With the volatility occurring right now and the markets very dangerous, I want to pause from the turmoil momentarily to further emphasize what I recently wrote regarding managing positions and being safe. In 2001, just after I got married, my father-in-law asked me when I wanted to retire. I modestly told him I hoped to do so sooner than later, but believing in my heart of hearts that I wouldn’t be trading for more than another few years. The relatively quiet markets of the next few years (compared to the stretch between 1999-2001) unfortunately presented a reality whereby for me anyway, I could make a consistent living but it was not as quite as good as the early part of the decade. Part of what me made me exhibit hubris in 2001 (even if I didn’t totally believe it then in the way I definitely do now) was that nothing is ever guaranteed. Well, on the other extreme is what I consider to be the worst part of what I do for a living. You have to understand- trading is 95% psychological and 5% numbers to me, but one of the major external components is being completely honest with fellow traders about my own trading- and theirs. One recent morning, I had to tell one of the most genuinely decent souls I’ve met that I didn’t think he should keep trading. I literally stayed awake almost all night the previous night thinking about it because it bothered me that much. I’ve seen many people come and go over the years; with that comes but one characteristic for those of us still around- true humility. I’ve been fortunate enough to have carved out a respectable living net-net over the years in the trading arena. But painful reminders such as the one that Monday morning hammer home the true meaning of the word “humility.” Markets constantly change. Trading changes. As traders, we must evolve as well constantly. There’s an old saw that a trader is only as good as one’s last trade. I don’t agree with that; anyone can have a good or a bad trade. What is true though is that trading is exceptionally difficult and the one trait I’ve seen in the traders that make it is humility. All of the relatively successful traders I’ve met have been humbled by the market too many times to count. So, I learned yet again in a painfully human way recently that nobody with any degree of success should take anything for granted at any time- because any of us could be next particularly if we do not do what we’re supposed to do in terms of managing our trading properly.
Markets overnight were predictably hit hard with Tokyo down 2.5% and every major European bourse down at least 2% as of this writing. Every other non-equity market is amazingly subdued with the dollar up a bit against the yen but down against the euro, gold ostensibly flat, oil down 2%, and S&P May futures expiring on the open. Futures since the close have been all over the map with Dow trading down 50, rallying 150 from there, falling 200 to below the flash crash low, and slightly off of the floor as I type. With everything somewhat quiet and the expiry of the futures, look for the down open with some further selling pressure to the futures low…but then I think things turn at least for a bit. Look to play relative strength plays. After that, let things sort out…if the external markets remain quiet, we should see a violent snap-back rally. The thing to watch at that point would be to see if the leaders are strong and remaining strong (GS, AAPL, et al); from there, follow the leaders for the tone for the balance of the session particularly at the close of trade in Europe later this morning.
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
MRVL- decent earnings
FL- good earnings
ARO- decent earnings
NDSN- good earnings
Bad-The following stocks have bad news and/or a weak technical pattern
DELL- poor earnings
CRM- poor earnings
GPS- poor earnings
INTU- poor earnings
RRGB- poor earnings
BRCD- poor earnings
ZUMZ- poor earnings
FCX- closed near a low
AIG- closed near a low
RIG- closed near a low
GS- closed near a low
LVS- closed near a low
POT- closed near a low
IBM- closed near a low
X- closed near a low
GOOG- closed near a low
RIMM- closed near a low
RDN- closed near a low
CREE- closed near a low
APC- closed near a low
PRU- closed near a low
FSLR- mentioned negatively on “Mad Money” last night
Earnings:
FRI MAY 21 BEFORE
ANN TECD
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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