I wrote a piece the other day about the power of creative thinking. I want to discuss a unique trade which I very admittedly did not capitalize nearly as much as I should have simply because of my irrational fear of the broader tape at the time. There was a debate as to whether Steve Jobs was going to show up much less discuss the newest Apple (AAPL) product on last Wednesday. I discussed this happening in some detail on our morning call that day in telling everyone that AAPL would likely be a ‘tell’ for the market for the first part of the day anyway. I originally thought that there was no real easy trade with the thing until I heard comment after comment about Steve Jobs with regard to him showing up and looking weak. Universally among the people I spoke with, each and every person thought if he came and looked weak that the stock would go down. When everyone is on one side of the fence, it always gets my radar alerted. It’s another blog entry for another time, but basically if everyone has already sold a stock, it means there’s nobody else left to sell. In English, everybody with an opinion one side will ultimately be forced to be wrong because the action will already be done so who’s left to sell? Anyway, again, another time for that entry. On point, to me, it was actually quite simple: if he didn’t show up, people would worry that he was doing badly. If, however, he did show up, enough people were already short in being convinced Jobs wouldn’t be there that they’d cover…with nobody around left to sell. This is what accounted for the vacuum higher once the presentation commenced. Thus always try to seize upon the fear and greed of the positions of other people rather than your own.
Markets in Asia were generally higher overnight with Hong Kong up 0.4% and Tokyo up 0.6%. The trend, however, is a bit lower in Europe amid worries about sovereign debt with Frankfurt off 0.2% and London 0.4%. Oil and gold are both ahead modestly with the dollar and bonds quiet. Futures have been mixed to slightly lower. For the day, it’ll likely be more benign than yesterday with a downside bias overall due to the weakness in stocks such as FNSR. The focus will likely be on the small caps with earnings, the optic al markets plays, and relative/strength weakness plays off of the direction of the market.
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
WDC- closed near a high
GS- closed near a high
UAL- closed near a high
X- closed near a high
DKS- closed near a high after posting earnings
KV/A- closed near a high following the release of details surrounding its patient assistance program for Makena
STP- decent earnings
AVAV- good earnings
FMCN- decent earnings
MDC- closed near a high
SINA- closed after a brokerage upgrade
LWSN- closed near a high after hiring an investment advisor to put itself up for sale
RBCN- closed near a high
CKEC- good earnings
MY- decent earnings
CRDN- great earnings
HERO- decent earnings
COOL- great earnings
DANG- decent earnings
Bad-The following stocks have bad news and/or a weak technical pattern
NFLX- closed near a low amid competition worries
URBN- closed near a low after posting horrible earnings
GEDU- closed near a low after posting horrible earnings
SGMA- closed near a low after posting horrible earnings
CNIT- closed near a low after posting horrible earnings
LNG- closed near a low after revealing it’s been charged with a debt default
AMZN- closed near a low
VRTX- closed near a low after a downgrade
FNSR- abominable earnings; JNPR, OCLR, GLW, CIEN, FN, OPLK, CIEN, IPGP, AVGO, ALU among others could move with it
SAM- terrible earnings
SOLF- convertible notes offering
DMND- bad earnings
EPB- share offering
DYN- story in “WSJ” implying the company may declare Chapter 11 bankruptcy
Earnings:
WED MAR 9 BEFORE
AEO DANG HERO
NAV PLCE
WED MAR 9 AFTER
CWTR FRPT HRB
MCP MW SMTC
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
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