Sometimes, there are just times to divert a little bit from the norm. This is not usually the case, but this piece is about one of those rare 'exceptions to the rules.' Such was the case on Tuesday when Seagate Technology (STX) announced that Samsung had taken a stake in the company. Mind you, the stock had run up several points ahead of the announcement amid the thinking that maybe, just maybe, STX was going to be a takeover candidate. The thought process to the trade was this: STX was trading less than 1% higher around the time of open. It could not get any traction on the news. Ergo, it'd be a conventional short through unchanged as some longs who felt the company was an imminent buyout candidate would be disappointed with no merger announcement forthcoming. Now, usually, I am in trades for 10 seconds- 3 minutes with the entry a near science and the exit an art quite admittedly. But in this case, the thought process was quite cut and dry...if it had rallied several points on the thinking it was to be bought out and now it wasn't to be bought out, it could really really go. I shorted several thousand shares of the stock as it breached unchanged and made good money thankfully. But the theory in this one went that it was a solid 30-90 minute idea if not longer as common sense would dictate that disappointment would lead to a larger decline which sure enough occurred as it proceeded to fall almost a dollar from unchanged. So here's the point: when you have a degree of success at whatever type of trading you are doing, do it by all means. But in the rare exception that you want to divert for a very logical reason, don't fall back into your traditional mindset because if your trading parameters are different, your mindset should be different as well.
Markets were stronger throughout the world overnight with the Asian markets trading ahead just shy of about 1% with the European bourses up more moderately- about 0.2% to 0.4% across the board. Oil and gold are both up modestly with the dollar getting hit once again. Jobless claims data came in slightly better than expected, LEI is out at 10AM (0.3%) and Phily Fed (36.0) at 11:30AM. Futures are nicely higher on the generally positive earnings flow- specifically from AAPL. As the day progresses, look for the gains to likely hold on slower volume over time. It will be frantically busy yet illiquid on the bell. The focus will be on the tons of earnings out along with relative weakness plays.
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
VMW- closed near a high after posting good earnings
UTX- closed near a high after posting good earnings
STJ- closed near a high after posting good earnings
GRA- closed near a high after posting good earnings
SNDK- closed near a high
JOYG- closed near a high
FFIV- closed near a high
AMZN- closed near a high
BIIB- closed near a high
MEE- closed near a high
ALTR- closed near a high
KLAC- closed near a high
CAVM- closed near a high
CRM- closed near a high
AAPL- good earnings
PLXS- great earnings
QCOM- good earnings
YUM- good earnings
FFIV- great earnings
SCSS- great earnings
GDI- good earnings
EW- good earnings
SLM- good earnings
HON- decent earnings
ALGN- good earnings
TSCO- decent earnings
ETFC- decent earnings
CSR- received a $6.50/share takeover bid
BAX- decent earnings
BIIB- decent earnings and positive drug data
CY- decent earnings
COF- decent earnings
DD- decent earnings
DO- decent earnings
GE- decent earnings
MS- decent earnings
NEM- decent earnings
NOK- signed licensing deal with MSFT
PENN- decent earnings
PNC- decent earnings
TPX- decent earnings
TRV- decent earnings
UNH- good earnings
Bad-The following stocks have bad news and/or a weak technical pattern
QIHU- closed near a low
SYK- closed near a low after posting poor earnings
MCP- closed near a low
THG- closed near a low
AMGN- poor earnings
AXP- poor earnings
WDC- poor earnings
CMG- poor earnings
LRCX- poor earnings
NE- poor earnings
GILD- poor earnings
CPHD- poor earnings
CAKE- poor earnings
RIG- being sued by BP for $40 billion for the Gulf oil disaster last year
SLB- poor earnings
WFT- poor earnings
WLT- poor earnings
TEVA- sudden increased competition from BIIB’s pill
SINA- cut to “sell” by Goldman Sachs
Earnings:
THURS APR 21 BEFORE
ALK ALXN APD
BAX BBT BLK
BX COL COV
CP CSH CY
DD DHR DO
DOV ESI FHN
FITB GE GMT
GR HON IR
JNS JBLU KSU
LH LLL LSTR
LTM LUV MCD
MS NEM NOK
NUE NYT PCX
PENN PNC PPG
RAI SHW SLB
SON ST STI
TCB TEL TPX
TROW TRV TZOO
UAL UNH UTEK
VZ WCC WFT
XRX
THURS APR 21 AFTER
ADS AMD AMSG
BCR BIIB CB
COF CYT EZPW
GILD IGT INFA
MCRL MXIM PLCM
RMBS SNDK SYNA
WLT
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
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