The other night, a very close friend of mine who has been trading very well in the last several weeks inadvertently left an order out after a very hectic day...week...month...and year! He got filled an hour or so after the close. He immediately put an order out there to exit his position exactly where he entered it. Would you believe at 7:15PM that evening - on a Friday no less- he got filled?! My immediate thought was "how lucky!" My second thought was that if I shared this parable with everyone, most of them would think "Why can't this sort of thing happen to me?!" That really got me thinking about a major concept that nobody really talks about. There is certainly an element of luck to this trading game. A computer goes down while in a position. Or there is a power outage. Or a major world event happens. But, for the most part, traders tend to create their own luck- good or bad. Going back to the original story, the individual who got that fill could easily have placed an order a few cents away from the prevailing market and hope for the best. But he didn't. In a relatively active stock (even on a Friday), he placed it exactly where he entered it and felt that it was quite plausible that an institution may choose to exit a position over the weekend. So, was it possible that he could have been stuck with the thing? Yes. But by handling the situation intelligently and logically, he was able to put himself in position to exit without so much as a scratch. Now of course the example I used was somewhat extreme, but day-in day-out, I here how "that kind of stuff never happens to me" or "I'm cursed" or "I only seem to get filled when it goes against me immediately." The thing is though that the markets are a thing- not a person. Yes, some people have more ability than others to handle numbers better or think a bit quicker, but day traders as a whole trading for their own account are pretty much on the same playing level. The other thing that bugs me about the complainers is that they don't realize how lucky in life most of them are. We've witnessed two major earthquakes in the last several weeks. We've heard tales of random civilians killed by suicide bombers. We've witnessed people at a very young age having horrific diseases. For myself and most of the people I know who trade, we all get to go home to a place with a roof over our head, running water, and don't have to worry about a suicide bomber detonating a bomb at our local grocery store. That's truly luck. So, yes, there are going to be days and trades that nothing seems to go right. But if you do what you're supposed to do, over time, what you think are 'lucky' fills that tend to happen to 'lucky' people will tend happen to you as well.
Markets throughout the world were lower overnight with markets in Asia falling about 1% on average in most major Asian and European nations. The yen is relatively weak to the world’s basket of currencies after the Japanese prime minister resigned. In turn, this is having an impact on the carry trade with oil and gold a bit weaker, the euro off slightly against the dollar, and sparking a little buying in American stocks as a safe-haven. Furthermore, there is hope- however speculative- that the latest maneuver from BP will stop the oil flow which is lifting many energy shares early on. Add to the mix more gains for AAPL as well. Off-hand, the gains will likely hold today barring a major debacle in the euro. TV’s will be tuned to Buffett in front of the Congress as well. So, look for a summer Wednesday with continued illiquidity albeit with an upside bias. Focus on the drillers and pay particular attention to the stocks in the news today to see if they respond ‘rationally’ as a quieter environment will likely yield some good trades there as well.
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
JSDA- closed near a high
PANL- closed near a high after an upgrade
AMGN- announced approval of Prolia
COST- featured on “Mad Money” last night
JOSB- good earnings
TSRA- raised revenue guidance for next quarter
LOCM- raised earnings guidance
DIVX- being acquired by SNIC for 3.75 in cash and .514 shares of SNIC
MON- signed licensing deal with Dow AgroSciences and was upgraded by Goldman Sachs
AVII- AVI-4658 demonstrated positive phase 1b/2 data from AVI-4658
Bad-The following stocks have bad news and/or a weak technical pattern
PSS- poor earnings
MF- share offering
SLB, DRQ, OII, CAM APC, HAL NOV, DO, RIG, NBL, SII, ANR, ATPG- all closed near their lows in a very weak oil rig sector
POT- closed near a low
FCX- closed near a low
CLF- closed near a low
MEE- closed near a low
X- closed near a low
UVV- closed near a low
FSLR- closed near a low
RIMM- closed near a low
GS- closed near a low
BUCY- closed near a low
WLT- closed near a low
HRBN- closed near a low
CSIQ- postponed release of earnings results…boosted shipments guidance, but audit committee started inquiry after receiving SEC subpoena
SNDA- poor earnings
AIG- AIA/Prudential deal on verge of collapse
Earnings:
WED JUN 2 BEFORE
DAKT JOSB
WED JUN 2 AFTER
CPRT CWTR HOV
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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