In this very placid market, there are two basic motifs for individual stocks these days: stagnant action and exaggerated action. Earlier in the week, I discussed the calm environment in which we are trading with some degree of detail, but I left out a little color on individual plays. As I see it, most stocks are simply trading so slowly intra-day in the present that ennui creeps in. During these (unfortunately many) times, the best thing to do is simply stay away. Why expect something to suddenly move one way or another at any given time given that most stocks are so quiet? Conversely, for the most part, when a stock does move, it does one of two things. It does what DVN did yesterday when Jim Cramer mentioned it during his daily afternoon 2:40PMish segment in spiking unencumbered 55 cents. Most of the time, when he talks, whatever he says during that time frame simply does not causes exaggerated moves all that much. Conversely, there are stocks such as Costco (COST) which trended higher much of yesterday morning despite posting poor earnings, breaks the immediate-term trend…and then springs a point suddenly to a new high. All of this blather leads to two main points. First, moves just aren’t coming particularly smoothly. The general choppiness and dearth of volatility (and volume) just aren’t setting the stage for really quick and relatively easy moves as the S&P consistently finishes within a whisker of unchanged at the end of the day. And second, what to do, what to do? If you’re not independently wealthy (which unfortunately for me, I certainly am not), I still have to make a living. So, one basic thing: do what it is you’re supposed to do and nothing else. By that, I mean stick to your method religiously and trade only within the confines of it. For me, this requires precise entries, immediate exits if wrong, and doing the ½ ¼ ¼ exit I’ve discussed here many times in faster than normal speeds to capture whatever gains you can get. Yes, occasionally you will enter something that has one of those near-random spikes the way DVN kept on truckin’ yesterday. But much more often than not, the nature of the beast right now is that you’re going to get chopped up if you don’t take what the market gives you so accept that for what it is. In the interim, continue to trade less frequently and in smaller size at that until things perk back up else if you’re a trend-following minute-to-minute day trader all you’ll do is leave at the end of any given day of work frustrated…and poorer…than when you walked into the office in the morning.
Markets in Asia were down overnight with Tokyo falling 1.1% with Hong Kong off 1.4%. In Europe, markets are off more modestly, but across the board to the tune of about ¼% on average. As for everything else, I pretty much feel like I can cut and paste most of what I wrote yesterday…and Tuesday…the dollar, commodities, and bonds are all quiet. Futures are muted as well albeit with a slight downside bias. Look for a day similar to the last couple except for a small down environment rather than a small up environment. Financials are showing small relative gains, but otherwise, it should be quiet. Focus on the plays in the news with no momentum trades in stocks/sectors based solely on price action alone as, well, there just isn’t a lot of clear-cut price action right now.
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
BRK/B- closed near a high
APOL- closed near a high
ETH- closed near a high after posting great earnings
NZ- closed near a high after posting great earnings
SLXP- continued momentum in closing near a high
TM- closed near a high
PETM- great earnings
TTWO- good earnings
SIGM- great earnings
CWTR- decent earnings
JAZZ- decent earnings
HMIN- decent earnings
AUY- decent earnings
NKTR- closed near a high after posting good earnings
UFPT- closed near a high after posting great earnings
DIVX- good earnings
DNDN- announced positive Provenge results late last night; they will be presented the data at a ASCO symposium in San Francisco on Friday at 4:45PM ET
WES, DECK- featured on “Mad Money” last night
FSYS- good earnings
STP- good earnings
URBN- good earnings
ARO- decent same store sales data
MED- decent earnings
Bad-The following stocks have bad news and/or a weak technical pattern
MDVN- no bounce in closing near a low after its phase III failure yesterday
ARD- closed near a low amid continued weakness from its poor earnings earlier in the week
VISN- closed near a low after posting terrible earnings
ALTR- warned slightly on revenue guidance
SINA- poor earnings
SOMX- closed on a low
CIEN- terrible earnings
Earnings:
THURS MAR 4 BEFORE
CIEN CNQ FSYS
MED STP TK
URBN WEN
THURS MAR 4 AFTER
COO MRVL
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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