A dialogue I was having with someone the other day sparked the following thought: what should one do if faced with the pleasant situation of earning a day’s pay by 9:35AM ET. Most people do one of two things. The terrible thing they do is up their size on future trades, because, well, they are ahead and it is ‘house’ money. Of course, this could not be further from the truth because last time I checked, the money I earn before 9:35AM ET(and many days, before 7:35AM ET) is in my account already and belongs to me and me only. The other thing that traders typically do when in this happy predicament is to shut the computer off. Yes, I agree- it is a measure of good discipline to get ahead and stay ahead. But, let's say you want to average $1,000 a day of income. You are up $500 day one, $1,000 day two, $1,000 day three, down $1,000 on day four, and up $1,000 on day five. That means you are up $2,500 ($500 a day). If on day 6, you storm out to a $2,000 lead, why not build on that? What does one trade or one day have to do with another? So, why change anything? Basically, when you have a good day by, say,10AM, be pleased...but realize there are bad days out there to come so whatever you’re doing by 10AM, keep doing it. One trade and one day has very little if anything to do with another. I know for instance that it is much easier for me to earn a living on days like last Thursday when the markets are really moving than the bulk of yesterday when things were quiet. There are people, I am sure who will disagree, with me, but my core belief has always been to not change your mentality just because you're ahead because you may miss out on something great.
Markets were down in Asia with Tokyo and Hong Kong both down about 1.5%. In Europe, the bourses are falling very heavily with prices down from 1.3% in Germany to 2.3% in France. The euro continues to decline as the 1.24 level is approached with talk of a potential breakup of the entire mechanism by the likes of people like former prime ministers who helped construct the currency in the first place. Gold is approaching $1,250/ounce with oil down yet again to the tune of 2%. Here were also reports overnight that the oil spill in the Gulf may be substantially worse than expected. All of these factors are lending to a lower open for Wall Street. It looks to be a very dangerous day; Fridays can have some very exaggerated moves on days in which currencies are moving. Focus on relative strength/weakness plays, the stocks in the news (such as RIG), and the small-caps.
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
HAUP- closed near a high after launching live TV support for the iPad and iPhone
IFLG- continued to rally in closing near a high after announcing it will enable a product at the Premiere SAP Conference
SPDE- closed near a high after announcing its attendance at a conference
CGX- closed near a high after the CEO announced he’d bought a substantial position in the company
CWS- closed near a high
RPC- closed near a high
YHOO- mentioned on “Mad Money” last night
Bad-The following stocks have bad news and/or a weak technical pattern
NVDA- poor earnings
JWN- poor earnings
CA- poor earnings
ALKS- poor earnings
DGW- closed near a new trend low
ASIA- closed near a low
GS- closed near a low
BIDU- close near a low
AMZN- closed near a low
AIG- closed near a low
POT- closed near a low
CLF- closed near a low
PNC- closed near intra-day low
KSS- closed near a low after posting earnings
PBH- closed near a low after posting earnings
RAS- closed near a low
AGNC- share offering
NS- share offering
JKS- 5.84 million share IPO at $11.00 per share, at the low end of the $11-13 range
NOR- 10 million share IPO at $8 per share at low end of 8-9 range and was originally supposed to price 16.67 million shares at 14-16
V, MA- U.S. Senate arroved Durbin amendment yesterday which will allow the Federal Reserve to impose limits on debit-card feeds collected by banks; BAC, WFC, and JPM may also be affected
Earnings:
FRI MAY 14 BEFORE
JCP
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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