In April 2000, I was dating a girl who I met through some friends. She was somewhat shy, but seemed to be a very nice person. Right around her birthday, we were talking about said birthday and somehow the topic of surprise parties came up. She noted she’d never been thrown a surprise party before. I don’t know if that was a hint or what, but I of course got right on it. Through mutual friends, I procured her best friend’s phone numbers/e-mail addresses and put something together. She was floored (or certainly seemed it). Fast forward three weeks. On my birthday, I got…nothing. Not a phone call. Not an e-mail. Nothing. I didn’t want a surprise party, but you know, a “Happy Birthday, Erik” would have been nice. The next day was the end of our relationship. Just over 2 ½ month later, I dated the last girl I’d ever date as this one (Robyn) became my wife just over a year later. While stuff like this may be more interesting than the stock stuff I discuss here typically, there is a business-related point. The day after my birthday 2000, my losses were cut. Was I upset (and am I still annoyed)? Yes. Would it have been much worse to have stuck it out? Yes. Would I have missed out on a much better opportunity in the imminent future? Yes. Guess what? It is the same trading stocks. Part of a trader’s life is encountering difficult/adverse trades. It’s going to happen- and to most of us- it is going to happen daily in some fashion. The trick is cutting your losses and awaiting the inevitable better opportunities that will tumble your way. I abhor when I hear someone say “I can’t get out” of a bad position. You can always get out. It just may not be at a price agreeable to you. But if you are short, say 2000 C from 3.67, you short 2000 more at 3.68, you short another 4000 at 3.69, and another 7000 at 3.70 because, you know, it just can’t go higher…yet it’s 3.72 bid and you just want out, guess what? First, it means you didn’t read what I wrote last Friday nor listen to our 15 minute discussion about it on the morning call that day regarding adding to losing positions when they are rapidly going against you nor did you have basic respect for trend trading…link to the blog entry can be found here:
http://epiphanytrading.blogspot.com/search?q=don%27t+fight+a+tidal+wave
*But* it does *not* mean that you cannot simply cut your losses when you are wrong. What you do if it is 3.72 to 3.73 with three million shares on the offer and you want to get out in the immediate-term due to emotion or prudence or a combination of both, you cue up an order at 3.73 and you hit your buy button for your 15,000 shares. Sure, you lost $590 gross…but you didn’t lose $1.500 more when it went up another dime in a relatively short time frame. I am well aware that some stocks are going to be less liquid than C, but the principle is the same. If you want to get out (right or wrong), you don’t wait nor hope nor try to save a penny a share; the option is always there for you to simply hit the button, take whatever liquidity is there, and you’re out. Once your mind is clear, you can then start doing what you’re supposed to do and get your money back (and more). But to say you cannot get out of a bad situation is utter rubbish; it is much better to exit expeditiously if you’ve screwed up and start anew…than to hang on to the person who didn’t so much as text you on your birthday and miss out on “the one” when the opportunity came along….or of course to hang onto a bad trade all the while missing out on better opportunities.
Markets throughout the world are little changed…in Asia, Tokyo was down 0.03% while Hong Kong was up 0.003%. Like I said, little changed. In Europe, prices are marginally higher by about ¼%. The dollar and oil are a little stronger as well. Futures are modestly higher again as there’s no earthshaking news. Look for a continued gentle rise higher with choppiness in individual stocks but no major move with the corollary that financial stocks are very strong this morning- if that holds and/or builds, we could set up for a bit of a rally today. Focus on those aforementioned financials, big cap techs, and the various stocks in the news/stock offerings for trades today.
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
ITMN- FDA panel backed its lung drug Pirfenidone
FACT- received buyout bid of 27 from ABT
AGN- FDA expanded approval of Botox for elbow and wrist spasticity
AEO- closing its Martin+Osa stores
AONE- poor earnings, but signed contract with NAV
MGH- closed near a high after discovering a significant gold zone on the Ouijaba property in Canada
CMC- closed near a high after takeover chatter ruled the day yesterday
WNC- closed near a high; secured three-year purchase agreement from Swift Transportation after the close yesterday
SKT- featured on “Mad Money” last night
CYTK- CK-2017357 granted orphan drug designation for ALS treatment
OCLS- received FDA 510k clearance for Microcyn skin and wound HydroGel
Bad-The following stocks have bad news and/or a weak technical pattern
ABT- acquiring FACT
PSS- lukewarm earnings
EQT- share offering
SLXP- poor first quarter earnings guidance
NAV- poor earnings
AGO- share offering
SVN- closed near a low after posting poor earnings
UAUA- island reversal in closing near a low after issuing positive revenue data
EDAP- island reversal after receiving Japanese approval for its Sonolith I-Sys
PLCE- poor earnings
JCG- decent earnings, but traded off a little after-hours
Earnings:
WED MAR 10 BEFORE
AEO PLCE SOL
WED MAR 10 AFTER
CLNE FCEL GYMB
MW
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
No comments:
Post a Comment