The year 1999 was an extraordinary one for the stock market. The NASDAQ that year was up almost 90%. But I remember specifically was December 1999 and my New Year’s Eve that year. What I recall in the best year for the NASDAQ in its history was December of that year when news networks would devote chunks of their days to the impending Y2K disaster. And of course the next memory was on January 1, 2000 at 12:00:01AM when our TVs didn’t go dark and the electricity didn’t go out when everyone at the party I was at (all of whom had had a libation or six) jumped and down because we were all around. Before that, I am told of hysterias surrounding such things as the lunar landing in 1969 and of course we all know the history of the Cuban Missile crisis although only those people alive at the time can truly understand the palpable sense of impending doom. In fact, there is a 450 year-old term for all of this stuff- “eschatology”- which taken from the Greek means “the study of the lasts.” In fact, every major religion actually has a definitive ‘end game scenario’ for the world I which we live. I am also sure as the time comes closer that we’ll be hearing much about 12-21-2012 aka the date with which a few ancient Mayans calculated there’d be at least a major cataclysm. Economically, the debts of the developed nations will eventually be a major issue for the world’s economic systems. Politically, there’s always the threat of nuclear war. Scientifically, I don’t think it’s far-fetched to assume that there will come a day that the sun will not rise in the east nor set in the west because, well, it won’t rise. There are two points for this depressing monologue. First, I ostensibly refuse to watch the news at home. When I go home, I want to spend quiet time with my family. When not happily playing games with my kids, I get enough depressing talk all day long on the TV and in front of me that I really need to get it out of my system by not looking at this stuff too terribly much. Whether it’s talk of “I can’t do this” trading-wise to conversations on TV about the decline of the American economy, after awhile, it seeps into the subconscious and it’s good for me (as well as anyone reading this) to think of happier things. I am not saying some of this stuff won’t come to pass nor am I saying that there is not a time and place for thinking about it. This leads to my second point. Usually, that time and place is not while day trading. I’m continually amazed when I hear people shorting BAC because “the economy is going into the tank” for an immediate-term scalp trade If your time horizon for a trade is two minutes, it is highly unlikely that the economy will go into the tank in those next two minutes. So, compartmentalize all of the end of the world chatter; do not ignore it per se, but certainly compartmentalize it- and do not let it affect your immediate-term decisions. Just because there was discourse about an economic depression on CNBC yesterday, said discussion did not stop the market from rallying 100 plus Dow points from its low at one point.
Markets worldwide were lower overnight. In Hong Kong, prices were down 0.4% but stocks declined 1.7% in Tokyo. The trend is the same in Europe with the bourses down 1% to 1.5% across the board. The dollar’s quiet along with oil but gold is slightly higher and bonds continue to rally sharply with the 10-year yield now at 2.45%. Durable goods came out terribly this morning which has not helped as futures have worsened their early morning declines. The 10AM number today is New Home Sales with estimates ranging from about 300K to 335K. Interestingly, ‘home’ stocks reversed yesterday and are higher again this morning. Thus, as long as currencies and bonds stabilize (big ‘ol if), we may well get a bit of a reversal today. The 10AM reaction will be telling; if there is no bounce in the markets by 10:05Am, start zoning in on A-B-A2s to the downside. Focus on the select microcaps in the news, relative strength plays off of the open, and casinos with LVS spotlighted on Cramer’s show last night.
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
PAY- decent earnings
ZAGG- closed near a high
SOMX- entered into co-promotion agreement for Silenor with Procter & Gamble (PG)
TOL- decent earnings
CWTR- decent earnings
Bad-The following stocks have bad news and/or a weak technical pattern
WYNN- closed near a low
GS- closed near a low
X- closed near a low
NUVA- closed near a low
CF- closed near a low
FCX- closed near a low
BUCY- closed near a low
SPMD- closed near a new trend low
SCSS- closed near a low
SYK- closed near a low
PCX- the COO suddenly resigned after the close yesterday
NFLX- closed near a low
IOC- closed near a low
Earnings:
WED AUG 25 BEFORE
AEO CWTR TOL
WED AUG 25 AFTER
GES JDSU RUE
SIGM SMTC TIVO
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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