I admit it. I enjoy sports. I unfortunately don’t get to play the games the way I used to do so much less actually watch much sports on TV, but I do keep up with the scores and stats. What always interests me is when sports and trading intersect. Such a case happened this week in the stock performance of Madison Square Garden (MSG). The Dolan family of Cablevision fame own a majority stake in MSG. Furthermore, the addition of famed NBA basketball player LeBron James to any team will impact the value of said team dramatically. It is said that in Cleveland, much of the downtown economy has been centered around Cleveland-born James in the last few years. Thus, any rumor of James playing for say, the Knicks, can impact the value of MSG for sure. For instance, with the near 7% spike in MSG on Wednesday, the Dolans earned $20 million with their stake- an amount of money that would cover the 1st season (and more) of James’s salary. Trading-wise, MSG was moving on the latest rumor and this is where I try to garner my living- making sense of the rumor. It’s not good to gamble on a 50-50 shot…but it is good to make a calculated bet when the odds are stacked dramatically in your favor. Well, on Wednesday, there was a story out that James would make his announcement about which team he’d play for in Greenwich, CT (not far from New York City). MSG spiked from 20.50 to 21.50 around 3PM ET that day on the thought that the selection would be the Knicks since the announcement was not far from the practice facility of the Knicks. I thought the stock would ease because it seemed to be a coincidence. The stock did decline a bit. But it turned out to be consolidation. When the stock breached its high of 21.50 after not selling off on the rumor, a quick day trader could have made about 20 cents a share in buying thru the high in a matter of a few minutes. So, don’t try to make sense out of pandemonium much less overthinking things…have a thought as to what should happen as well as a back-up idea and simply apply those plans to your trades.
Markets overnight were generally higher across the world with Tokyo up 0.5% and Hong Kong ahead 1.6%. Gains are more moderate in Europe with the bourses generally positive by about ¼%. Oil and bonds are down modestly with gold ½% positive and the dollar slightly positive across the board. Futures are modestly lower. The tone of the market overall remains positive on the heels of this week’s strong rally, but there seems to be a ceiling in here with the Dow leading the way over the broader indexes yesterday and with AAPL notably weak this morning. Look for a slightly weaker day overall on quiet volume with the bulk of the action coming in the first half of the day. The focus will be on BIDU vs GOOG, AAPL, the credit card companies on a V upgrade by Goldman Sachs, and selected small caps in the news.
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
WLK- closed near a high after being upgraded
NUHC- good earnings
POT- closed near a high
CLF- closed near a high
TSLA- closed near a high
ARG- received raised 63.50 takeover bid from APD
RIG- closed near a high
NANO- reaffirmed earnings guidance
SLB- closed near a high
SHLM- closed near a high after posting great earnings
GOOG- reported it had its search license renewed in China
V- upgraded at Goldman Sachs
Bad-The following stocks have bad news and/or a weak technical pattern
INV- closed near a low after announcing a share offering
CPTS- terrible earnings outlook
RITT- closed near a low
BIDU- GOOG’s main competitor in China likely to react negatively to the positive GOOG China news
AAPL- NTP (which previously received a $600 million settlement from RIMM) has sued AAPL for allegedly using NTP’s patented technology for cellular e-mail systems
Earnings:
FRI. JUL. 9
None 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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