Many traders falsely think that the trading day starts at 9:30AM ET and ends at 4PM ET. In countless ways, they are mistaken. The specific tenet I have in mind today is that due to the trading of futures, there is ostensibly constant movement time-wise much less delta-wise as far as market averages go during the trading week. Futures contracts for those who are not familiar with them are ostensibly instruments that allow you to predict the next blip of the market without putting up a lot of money yet the derivative of the average carries both high risk- and high reward. The action is inevitably always worth watching, but has been particularly relevant the last two trading days. On Sunday night around 11:30PM with Asian markets selling off and the euro breaking down that much more, near-term Dow futures were down around 130 points. Yet the market barely opened lower as Monday morning post-NYSE 9:30AM trading commenced. The market felt heavy with many stocks giving way (such as AAPL in the afternoon) and futures were drawn to Sunday night’s low with the major averages following along closing almost exactly at the midnight lows. Guess what? Around 1:30AM on Monday night into Tuesday morning, the Dow traded ahead 110 points futures-wise. Yet, the actual NYSE open was much lower. As the day progressed yesterday, many of the generals gave way with stocks like AAPL and GS tumbling in the late morning. Many of the major averages, however, held fairly well amid strength in such sectors as the copper stocks. And like a magnet as the day soldiered on the Dow in particular rallied right back to the high of the overnight futures. Now, is this going to work every day? No. But it works a tremendous amount of the time- often enough that is always well worth knowing the overnight ranges of the futures on all of the major indexes. The deltas of the move intra-day may be more or less than the overnight range, but certainly at a minimum, knowing these ranges certainly can give you an idea of how much and where stock prices can go during any given trading day.
Markets were mixed in Asia overnight with Tokyo down 1% but Hong Kong ahead 0.7% after positive economic news out of China (with the Shanghai market putting in a near 3% rise). European markets are slightly higher across the board with the euro recouping the 1.20 level. Oil is up almost 2% with gold down 0.5%. Futures after trading in a much more choppy manner albeit lower much of the night are now indicating a decently higher open with mild strength in an array of sectors. For today, look for another choppy session; it is imperative to see if the generals such as AAPL and GS can hold earlier on as they will likely tell the tale of the day. It will likely be a narrower range day and a more muted session at that. Focus on the oils, the relative strength/weakness plays, and the myriad of stocks in the news as those will also be moving most of the day.
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
TTWO- decent earnings
OXM- decent earnings
FCX- closed near a high
WYNN- closed near a high
JOYG- closed near a high
SLB, ANR- closed near a high
DVN- closed near a high
CLF- closed near a high
JPM- closed near a high
FCH- repaying debt at substantial discount and its RevPAR was up sharply in May
CERP- closed near a high after announcing a significant rise in shipments of product
WFT- mentioned on “Mad Money” last night
DO- noted that rumors of an oil spill from the company were false
AVB- boosted earnings guidance
ECLP- being acquired by MDRX in a stock swap deal for 1.2 shares of MDRX for each ECLP
PIP- U.S. Government Accounting Office denied competitor protest of SparVax contract modification
TXN- decent earnings guidance
REGN- announced Arcalyst met primary and secondary endpoints for its phase III trial of prevention of gout flares
PLL- decent earnings
POT- upgraded by UBS
Bad-The following stocks have bad news and/or a weak technical pattern
CLDA- share offering
TIVO- closed near a low after losing its appeal in the DISH patent case
NWY- closed near a low after warning on its 2nd quarter outlook
Earnings:
WED JUN 9 BEFORE
CIEN MTN NAV
WED JUN 9 AFTER
MW SHFL
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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