When I was in a senior in college in January 1996, I was an Honors student, a n officer in three clubs, was fortunate enough to have a pretty good social life…and I was doing this trading thing on the side. At the time, I was doing more swing trading than considering that, well, I had things like classes and finals and want to enjoy my life before I had to worry about such things like bills. By that time, I had been trading for nine years (not full-time obviously), but had a pretty good amount of experience for a kid barely old enough to drink alcohol legally. What I also had was a chip on my shoulder. A few friends had been watching me trade (a couple of whom had given me some very minor money to throw into my account to trade for them) and I had managed to turn an original base of $15,000 into just over $100,000 in the space of two years or so. Symantec (SYMC) had traded to 28.75 on December 6, 1995. It closed at 21.19 on January 3, 1996. On Friday the 4th, it got down to 17.75 before closing at 19.37. I knew everything at this point of course after I had managed to buy some shares just over 18. Monday morning the 8th, SYMC gapped lower in opening at 18.25, fell to 16.37, and closed at 16.87 with me buying more stock that day making my average 17.63. At that point, I was almost fully margined because, you know, the volume on that Friday was the heaviest it had ever been to that time and the big volume just meant I was going to be right. Then on Monday afternoon the 8th following an early close for the stock market due to a massive snowstorm, SYMC warned. Badly. The stock closed five points lower on the 9th on 2 ½ times the volume from the previous heaviest day a couple of business days prior. And my two years of gains…wiped out almost to the penny. Let me type that again: what took me two plus years to build was wiped out in two trading sessions. I was not fun to be around for a few days, but I learned three very important lessons at the ripe old age of 21. First, the saying “the trend is your friend” does mean something. Secondly, trying to pick a top or a bottom on a rapidly fluid situation when the move is going against you tends to be detrimental to a trader’s finances. Finally, when a stock is halted and/or news comes out overnight and you’re trapped in something, there are few worse feelings business-wise than you’ll ever experience. When you’re in a position (particularly when it is against you and you’re fighting the trend), the trade tends not to yield such a happy result. Such was the case last Friday Feb. 26 in shares of Nuvasive (NUVA) when the stock exploded double digit points intra-day…then got halted, and then opened up two more points after the halt. Daily, I tend to look for new highs and new lows…but I only seek to buy new highs and sell new lows. Things that are going higher tend to keep going higher and vice versa. So, to me, particularly after learning the hard way, it is mind-boggling to me when I voice this sentiment over and over again when the situation presents itself yet tend to get ignored much less angry sentiment when I express it. I understand the contrarian strategy; really, I do. But it is so much easier for a fluid strong trend to keep going rather than randomly reverse. So why guess? I *hate* when someone does something like short a stock just ‘cause it is “up too much.” Well, there’s a reason for that. It usually doesn’t work. Go with what works, don’t get involved in stocks that can be halted at any given moment, and don’t get trapped. I learned the very hard way and never did it again; I don’t want anyone else who hasn’t suffered that fate to have to learn the lesson the way I did.
Markets were sharply higher throughout the world in Asia overnight with Hong Kong up 1% and Tokyo 2.2%. Europe followed in lock-step with the bourses up just shy of 1%. Commodities are nicely higher as well. And of course- stunner based on all of this- equity futures are nicely higher. There is continued optimism regarding the Greek situation, the jobs report came out strong, and AAPL is trading sharply higher. All of this leads to what will likely be another quiet but positive day overall. The action will likely be a bit more today with the focus in biotechs, techs, financials, and the relative strength plays.
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
ZANE- incredible move yesterday after getting some orders; still closed near a high
CNAM- closed near a high after announcing a supply deal
MIDD- closed near a high after announcing great earnings
ANF- closed near a high after announcing positive same-store sales data
GS- very strong in relative terms all day yesterday; closed near a high
JAZZ- closed near a high after posting earnings
RMBS- closed near a high after winning a patent lawsuit over NVDA
AIG- closed near a high after rumors of a settlement with the IRS
TIVO- closed near a high after winning a lawsuit against DISH
TTWO- closed near a high after posting great earnings
AMZN- closed near a high
AAPL- featured on “Mad Money” last night
VOLC- closed near a high after posting decent earnings
ITMN- announced the FDA has posted briefing documents for a March 9 meeting to review the company’s new drug application for its pirfenidone drug candidate
Bad-The following stocks have bad news and/or a weak technical pattern
SWM- closed near a low
MRVL- bad earnings
COO- bad earnings
ARST- bad earnings
BOOM- bad earnings
RIG- featured on “Sell Block” on “Mad Money” last night
ZUMZ- island reversal in closing near a low despite posting good data
SOLF- poor earnings
Earnings:
FRI MAR 5 BEFORE
SOLF
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
Erik Kolodny Brendan Byrne Epiphany Day Trading Direct Access Level II NYSE ARCA NASDAQ FINRA STOCKS DOW S&P INDEX FOREX FUTURES CNBC Bloomberg Team Velez VCM avatar Lightspeed Hold Swiftrade Reminiscence Stock Operator GOLDMAN Sachs Merrill Cantor Fitzgerald Spear Leeds
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