In this relatively slow intra-day trading environment, many people are sorely tempted to trade with more size to make up for the lack of movement. When things are moving, one can obviously trade their normal share size to capture profits on their target moves. The problem with the slow(er) tape, speaking for me alone, is that the moves which I’ve become accustomed to garnering over periods of seconds now occur over periods of minutes. Yet, what I and many other people continue to do is act as if rapid profits are attainable (which, in some cases, they are). Thus, I for instance can be right about a move…but it may take 15 minutes and 36 seconds rather than 1 minute and 36 seconds. Furthermore, as time horizons for moves become a bit less compressed, there is a lot more jiggling in prices within the grander movement. What this has led to for many traders (including myself) is an attempt to break the stasis by trading a few more shares than normal in any given trade. The issue is that by trading in an immediate-term mindset with lower liquidity and smaller deltas, one almost guarantees oneself small losses over time by forcing oneself to exit in illiquid conditions when wrong. Thus, if you’re attempting to trade for immediate-term moves, this is not a time to boost trading size; rather the opposite is true in capital preservation mode.
Stocks rose throughout the world overnight with Tokyo ahead 0.9% and Hong Kong up 1.9%. In Europe, the bourses are all up about 1%. The dollar is slightly weaker across the board, gold is flat, bonds down slightly, and oil up almost 1%. There were three main stories overnight. China’s industrial output numbers came in much better than expected, there were a couple of positive economic numbers in Europe, and there was finalization on Basel rules for banking regulation. Futures are up sharply state-side. The only economic data out today is the Treasury budget (forecasted -$95 Billion) at 2PM ET but that is usually not a market mover. Earnings flow is nonexistent. But merger mania is back in style a bit this morning. For the day, look for some giveback of the gains but a positive day once again on a bit heavier volume as the crowd seems finally ready to start anew. Focus on the merger stocks, the bevy of small biotech stocks in the news, and relative weakness plays (particularly early on).
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
BDCO- closed near a high after LNG received approval to export liquefied natural gas
DIN- closed near a high
KV/A- closed near a high after receiving FDA approval to bring its 1st product to market
RIG- closed near a high after a report from FBR Capital which indicated RIG’s Macondo liability may be lower than expected
LULU- closed near a high after posting good earnings
MA- closed near a high
AMZN- closed near a high
CMTL- closed near a high
CGNX- featured on “Mad Money” on Friday night
DTG- HTZ raised its bid for the company to $50/share
ARST- received $43.50/share takeover bid from HPQ
SNTS- added two drug candidates to pipeline
INO- achieved successful phase I completion of its VGX-3100
OXGN- positive Zybrestat study results
ARIA- announced phase II initiation of Ponatinib trial
AONE- featured on CNBC’s “Squawk Box” show this morning after opening the largest lithium ion automotive battery manufacturing plant in North America
Bad-The following stocks have bad news and/or a weak technical pattern
PCG- closed near a low after a gas-line explosion in San Francisco
RDCM- closed near a low
WHR- closed near a low
SCOK- closed near a low
AVGO- closed near a low
PCX- warned on 3rd quarter sales volume
SGEN- negative phase IIb Lintuzumab results
Earnings:
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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