This is one of those pieces whereby I've sought the right way to start much less formulate the correct words. Let me give it a try. The obvious topic dominating the news recently has been the horrific earthquake in Japan. The key question of course is: what happens next? And I speak of all of this from a cold economic vantage point in which day trading is concerned rather than the infinitely more important human aspect. There have been numerous experts pontificating about this very topic for several days. But here's the truth: nobody knows. Nobody knows. Nobody. And that is very scary. I remember even 25 years ago that hurricane science much less the prediction of snow storms was more of an art than anything...and it still is. But at least once the storm has passed, it's a matter of knowing things like which local rivers will likely flood. In this case though- the best thing- again financially- is that the disaster occurred fairly north of Tokyo in a region that accounts for a small fraction of Japan's GDP. Thus economically, it can be a blessing in disguise as money is spent rebuilding better than before with the Japanese economy taking an immediate-term hit but benefiting in the long-run. And do I really need to mention the worst case? Nuclear meltdowns setting the nuclear power industry back decades if not longer. Destruction so bad that it is deemed unworthy for rebuilding. Pervasive fear of more earthquakes. The reality is likely somewhere in the middle...but again nobody knows with any degree of certainty. The other notable aspect will be the performance of the yen. Many people incorrectly think this is an immediate-term negative for the yen. But it's the opposite. With trade surpluses abounding albeit with a very high level of public debt, there is a very high level of repatriation of yen for rebuilding the Japanese economy. The wild card of course is if the Bank of Japan decides to do a quantitative easing of its own in printing yen. So again, the 2nd best thing we as day traders can do is to monitor the situation on a daily basis as the headlines will be fluid for some time to come with uncertainty ruling the day(s). The best thing of course that we can do, by the way, is to make a donation to the Red Cross or some other organization to help the many people running short of food and other necessities from what is one of the worst natural disasters to affect the world in many many years.
Markets overnight were drilled. Tokyo finished off its low…and was still down 10.7% for its worst back-to-back days since World War II. Hong Kong followed suit in finishing down 4%. The European bourses are down from 3%-4% across the board. Oil is down 4%. Gold is down almost 2%. The 10-year bond is up a point. The dollar is down a full yen but up a full euro. Futures are indicating a 300 point Dow drop. The story has been one of an increasing nervousness over the possibility of a nuclear meltdown in Japan. Indeed, if the wind blows the right (or wrong) way, Tokyo is in danger. Suddenly, the entire nation is at risk. I cannot begin to guess that the market will do today. Keep your eyes to the headline with trading horizons shortened to seconds from minutes. The focus will likely be on the solars, the uranium stocks, and big cap techs and financials with an eye toward relative strength plays in any market pop. Be EXTREMELY nimble and quick with NO big positions size-wise or time-wise.
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
BTU- closed near a high
FSLR- closed near a high in a strong solar group
MED- closed near a high
CCJ- reversed to close near a high in a weak uranium group
SHAW- reversed as worries eased later in the day about the Japanese nuclear plant crisis
IPXL- positive phase III Advance-PD results for treatment of Parkinson’s Disease
CCRT- announced tender offer to purchase up to 13.125 million shares at 8
HEK- decent earnings
NFLX- upgraded from Neutral to Buy at Goldman Sachs
CBLI- it’s a radiation drug maker…
Bad-The following stocks have bad news and/or a weak technical pattern
ILMN- $800 million convertible notes offering
GVP- closed near a low and issued earnings last night
SPRD- closed near a low
DOLE- poor earnings
ZAGG- poor earnings
ATPG- poor earnings
BWS- poor earnings
CRZO- poor earnings
Earnings:
TUES MAR 15 BEFORE
ATPG BWS CRZO
DSW FDS
TUES MAR 15 AFTER
PANL PSUN
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
No comments:
Post a Comment