering
ZGEN- share offering
AAPL, GOOG- closed near intra-day lows
SONC- closed on a low after issuing poor earnings
LEAP- closed near a low after negative comments from Goldman Sachs
CBK- poor earnings
AIG- supposedly, Treasury Secretary Geithner asked AIG to withhold details about certain transactions from the public
GYMB- poor retail guidance
ANF- poor retail guidance
GME- poor retail guidance
JCP- poor retail guidance
Earnings:
THURS JAN 7 BEFORE
LEN STZ
THURS JAN 7 AFTER
APOL CRI GPN
I.HS SCHN
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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