For those of us who went to college, we may have well worried about the amount of money being spent to go there, but few of us questioned the money’s (educational) purpose- not only to learn about the world but obviously about whatever academic lessons we could garner. For anyone who has taken diving classes, flight lessons, music lessons, acting lessons, or attempted to take karate long-term, the money spent toward learning whatever skill we are trying to acquire is rarely if ever questioned. Whether it be the ability to play the flute, go diving in the Great Barrier Reef area (an amazing experience I got to enjoy), or attempt to better oneself by acquiring a black belt, currency used to acquire such lessons is very unimportant in the big picture. Trading is slightly different in that the end goal is actually to acquire money rather than to become the next Big Music Star. But over time I’ve learned the following: every trading mistake I make has 10,000 cousin mistakes with 99.5% of the mistakes I make of the variety I’d not define as “stupid.” Let me delve into this a bit more. A “stupid” mistake to me is doing something I know I should not be doing. For instance, if the market is rallying hard with Apple (AAPL) having rallied 1 ½ points in two minutes and I short a small 500 shares in thinking the rally has had it only to watch my account decline by $250 in 15 seconds…and then $500 in 45 seconds, that is stupid because there was no definitive reason to enter the trade followed by a major lack of discipline in exiting. With that in mind, every time I take a loss in a trade and don’t understand why (even if it is 33 times in a row), I view it at the end of the day as a tuition payment because I learn from it. I study the previous day’s trades every single day in immense detail and focus equally on what I did right with what I did wrong. Day trading in the end is an odds game- it is just that one has to stack the odds in one’s favor to succeed. Thus, as the market environment continues to get seemingly stranger with each passing day and the amount of mistakes I for one make continues to be, well, steady, I take solace in realizing that I am learning as I go much less rectifying the mistakes to maintain my status as a profitable trader. It is my firm belief, therefore, that for any trader to succeed, he/she must recognize the value of his/her mistakes rather than grumbling about how expensive they are else the mistakes will likely keep occurring with increasing frequency- and cost.
Markets overseas were mixed overnight with Tokyo closed and Hong Kong down 0.8% but the European markets are generally in the green with London and Frankfurt both up 0.6%. The euro is notably stronger against the dollar with oil and bonds steady but gold down 0.5%. The newsflow has been quite interesting with Irish debt being downgraded by Moody’s and the Hungarians having IMF financing cancelled. But this has been counterbalanced by a positive “Barron’s” article about Google and no major news out of BP or any other bombshells leading futures to a slight early gain. Look for a much quieter session than Friday’s trading day with a likely pside bias. Focus on the stocks in the news such as BIDU, the earnings plays such as HAL, and relative strength plays in any rally.
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
MOS- closed near a high
QUAD- closed on a high
EBI- announced plan to liquidate Evergreen International Balanced Income Fund with shareholders receiving a liquidating distribution equal to the NAV on Aug. 16
PPG, AKS- featured on “Mad Money” Friday night
GOOG- highlighted positively in the “Barron’s” cover story over the weekend
HAL- decent earnings
MOT- announced it is selling its gear business to Nokia for $1.2 billion
BA- announced order for 30 Boeing 777’s from Emirate Airlines and that their overall view of the market is becoming more positive
ATAC- to be acquired by Genco for $25/share in cash
KWK- rumored to be out by India’s Reliance Industries
Bad-The following stocks have bad news and/or a weak technical pattern
GS- island reversal in closing near a low despite the SEC settlement
RIMM- closed near a low on worries that AAPL may have fixed its problems
FCX- closed near a low
ADS- closed on a low
BIDU- closed near a low
DNDN- closed near a low
MA, V- closed near a low on worries about how the financial reform package will impact credit card payment rates
GOOG- closed near a low after posting terrible earnings
AMZN- closed near a low
BP, RIG, DO- closed near a low
X- closed near a low
APA- closed near a low
SLB, DVN- closed near a low
IBM- closed near a low
WLP- closed near a low
CERN- closed near a low
GILD- closed near a low after brokerage Jeffries warned on the company’s HIV-drud pipeline
BIDU- China’s main state-run television station accused the company of directing users to websites which sell counterfeit drugs
Earnings:
MON. JUL. 19 BEFORE
DAL EDU HAL
HAS MMR
MON. JUL. 19 AFTER
ATHR CCK IBM
LNCR NE PKG
STLD TXN TUP
ZION
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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