A few weeks ago, something happened which continues to stick out in my mind even after a couple of months. On the blog, I set up a scenario for the day in which I indicated a likelihood of the markets holding fairly well over the course of the day. I discussed this a bit on the morning call as well. A colleague came on the call and very politely ignored everything I had to say in which he set up a completely opposite scenario. I then reiterated my view and went onto a list of stocks (in which I made significant money from re the trade ideas from the list that day). Yet he could not have been more right and I could not have been more wrong in how the overall market played out that day as the market had a massive intra-day reversal in closing on its lows that afternoon. As embarrassed that I am that it happened, one gleaming glaring positive came from it. I realized that it just doesn’t matter. As traders, we all have different styles of trading and hopefully come into the trading day with ideas. From the watch list which hosts a myriad of ideas, I know if A does B, I will do C. Yet, the major point here is that if A does D, I know I’ll do E. I go into each day with what I call a flexible plan. Thus, if the market changes, I change with it. If I see the market is not acting as I thought it would, I switch to my short ideas. The thing to take away from this is that adaptability is a key ingredient to being a successful trader. If you get a thought in your head and stubbornly stick with it even if it is quite wrong, you’ll lose. And losing is bad. So, as vociferous as your thinking and views may be, it is meaningless if the market says otherwise- your brain may give you incorrect the information, but the market is the real answer and one that must be obeyed at that.
Markets in Asia were mixed. Tokyo traded ahead 0.8%. But then China made more credit tightening measures readily apparent to the market by ordering its banks to raise deposit reserves in attempting to rein in their raging economy. Thus, Hong Kong was down about 0.6% and Europe is down over 1.5% on average. Oil is notably down as well as is the dollar with bonds stronger. On the heels of this news plus AA’s poor earnings, futures are sharply lower state-side today. This is one day when it doesn’t seem that the markets are going to recover. I wouldn’t look for a major exacerbation of the selling pressure (although it is possible) as companies with good news are seeing rises in their stock prices (i.E. HIG) so look for another very difficult day to trade with a focus on stocks n the news and materials stocks.
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
PVH- good earnings in raising guidance
ELX- raised earnings guidance
BLDP- announced sale of fuel cell power modules to Advanced Public Transportation Systems bv in Europe
SEED- closed on a high after Fidelity announced it had taken a 13% stake in SEED
MMR, EXXI- closed near a high after a major Gulf of Mexico petroleum find
AMAG- closed near a high after raising revenue guidance
TK- closed near a high
MAPP- closed near a high after the FDA announced no 2nd study for MAPP’s migraine current study is needed
CHNR- closed near a high
WFMI- closed near a high
JCI- mentioned on “Mad Money” last night
SCLN- announced positive preliminary results with Sigma-Tau re Zadaxin’s ability to enhance response to H1N1 vaccine
STXS- the FDA approved the usage of the RMT ThermoCool catheter with STXS’s magnetic navigation system for the treatment of Type 1 aerial flutter
VICL- licensee AnGes MG reaches agreement with the FDA for phase 3 trial of Collategene angiogenesis product
DSW- pre-announced decent earnings
INFY- good earnings
MGM- upgraded by Goldman Sachs
TIF- boosted earnings guidance
SVU- decent earnings
HIG- raised earnings guidance
Bad-The following stocks have bad news and/or a weak technical pattern
ERTS- terrible earnings warning
CRM- notes offering
MFLX- terrible earnings warning
HT- stock offering
OEH- stock offering
FMX- closed near a low after selling a unit to Heineken
MED- closed near a low
X, AKS- among the major steel stocks closing near a low
AA-terrible earnings
NLST- share offering
CVX- sees 4Q earnings lower than 3Q
REXX- stock offering
MOH- warned on earnings outlook
KBH- poor earnings
Earnings:
TUES JAN 12 BEFORE
GAP INFY KBH
SVU
TUES JAN 12 AFTER
LLTC
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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