First, for anyone interested, I have the honor of being the featured guest today just after the close on "Trader Talk." The focus will be on how I got to where I am now (wherever that is!) along with a discussion about my methodology. The link is here if you want to listen to the broadcast:
http://www.blogtalkradio.com/tradertalk
Back to normal programming-
There was a relatively placid session for much of the day yesterday until the late afternoon. What occurred brought back bad memories as well as fears of “here we go again.” At about 9PM local time last night in Berlin, Germany prohibited naked short-selling as well as short-selling on European government bonds with credit-default swaps. The government’s attempts to calm markets totally backfired with the euro plunging to a four year low against the dollar and setting off a 1.45 selloff in the S&P 500. The whole thing wreaked of an escalation of regulatory risk for the worldwide trading environment. Furthermore, the move may well add to worries that the EU nations are not working in coordination with one another as Germany’s unilateral action was not reciprocated through the rest of Europe. But the most detrimental effect took us back to the pre-Lehman days when the U.S. government willy-nilly temporarily banned short selling in select stocks. Forget the fact that the S&P 500 declined sharply during the ban with financial stocks underperforming. The issue was that it was a precursor to much of the turmoil in the financial sector that followed. Worries that such a thing is occurring all over again actually increased worries rather than decreased nervousness. For day traders, the key number to watch will continue to be the euro in the immediate-term with a major correlation between U.S. stocks and the direction of the euro- with random news coming out at random times…and causing random intra-day moves.
Markets overseas were hit hard overnight with prices falling 1.8% in Hong Kong, 1.6% in London, and 1.7% in Frankfurt. Oil got below $68/barrel this morning before bouncing a little. Bonds are giving back a little of their recent huge gains. Most notably, the euro is staging a bit of a rebound this morning with it trading around 1.224 to the dollar as of this writing after trading near 1.215 overnight. Futures are down a bit state-side, but well off of their lows. One interesting if ephemeral aspect to some short covering in the euro is the CDO issue- with entities not being able to hedge by shorting some collateralized debt, it takes some pressure off of the euro. So, it seems forced and artificial, but the euro has gained a little ground. This will be the topic of the day again so track the euro for an idea of how the stock market will do. Best guess is that we chop much of the day with no gigantic move on either side, but quite honestly, it’s truly a minute-to-minute market for me right now. Focus on relative strength/weakness plays along with select techs in the news such as HPQ.
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
HPQ- good earnings
ADI- decent earnings
LGL- closed near a high after posting great earnings
SWN- CEO featured on “Mad Money” last night
DE- good earnings
Bad-The following stocks have bad news and/or a weak technical pattern
VECO- closed near a low
TSL- closed near a low
BIDU- closed near a low
BUCY- closed near a low
CLF- closed near a low in a reversal
FCX- closed near a low in a reversal
MEE- closed near a low
X- closed near a low in a reversal
UFS- closed near a low
NPD- closed on a trend low
HRL- poor earnings
Earnings:
WED MAY 19 BEFORE
BJ DE EV
HRL RL
WED MAY 19 AFTER
AAP ADSK AMAT
BRS GYMB HOTT
LTD NTES PETM
SNPS
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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