First, for those interested, below is the link to my interview yesterday on "Trader Talk." I want to thank Troy Peterson for the opportunity as well as Rob Smith for the very kind recommendation:
http://www.blogtalkradio.com/tradertalk/2010/05/19/trader-talk-interviews-professional-trader-erik-ko
There is a time and place for most great trades. Such was the case on a lazy Thursday afternoon a few weeks ago. Just after the close that Thursday, PALM reported abysmal earnings information. They had worse than expected losses…and the future forecast was even grimmer. The stock immediately from Thursday’s 11.72 close to below 11. It traded around 11 for a bit, but then RIMM delivered its good numbers. PALM rallied to 12 (up from the close!). Yet, these two companies are competitors and reiterating- PALM delivered absolutely terrible earnings numbers. Sure enough PALM began to decline towards the 11.72 close (“unchanged from the close”). There was a major 11.75 seller and with a pool of liquidity at 11.70, it was quite commonsensical to short the thing through unchanged. The risk was a nickel quite plainly as the 75 seller put out a lot of shares and if right, well, the stock had just been 11 a few minutes prior. Sure enough, the stock fell from 11.70 to 11.20 in a couple of minutes in providing many day traders with their best trade of the week. There was a stretch where I didn’t make a trade for almost three hours on that Thursday. But I was totally ready to operate when a trade did present itself. Thus, rather than randomly making trades in the middle of the day, I waited for my spot and hit it with what I could stomach. This was a news-centric trade combining relative weakness and a stock near unchanged. If one followed RIMM’s numbers and PALM’s numbers as well as understood just a minimal amount about the companies, one could do this trade. Finally, it is but one more example of the folly of posting orders. If one threw a bid out at, say, 11.50 for 20 cents in seconds, one would have missed the opportunity to earn an extra 30 cents in 15 more seconds. So, be aware that while the markets are dangerous right now, there are indeed plenty of relatively safe opportunities around right now as well. As we’ve all learned the hard way, please focus on those ‘safe’ spots in this very turbulent time.
Markets are getting hit throughout the world as currency woes in Europe as well as more Greek riots are causing turmoil in the financial system. Tokyo finished down 1.5%. In Europe, every major bourse is down around 2% as of this writing. The parade of red continues in commodities with gold off 1%, oil 2%, and platinum almost 6%. The yen is the strongest currency on the board with the dollar down a yen, the euro way down, and the British pound getting heavily crushed. All of this is leading to strong declines in the futures. Today is a very perilous day. There is a tremendous amount of nervousness out there. Off-hand, look for a small bounce after the open. From there, it’s going to be very dependent on what the euro currencies do ahead of options expiration on the close tomorrow. Play relative strength plays in the early going otherwise trade very nimbly with much smaller size lots than normal.
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
GS- closed near a high
TSL- closed near a high in a nice intra-day reversal
AAP- good earnings
AMAT- decent earnings
ADSK- good earnings
HCN- on “Mad Money” last night
Bad-The following stocks have bad news and/or a weak technical pattern
IOC- closed near a low
MED- closed near a low after a negative report from The Fraud Discovery Institute
LTD- poor earnings
HOTT- terrible earnings
NTES- poor earnings
WNC- 11 million share offering
APP- closed near a low after issuing poor preliminary earnings and warning of a debt covenant violation
MF- poor earnings
GME- poor earnings
Earnings:
THURS MAY 20 BEFORE
CSC GME MF
PDCO ROST SHLD
SPLS TDW
THURS MAY 20 AFTER
ARO BRCD CPWR
CRM DELL FL
GPS INTU MRVL
RRGB VRGY
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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