During my many years trading, I have sadly bared witness to many individuals blowing their stock account up. Usually, this is due to various things from refusing to exit stocks that were going against them to doubling down in bad positions to being entirely unprepared for work to increasing trade size when things weren’t going well in an effort to get it all back. On an intra-day basis, I have one solution. It sounds so simple, but so hard to do at the time yet has likely saved me from turning bad days to unfathomably horrible sessions. The seemingly simple advice: well, it’s not to just stop trading at random, but to have a set number at which you will stop- no matter what- and here’s the tricky part- stick to the number! See, when things go really wrong, they tend to snowball rapidly. A good friend of mine once told me that it is so much easier to destroy things than to build them up; the north and south towers of the World Trade Center complex took five years to build, but were destroyed in one horrible morning in a matter of a couple of hours. Sorry for the terrible analogy, but I am really trying to drive home a point: what can take several months and even years to earn can be lost in a matter of hours. Thus, if you mentally pretend your account is at zero at your mental stop loss number, you cannot lose any more than that number. No trader can only have good days; it is however a matter of making the best of the bad days by containing financial damage which builds staying power of the finest traders.
Markets in Asia were down Monday morning about 1% with Europe up about 0.5% on merger news. Last night, Hong Kong recouped most of Monday’s losses while Tokyo was down another 1% on news of the imminent bankruptcy filing of Japan Airlines. Prices in Europe are giving back a chunk of the ground earned on Monday. Gold is up slightly, oil down slightly, and the dollar is notably stronger against the euro. Futures are marginally higher. As earnings season kicks into gear, news flow is notably up but the markets are churning. Look for a choppy session off of Friday’s weakness, but a slight upside bias. Focus on the companies with earnings as well as the microcaps.
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
PFSW- closed near a high after launching an eStore with Procter & Gamble
IDC- closed near a high after announcing it was looking at strategic options
CPY- closed near a high
LEAP- closed near a high
TRA- closed near a high after CF withdrew takeover offer
CCME- closed near a high
MAPP- closed near a high
ASPS- mentioned on “Mad Money” Friday night
TYC, CFL- TYC buying CFL for 42.50 in cash
ADG- being acquired for 7.25 in cash
GNVC- announced collaboration agreement with NVS
X- upgraded by Deutsche Bank
CIEN- upgraded by Credit Suisse
PH- great earnings
NLST- granted two additional hypercloud technology patents
Bad-The following stocks have bad news and/or a weak technical pattern
CF- island reversal in closing near a low after withdrawing offer for TRA
AGU- closed near a low as it may actually look to buy CF
AAPL, AMZN- closed near lows
MON- closed near a low
BIDU- chief technology officer resigned
EDU- poor earnings
AMTD- poor earnings
KFT- raised bid for Cadbury
Earnings:
TUES JAN 19 BEFORE
AMTD C EDU
FAST FHN FRX
MMR PH
TUES JAN 19 AFTER
CREE CSX IBM
PPDI
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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