I know many people who are on diets (whether they need to be or not). They pick out the type of diet/food they will eat (South Beach, Atkins, Weight Watchers, Jenny Craig, and so forth). They are attempting to adhere to the rigors of said diet and are focused on losing weight. The thing that all of these people have in common regardless of whether they are succeeding at said diet is that they all are focused on the present and the future rather than the past. For instance, the attempt in my household at the moment as put forth by the king (and queen) of my household- my wife- is a ‘good fats’ diet with olive oil the type of key ingredient found in many of our (admittedly delicious and healthy meals- hope you’re reading this, love!). It doesn’t matter if people dieting had cheese lasagna last week or a BLT the week before. What matters is the future. Why can people so easily attempt to shed pounds by not thinking about what happened before yet cannot attempt to make money without obsessing over their next previous trade? The beginning of the month is as appropriate time as any other time to note that in my head, I start over at 0 on June 1. But I also do that on June 2. And June 3. And June 4. And June 5. Oh yeah, I’ll also do it after the first trade I make today. And the second. And the third. Do not get me wrong. I am a student of history and firmly believe that if one fails to learn from past mistakes, one is bound to repeat the mistakes. Also, as noted in the past, I have a certain number whereby I only paper trade (or trade 100 shares of positions) if I am having a wretched day. But I inherently know that my next trade has very little if anything to do with the previous trade. If I am short 1,500 shares of Goldman Sachs (GS) in an attempt to profit from it going through yesterday’s close as the market is selling off and it doesn’t work because the market takes a small upblip for the broader market, it doesn’t necessarily mean that it won’t work if I am short 1500 shares of Apple (AAPL) next with the same pattern in identical circumstances. Yes, I do keep in the back of my head what just happened but my focus is on making money in the AAPL trade in the right circumstances rather than my loss in GS. Thus, as you trade, realize that one can learn from history to be certain- but the only way a trader is going to make money is to focus on the present and future in making profitable trades rather than obsessing over the past.
Markets in Asia were overall lower the last couple of days with prices off about 1%. In Europe, markets in general staged a relatively weak rally on Monday with typical gains of 0.3% to 0.5%, but most bourses have declined 1.55 to 2% overnight. The euro is very weak in touching a new four year low below the 1.22 level to the dollar on worries about the Spanish debt situation. A skirmish between Israel and Turkey and a worsening of the BP oil slick situation also are casting a pall over a negative outlook for equity prices with futures sharply lower as of this writing (albeit off of the floor). Look for a thinly traded session overall on a day after a holiday with the bias overall to the downside. With that in mind, a positive move for AAPL combined with an exaggerated sell-off into Friday’s close sets the stage for random sharp short covering rallies so tread carefully. Focus on stocks that are relatively strong as your main source of trading conduits particularly in the early going.
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
FCN- closed near a high
OREX- says FDA accepted a new drug application for review of the company’s product for fighting obesity
AAPL- announced it has now sold two million iPads
Bad-The following stocks have bad news and/or a weak technical pattern
BCSI- closed near a low after posting awful earnings
UVV- closed near a low after posting awful earnings
ATPG, OII, DRQ, DO, SLB, BHI- all closed very weak on worries of further restrictions in the oil drilling industry
FTI- closed near a low
RVBD- closed near a low
Earnings:
TUES JUN 1 BEFORE
None today
TUES JUN 1 AFTER
GAME PSS SNDA
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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