One recent Friday, I posted a piece about potential illiquidity as well as various sharp moves which could take place that day. Apparently, I underestimated the response to it as well as a few questions I’ve gotten over the last few weeks so I want to try again on a variation of that piece. In the past two days, I had three different people ask me why they weren’t getting as many fills as they have been used to receiving. One other person told me that his trading software wasn’t working the way it used to. This is the simple answer: it is summertime. It is a blanket answer. This is what a summer market is like (and it typically gets worse as the summer progresses with the exception of the end of the quarter and during earnings season) as far as trading volumes go. Furthermore, in weeks like this, people take vacations. It’s a four day week so it’s only four days off instead of five plus it’s a time before many of the nation’s schools close for a couple of months so a lot of vacation hotspots are still relatively inexpensive and sparsely populated. There are always other triggers as well; for instance, the week after Memorial Day was also the week before the weekend of the CFA Exam. Many of you will read (or re-read that) and scoff. Having known many people who have taken parts (or all) of that very difficult test, let me tell you that the study level is extraordinarily extensive with much cramming done the week before the exam. So, a lot of people (even traders who’ve been around upwards of 10 years) are focused on learning the minutia of things like lease accounting instead of tracking the direction of BP’s stock price. Now, to the credit of our traders, Epiphany’s May trading volume was the heaviest on record. In June, the volume was even heavier! But as we head out of Independence Day into July, expect illiquidity to be more of a rule than an exception. Adapt by holding things a tinge longer, make sure you constantly have orders at the ready, and be even more focused in your research and market analysis. This is part of the business. It can be extraordinarily busy and active; it can also be slow at times. It’s just the nature of the markets (plus, traders would rather be on the golf course or tennis court in the summer than in front of the computer). But mainly, my best advice is two-fold: on days when there are things to do, it absolutely boggles my mind when people leave early routinely. This is a job. When opportunities are prevalent and the markets are moving, be there to earn a living. On the opposite side is my second piece of advice- when markets are calm, don’t get frustrated and don’t overtrade. And by the way, get out and enjoy the sunshine as much as possible; enjoy life a bit more when the weather is nice in the hours after markets are closed. Thus, if markets are moving, be ready with a clear mind and if there’s not as much to do…don’t do as much.
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
THO- closed near a high after reporting no accounting changes after an accounting review
ONP- closed near a high
AMAP- closed near a high
FIS- reaffirmed outlook and also announced private offering of notes to repurchase stock
Bad-The following stocks have bad news and/or a weak technical pattern
TSLA- closed near a low amid a two day massive reversal from its IPO high
IOC- closed near a low
UAUA, CAL- closed near lows after CAL reported weaker-than-expected revenues
GOOG- closed near a low
DNDN- closed near a low
ADS- closed near a low
AFAM- closed near a low after announcing it was being probed by the SEC
TGB- an independent Canadian panel said that TGB’s proposed gold-copper project in British Columbia would have significant negative environmental effects in the region
Earnings:
None today
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
Joseph R. McCandless- Managing Partner
D. Timothy Seaquist- Managing Partner
www.epiphanytrading.com
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