So you’re standing 4th in line at a grocery store. Three people ahead of you, you notice the cashier ask the customer if they’d like to play double or nothing meaning if the coin lands on tails, she gets free groceries; however, if the coin lands on heads, the customer has to pay 2.5 times as much. The two other people in front of you are posed the same question. Thus, when you get to the front of the line, you are ready for the question and know how to answer. For fun, you may do it…totally depends on how much of a gambler you are. Now, let’s say you’re standing line with a five or even six figure check deposit at your local bank. You’re fourth in line. You notice the three people in front of you are offered the (almost) 50-50 split with of course the bank getting the 50% juice. I think it’s a pretty good bet that most day traders reading this would turn down this option. With those parameters in mind, it will likely puzzle me until the end of time why people take those bets time and again which is what led me to write this two weeks ago (after having learned the very hard myself quite some time ago):
http://www.capitalmarketforum.org/entry.php?130-FRI.-AUG.-20-It-s-Not-Always-Sunny-In-Philadelphia
These days, every economic number is followed and seized upon by the markets- oftentimes dramatically. Going into an economic number with a position is a recipe for a net losing position. As a colleague and good friend pointed out yesterday, if the move goes your way, typically you’re happy to take the profit quickly. If it goes against you, many people hold on hoping for the best and of course usually get demolished thus the first double or lose it all and more analogy above. Furthermore, if a number comes out and the market is in a strong trend with the economic number only piling on to the trend, don’t fight it. It is these types of situations in which the second analogy comes into play. On a day like yesterday, if the market is strong…and getting much stronger after twisting every piece of news- good or bad- into something positive, it’s a force not to be reckoned with. So, this is as basic as it gets (to me) but I’ve lost more than the GDP of a small country in my first 8-10 years of trading: do not gamble by going into an economic number holding a position particularly these days and do not add to short positions in a sharply rising market (and vice versa).
Markets throughout Asia rallied overnight with Tokyo up 1.5% and Hong Kong up 1.2%. In Europe, prices are generally flat equity-wise. Oil is slightly weaker with gold slightly stronger. The dollar is a tinge weaker against the yen while it’s flat against the euro. Bonds are a little weaker with the 10-year yield back at 2.60%. Jobless claims data and factory productivity came in about as expected. A drop of 1.2% in factory orders and a decline of 2.6% in pending home sales are expected at 10AM. Futures are a little higher. Ahead of the jobs report tomorrow, look for stocks to trade higher this morning with the 10AM numbers shaping things thereafter although the bias likely remains positive for the day after yesterday’s short squeeze. The focus will be on the merger stocks, the smallcaps in the news, and A-B-A2 plays to the upside.
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
CRME- received marketing OK in Europe for Brinavess
SAI- decent earnings
AAPL- closed near a high
NFLX- closed near a high
AMZN- closed near a high
CEPH- closed near a high on takeover rumors
CRM- closed near a high
FCX- closed near a high
SRZ- closed near a high after announcing a restructuring and settlement agreement with HCP
JOYG- closed near a high after posting earnings
BUCY- closed near a high
DNDN- closed near a high
APC- closed near a high
PNC- closed near a high
WHR- closed near a high
OXY- closed near a high
HES- closed near a high
OREX- entered into a partnership with Takeda to commercialize Contrave in North America
SCMR- decent earnings
UTIW- decent earnings
BKC- rumored to be bought out for 24/share
Bad-The following stocks have bad news and/or a weak technical pattern
HOV- poor earnings
PSS- poor earnings
POT- closed near a low
Earnings:
THURS SEP 2 BEFORE
DLM UTIW
THURS SEP 2 AFTER
ARST COO FNSR
TTWO ZQK
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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