On Friday, as I have at times in the past, I used the phrase “hyperspeed trading” a few times. I have not elaborated on this in awhile so let me do so here. Starting when I was about 10 years old all the way up to today, I noticed that many people refused to change with the times. Don’t get me wrong; I can be extraordinarily obstinate and stubborn at times. We all can be extraordinarily obstinate and stubborn at times. But let me elaborate. When I was 10 and I saw people refusing to watch anything but ABC, NBC, CBS, and PBS, I couldn’t understand. When I saw people when I was 15 saying that they’d never use a computer, I couldn’t understand. When I was 20 and I saw people refusing to use the Internet, I just didn’t get it. When I was 25 and I saw people refusing to accept day trading electronically as a viable way to earn a living, I couldn’t understand. Well, you know, it has always been the same with the stock market. The market is inevitably never static. Instead, it is a changing animal on a day-by-day basis. Certain methodologies tend to work over time (like my own, I’d hope!), but there are times that things become slightly modified and when one needs to change. Days like Friday are such times. There are two distinct differences in my trading. First is quite simple: everything becomes speeded up. The normal trades that I tend to do just become time compressed. Trades that I’d normally spend 1-2 minutes doing, I’d do in 10-30 seconds. For instance, on Friday when FCX took out the daily high, I bought the stock at 68.78 at 2:54:13PM. I was out of the first piece eight seconds later and completely out of the trade by 2:54:32PM. The second thing I do is that I employ relative strength a lot more. I wrote a novella about this last Monday (February 1 if you want to look at the archives). But basically whatever stocks are strong in a weak tape tend to stay strong overall and vice versa. So, I knew for instance when at 9:40:53AM, RIMM had gotten negative after opening up sharply with the S&P sharply negative but begin to rally, the odds of RIMM getting back to where it was (or at least being a leader in any immediate-term rally) were quite high. The shares I paid 66.19 for at that instant were pitched out between 66.35 and 66.40 by 9:42:41AM. In another example, I bought AMZN at 115.74 at 10:21:02AM, sold half of it 31 seconds later at 116.09 and sold it all the way up to 116.90 by 10:22:50AM. I do make it my best effort to put ostensibly everything I feel the group can do safely out there on the chatroom (as I did on all of the aforementioned examples), but if I know I am going to be in and out of something in six seconds for the safety of all involved, I do it quietly in trying to determine what the trends are so as to feel comfortable calling out things like the AMZN which moved over a dollar in 1 ½ minutes. But the take-away here is that one has to change with the times and traders have to change with the markets. On days like Friday, everything becomes very fast with the thinking on the normal methodology going from a goal of a profit in minutes to one of seconds all the while realizing the stocks that are relatively strong and relatively weak to the tape in trading those actively to get a true feel for the market action (and taking out quick profits)…and making the truly good trades such as the ones described above.
Markets in Asia were weak overnight with Hong Kong down just over 1/25 and Tokyo down a bit over 1%. Markets in Europe are rebounding a bit from their steep Friday declines with Paris up 1/3% and Germany up ¾%. The dollar is little changed with gold and oil up slightly. Equity futures are up marginally. Look for a much quieter day today than Friday with trading on both sides of unchanged. Trade relative strength plays almost exclusively and be very nimble particularly compared to Friday.
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
AMAG- after reversing intra-day, company issued a full statement clarifying the safety of its Feraheme in stating that the rates of side effects is as expected
AAPL, AMZN, RIMM- closed near intra-day highs
GS- closed near day’s high
TM- came back a bit in closing near day’s high
AVNW, CNK- featured positively on “Mad Money” on Friday night
X, AKS, NUE- nice reversal in the steels in closing near intra-day high
NEM, AEM, ABX- strong gold sector even with gold was down; all closed at or near day’s highs
SPG- closed near day’s high after posting good earnings
SNSS- announced it granted Carmot Therapetics an exclusive license to its FBLD technology
CIT- John Thain appointed CEO
CVS- good earnings
HAS- good earnings
CAGC- decent earnings
CFSG- good earnings
Bad-The following stocks have bad news and/or a weak technical pattern
N- closed near a low after posting poor earnings
PFWD- closed near a low after posting poor earnings
KNSY- closed near a low after posting poor earnings
Earnings:
MON FEB 8 BEFORE
CVS GOLD HAS
L LO
MON FEB 8 AFTER
ADCT AINV AXS
CPT CRL ERTS
HAR HIG LNC
LNCR LRY PFG
SWI TCK VECO
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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