In yesterday’s market commentary on the blog, I wrote this:
Markets were little changed in Asia overnight with Tokyo and Hong Kong both up 0.1%. In Europe, markets are shaking off a BP debt downgrade by Fitch as well as a Greek debt downgrade to junk (which occurred yesterday while U.S. markets were open but Europe closed) with most bourses up about 0.5%. Oil is up another 1% with gold up slightly. The euro is stronger again too. All of this is leading to a respectable uptick in futures. Very impressive microcosm. With CBOE expected to be a strong IPO today, don’t underestimate the impact this could have in bringing some confidence back to the markets as well. Barring a meltdown by GS or the drillers, look for the gains to hold today.
Yet, all day long yesterday, I heard stories of people getting short shares of stock and getting that much more short as the markets kept creeping higher. People were waiting for a decline that just never came. I was asked by seven different people at seven very different times if I thought the markets would sell off intra-day. All one had to do to develop a sense of what was highly likely to come was to pay attention to what had come before it. I know, that’s all, like, deep and stuff but it could not be more true. On Monday night, the Asian markets failed to follow the sell-off that took place on Wall Street intra-day Monday. Then, despite a downgrade of BP’s debt, negative talk out of Greece, and that aforementioned reversal, the bourses were rallying with short covering in full force in the euro. Thus, the equity markets had every reason to gap down yesterday…instead, they gapped higher, held early strength, and slowly began to lift. I can say things like “the bad news was factored in.” But it’s a generic, pat, and largely ignorant answer. The truth of the matter is that I have no idea what happened and why the markets reversed. But I do know that by simply reading the internal clues to what had happened and what was going on what I should not do (which kept me from losing). Obviously, as important, it led me to believe what I should do- namely aim to enter unique longs such as BP on an A-B-A2 to the upside once it got positive on the day early in the session or buying DVN at 70 after a long consolidation period in the middle of the session. Basically, don’t try to outguess the markets- instead pay strong attention to the given clues, make sense of it, and don’t hold personal beliefs about what should or should not be but rather what is.
Markets were higher in Asia following Wall Street’s big rally yesterday with Tokyo up 1.8%. In Europe, markets initially traded somewhat higher, but have fallen off after some disappointing economic data state-side with the bourses down about 0.3% across the board. Oil is giving back about 1%, gold is flat, and the euro is weaker. Futures are getting hit on weakness/worries over BP as well as poor housing starts and building permits data. Yet the futures are down but not as much as one would think. For the day, expect the trading range in a narrower band than yesterday with a downside bias. There will likely be one rally attempt to build on yesterday’s strength, but weakness in the likes of BP and NOK will act as overhangs and likely cause the major indexes to remain lower all day. Focus on BP, the drillers, and anything with relative strength as there could be some short covering in the stocks which aren’t showing weakness early on.
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
RIG- nice reversal in closing near a high
DO- closed near a high
GS- closed near a high
CETV- closed near a high after a brokerage upgrade
FSLR- closed near a high on speculation about the president’s speech last night
AAPL, AMZN, RIMM- closed near a high
V, MA- closed near a high
X- closed near a high
CLF- closed near a high
FCX- closed near a high
POT- closed near a high
APA, SLB- closed near a high
SWN, DVN- closed near a high
PNC- closed near a high
PWER- mentioned on “Fast Money” last night
MDRX- featured on “Mad Money” last night
CTRP- closed near a high
ERII- closed near a high
ATI- closed near a high
CLC- good earnings
SUN- plans to separate SunCoke Energy and expects refining segment to be profitable next quarter
NBIX- announced agreement with ABT to develop and commercialize an endometriosis product
PPG- raised earnings guidance
Bad-The following stocks have bad news and/or a weak technical pattern
PDLI- poor revenue guidance
IFLG- reversed a huge two-day rally in closing near a low
SMBL- closed near a low after posting terrible earnings outlook
RL- pricing 9 million shares at 81
COV- acquiring SMTS for $25/cash per share; says acquisition will be negative to earnings on a GAAP basis in 2010 and 2011
FDX- poor earnings
NOK- warned on outlook
CRIS- poor phase II results
JDAS- lost lawsuit against DDS
Earnings:
WED JUN 16 BEFORE
FDX
WED JUN 16 AFTER
None today
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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