What one does not do trading-wise is every bit as important as what one routinely does. Re-read that because it took me five minutes to think of the proper way to type it and I want to make sure everyone understands it. The best way to describe it is to go over a day like Friday. I did my first trade on Friday morning at 7:08AM because GE got positive after initially trading lower on its earnings. I bought MCD just after the open as it crossed into positive ground after trading negative most of the morning on earnings. I shorted AXP several minutes later at the day’s low as it happened to be Thursday afternoon’s post-close low and with the markets selling off, I felt if it breached that level, a new wave of selling pressure would be unleashed. I bought CLF just after 11AM because it was nearing a high of the day as the market tried to get positive; CLF had been beaten down and was reversing nicely. Now, here’s what I did NOT do: inclusive of a 20 minute Internet outage, I did not make a single trade for the next 45 minutes because I needed to re-gain a rhythm following losing connectivity and the market was in a general range in which it was chopping around aimlessly. When SLB got to a low of 65.50 and bounced several times a couple hours later, I did not short it at 65.50 in hoping it’d break through which would have resulted in me losing money small several times. I did not short WDC aggressively at any point during the day because I couldn’t comprehend the breadth of its decline. Because I couldn’t mentally accept it, while I did short it small, I simply stayed away from it for the most part in focusing instead on the thousands of other stocks available to me. Finally, when I wasn’t sure as to what the market was going to do at any given time, I did things like take quick walks to get some air. Yesterday, when I took five small losses in a row between 12PM and 1PM (totaling only $100 or so), I realized I did not have a rhythm because the market was going nowhere and I pulled in my reins until things got great again about 5:30PM last night. Trading has gotten very busy again these last few days. Combined with earnings season, this is the type of period that one needs to earn their keep as a trader. There are so many times when it is slow; well, when it’s not besides the obvious of getting to work a little earlier and staying a little later, it may not be so obvious to know what not to do. Thus, if you find yourself unsure of something, if you find that you didn’t read up on a company’s earnings but want to trade its stock, if you notice stock prices are jiggling and you want to guess as to the direction of the next move, or if you find yourself taken aback by something much less in an emotional stupor, don’t trade for a few minutes. There are opportunities out there right now; hit them for what you can…but do not do something unless totally ready from every vantage point as the type of string I was putting together just after noon yesterday are the plays in this environment that take away everything and more from what should be your increased number and depth of winning trades.
Markets in Asia were hit very hard overnight as China sought to put more lending restrictions on their banking sector with both Tokyo and Hong Kong settling down 2%. AAPL, however, is stabilizing things in Europe as the stock is trading ahead sharply. Te European bourses are down about ¼% on average. The dollar is trading down against the yen, but up against the euro. Gold and oil are both down a bit. Futures are mixed with the S&P’s down a couple of handles but the NASDAQ up slightly. Today is a day to focus on earnings as it will be a very news-sensitive session. The broader market makes me a bit nervous; admittedly, AAPL is holding things together but the backdrop just isn’t great. With several Dow components reporting earnings today, it is very much a session to focus on the S&P/broader market when getting a feel for where things are. The market likely gives a little bit as the day goes on, but again, focus upon the earnings stocks and any relative strength play.
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
AAPL- decent earnings
VMW- fantastic earnings
AMGN- decent earnings
ZION- decent earnings
MTXX- decent earnings
EMC- decent earnings
TRV- great earnings
GLW- decent earnings
AMLN/ALKS- upgraded and trading higher on news NVO got approved for a drug which AMLN/ALKS makes the generic version of
BHI- good earnings
BTU- good earnings
Bad-The following stocks have bad news and/or a weak technical pattern
TXN- beat earnings slightly, but missed on revenues
ZRAN- poor earnings
ATHR- poor earnings
PKG- poor earnings
RINO- reversed from Friday’s deal news in closing near a low
WBD- closed near a low after a brokerage downgrade
ETN- closed near a low after posting earnings
WFT- poor earnings
DAL- poor earnings
JNJ- lukewarm earnings
X – bad earnings
Earnings:
TUES JAN 26 BEFORE
ABC ASH BHI
BTU CBE CVG
DAL DD EMC
ENR FMER FPL
GLW GWW JEC
JNJ KCI KRC
MHP MTG NUE
RF RYN SHW
TLAB TRV VZ
WFT X
TUES JAN 26 AFTER
ALTR BXP CNI
DV ELY GILD
IDTI MCK MOLX
MTH NAL PLT
PMTC PTV QLGC
SANM STM SYK
TPX WMS YHOO
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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