Particularly as earnings season is underway, it’s time to focus on a question I am frequently asked: at what time do you start looking at charts during the trading day? The trading day technically starts at 4AM ET when the ARCA ECN opens for business. However, most traders are sleeping at 4AM so there usually isn’t a lot of action until 7AM when the NASDAQ ECN opens. During earnings season, I am typically in the office until 7PM ET and then by 6AM ET the next morning to monitor the reaction of stocks to their earnings in actively trading said reactions late in the afternoon and early in the morning. By yesterday morning, for instance, I had a decent portion of my day earned in two trades by 8AM ET. However, most traders don’t actually begin trading actively until the open of the NYSE at 9:30AM ET. Because most traders don’t actively begin looking at stocks until 9:15AM ET, to me, it makes a lot of what already happening pictogram-wise somewhat irrelevant but certainly worth remembering. As the volume doesn’t come in until 9:30AM along with many of the algorithms from the trading computer programs, I tend to go with the crowd in relying upon graphs post 9:30AM ET to do any technical analysis. The major corollary to this decree is that I am ever-mindful of what happened in the hours leading up to the open. For instance, if a stock beat its earnings, but traded down 3 points at 6:30AM and then rallied to open up 25 cents in a market that opens up 200 Dow points, it’ll be a short thru the unchanged marker simply because of where it was earlier as it’d clearly display relative weakness to the market. Furthermore, with the move unexpected by many who simply started tracking the stock at the market open at 9:30AM ET in buying on ‘good news,’ it’ll make it that much smoother because a number of those people would begin sweating once the stock traded lower on the session. The bottom line is to track a stock’s progress post-NYSE open simply because everyone else is, but be aware of how the stock has already performed in the extended-hours because it can give you a guidepost as to its future direction.
Markets were mixed in Asia overnight with Tokyo down 0.2%, but Hong Kong up just over 1%. The picture in Europe was one of strength though after Wall Street’s rally yesterday with the bourses up 1% to 1.5% across the board. The yen is the strongest currency this morning with the dollar trading up against the yen but down against the yen. Oil and gold are both up modestly with bonds little changed. Futures are a bit stronger in building upon yesterday’s turnaround on the heels of AAPL’s great numbers. Good earnings from WFC and MS are helping as well. I never saw a total reversal yesterday and was wrong wrong wrong, but I don’t see how this one reverses either today. That said, as noted on the video last night, I focus on minute-to-minute so when so wrong, I try to quickly reverse myself in trading what I see rather than what I guess early on. Focus on the many companies out with earnings, the banks, and relative weakness plays just after the open should there be any profit taking into the opening 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
AAPL- great earnings
VMW- great earnings
CYT- great earnings
TPX- good earnings
ETH- great earnings
URI- good earnings
BP- announced $7 billion asset sale to APA
SLM- good earnings
GS- closed near a high after posting earnings
WYNN/LVS- closed near a high
TUP- near island reversal after posting poor earnings
FSLR- closed near a high
CLF- closed near a high
X- closed near a high
FCX- closed near a high
ANR- closed near a high
IBM- near island reversal after posting poor earnings
JOYG, BUCY- closed near a high
TXI- closed near a high after posting earnings
SCHN- closed near a high
RIMM- closed near a high
V, MA- closed near a high
GOOG- closed near a high
JCG, JCP- closed near a high
SLB- closed near a high
POT- closed near a high
STT- closed near a high after posting good earnings
CMA- decent earnings
ETN- good earnings
MAN- decent earnings
SWK- decent earnings
TXT- good earnings
USB- decent earnings
KO- decent earnings
CEPH- good earnings guidance
APH- good earnings
FCX- good earnings
MS- decent earnings
WFC- good earnings
LCC- decent earnings
Bad-The following stocks have bad news and/or a weak technical pattern
YHOO- terrible earnings
GILD- poor earnings
JNPR- decent earnings, but filed a shelf offering
STX- poor earnings
SYK- poor earnings
APA- announced acquisition of some BP assets, good earnings, but doing share offering
DEAR- terrible earnings
DGX- poor earnings
GNK- closed near a high, but announced share offering
TDW- terrible earnings guidance
GENZ- poor earnings
WYNN- poor preliminary guidance for Wynn Las Vegas
GS- earnings estimates taken down at Wells Fargo
Earnings:
WED. JUL. 21 BEFORE
ABFS ABT APH
BLK CHKP CMA
DGX ECA EMC
ETN FCX GENZ
HST KO LCC
MAN MO MTB
MS NTRS SWK
TXT USB UTX
WFC
WED. JUL. 21 AFTER
ADS AFFX AMLN
BIDU CA DOX
EBAY EW FFIV
FNF ISIL ISRG
KMP NFLX NTGR
QCOM RHI SBUX
SWI TEX TSCO
WDC XLNX
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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