A couple of mornings ago, somebody noted a potential trade a few minutes after the 9:30AM open of a Dow Jones Industrial Average stock. The previous day, the stock had traded in a range of 32 cents, had no news in it, the market was quiet, it had failed to get thru daily resistance many times over the previous several days, and it had closed in the middle of the narrow range. With that in mind, if one is looking out in a time horizon of 1-4 minutes to do a trade (which is what this blog is geared toward), most Dow stocks are not going to race higher or lower particularly when there is no news. Did I mention that it failed that that particular trade failed 51 times in the previous six days (I went back and counted)? This leads to my point. Trading can be as easy or as simple as you make it. The goal particularly in the early going when things are moving is to get as many trades off as possible while taking quick 20-50 cent per share profits in each. In the 15 minutes after the open, I literally captured 47 cents- in 2 ½ minutes- in BRK/B, 14 cents in 26 seconds in NUVA, 21 cents again in 23 seconds in NUVA, and 13 cents in FCX in 37 seconds. So, when things are relatively quiet, it is pivotal for day traders to pick spots and focus on things that can move rather than ploddy entities which tend to have low success rates. I’ve hammered home the “preparation” theme until I am blue in the face; that is not what this post is about (although it still applies- it still boggles my mind when people miss out on point plus trades 10 minutes after the bell because they not only haven’t studied earnings, but they can’t even be bothered to study their own trades for that particular day). The take-away is this- when you are seeking to find gold, you don’t go for the hardest tiniest nuggets buried deep in a mine at random. Rather, you should seek to pick up the biggest nuggets with the least effort in a timely manner after studying the survey maps. It’s the same thing with trading. Don’t go for the things that have low profit potential much less likelihood of reward; go aggressively for the lowest hanging fruit. There are only so many opportunities. The way to succeed is to go for the best ones.
Markets were very strong in Asia with Tokyo and Hong Kong both up in excess of 2% following Wall Street’s strong Friday rally. Things are much quieter in the rest of the world, however, with the European bourses straddling the unchanged line and every major commodity/currency not straying far from where they closed on Friday as well. Futures are marginally higher. There are a lot of moves in individual stocks/stories this morning, however, to the upside with the likes of AIG, MET, SEED, XRTX, RIMM, and commodities stocks like X up a point or more as of this relatively writing. With the strong bid seemingly in place, don’t look for much if any giveback today with the likelihood of the upside bias maintaining itself quite good. Focus on the aforementioned movers, commodity plays, and stocks in the news. Volume will likely remain low so look for illiquidity…but use it to your advantage particularly if short covering creeps in.
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
PCX- closed near a high on continued takeover speculation
CIEN- closed near a high after a brokerage upgrade following its earnings Thursday morning
GMO- closed near a high after posting good earnings
PUDA- closed near a high after releasing earnings estimates intra-day on Friday
AAPL- closed at a new high amid positive buzz following Cramer’s recommendation on “Mad Money” on Thursday night
JOYG- closed near a high
X- closed near a high
LLEN- closed near a high after posting good earnings on Thursday
UBSI- closed near a high
DMND- closed near a high
GNTX, DWA- featured on “Mad Money” on Friday night
AIG, MET- AIG to sell ALICO to MetLife for $15.5 billion
XRTX- pre-announced good earnings
X- upgraded by Goldman Sachs
RIMM- upgraded by BMO
YGE- decent earnings
SEED- developed strategic business unit for pesticide products
Bad-The following stocks have bad news and/or a weak technical pattern
HPQ- lowered reported first quarter earnings due to EDS litigation charge
MDVN- closed near a new low following Thursday’s horrific news about its drug failure
RIMM- closed near a low
OSG- closed near a low after announcing a share offering
PPD- closed near a low
AKS- downgraded by Goldman Sachs
Earnings:
MON MAR 8 BEFORE
DGW YGE
MON MAR 8 AFTER
ARNA CFSG FRPT
HRB TIVO VVUS
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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