The S&P 500 has been up 9 of the last 10 trading days. Before that, it was down 7 of the previous 9 trading days. Before that, it was up five days in a row. In months much less years past, prices would obviously have strong mini-trends within a trading range over a series of days, but to the degree to which this occurs now. There are several reasons for this. First, the newsflow within the channels is particularly in focus. Whether it be worries over the poorer nations of Europe to optimism about the prospects for the domestic jobs market, notable news is having an impact that can last for days. Second, volume- or lack thereof. It is much easier for prices to be pushed up or down when there are fewer participants and it’s so easy for trends to be exacerbated when someone is stuck badly in a wrong position because their exiting further impacts the situation. Third, the advent of entities such as hedge funds take huge positions which can cause enormous trend moves. Witness yesterday when the dollar touched a multi-year low against the yen while gold soared 1.5% as a fine example. As day traders, it’s not up to us to truly question this activity but to go with it. On days like yesterday, the forces of positive comments from the likes of Suntrust (STI) can combat an earnings warning from steel entity Nucor (NUE) when the market has risen for several days. Thus, obviously be ready to change with the trend if the trend changes. But don’t anticipate it changing. If you are doing immediate-term trading rather than longer-run stuff, this is certainly an era where it is much better to be reactive rather than proactive 9as long as you don't chase moves while 'reacting').
Markets in Asia were up overnight with Hong Kong slightly up by 0.1% but Tokyo rallied 2.3%. The Japanese government stepped in to try to stem the rise of the yen which sparked some short covering in the stock market there. Prices are slightly weaker in Europe by about 0.3% average for the bourses with the leading trigger seeming to be a disappointing jobless claims number out of Britain. New York Fed data was slightly disappointing at 8:30AM although Export/Import Prices came in as expected. Industrial production gains of 0.3% are seen at 9:15AM along with a Capacity utilization of 75.0; crude inventories are due out at 10:30AM. Gold is slightly lower with oil down 1%. Bonds are weaker with the dollar surging against the yen by 2 ½ yen although flat against the euro. Futures are down amidst all of this murkiness along with a host of earnings warnings from smaller companies. Look for a choppy day similar to yesterday but with a bit of a downside bias. Trading-wise, focus on the earnings warnings, the companies with news out last night (buybacks, media, and such) and the small-caps which closed near their highs yesterday.
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
CREE- closed near a high
NUVA- closed near a high after releasing earnings
RDWR- closed near a high amid rumors of an imminent deal
GOK- closed near a high
BPI- closed near a high
AUMN- closed near a high after announcing an expansion of its gold drilling program
THOR- closed near a high
SVNT- received FDA approval of its gout drug
AAPL- featured on “Mad Money” last night
PLKL- decent earnings
MA- announced up to $1 billion buyback of shares
Bad-The following stocks have bad news and/or a weak technical pattern
NBIX- disappointing top-line results of CRF1 to treat depression
STLD- earnings warning
CLF- closed near a low after updating its 2010 North American coal outlook
ARNA- closed near a low after negative FDA comments released about the company’s diet pill
LLEN- closed near a low
MDAS- closed near a low after announcing an $850 million acquisition
NOVL- rumors that the company has reached a deal to sell itself in two parts
Earnings:
WED SEP 15 BEFORE
None today
WED SEP 15 AFTER
AIR DBRN
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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