When I sat in horror watching the Twin Towers burn, my first thought was “I can’t believe this is happening.” On an infinitely happier note, when my wife was in labor with my two beautiful daughters, both times my initial thought was “I can’t believe this is happening.” In a tragic way, we all witnessed the debacle of the financial markets in 2008 and thought “I can’t believe this is happening.” Yet that sentiment of “I can’t believe this has happening” has actually been even more present in what has become a bit of a snapback 2009 market. A newsletter that I read everyday (written well by a very intelligent person) has the following disclaimer at the bottom: “As we are experiencing a bear market, the long term buy list is simply a list of more conservative and defensive names.” I kept track: seven people used the word “overbought” on CNBC when referring to the state of the stock market. Four more people used the words “exercise caution.” I could say this was “yesterday,” but it was actually last Monday aka 400 Dow points below where we are now. There are two points to take from this: first, I am beyond tired of hearing people use the words ‘bear market bounce.’ Whether it is a bear market bounce or the bull market that any rational indicator tells us the rally of the last several months has been, if one is short longer-term, one is losing money. More relevantly for the day trading world is the fact that many people carry biases with them to day trading; while one should never do that, having the wrong bias is the worst kind of arsenic for one’s financial health. If one shorts a stock just because it happens to be up 150% and that individual thinks that the prospects for the real estate market aren’t good, well, these are two disparate thoughts which have no relevance as to whether that stock will soon be up 165% or 135% for the day. Thus, do not carry any bias whatsoever with you into the trading pit- and if you do- study the facts and the way the market acts rather than where you think it should be just by looking at the deltas of the movements.
Markets in Asia were strong to end the week with the Nikkei and Hang Seng up just over 1.5%. In Europe, prices were much more stagnant with the bourses hovering around unchanged. The other markets (commodities, bonds, et al) are quiet for a summer Friday morning. Yesterday marked the climax of the earnings season so traders who’ve been actively trading this stretch are more exhausted than normal thus the last Friday of the first month of each quarter tends to be traditionally slow. The sell-off yesterday combined with negative reaction to some good earnings reports likely signals an immediate-term cap yet the trend is still solidly higher. Thus, look for the crosscurrents to result in choppiness today with trading on both sides of unchanged (albeit with a slight downside bias overall due to the weak GDP report) in quiet action with the bulk of the activity occurring in the very early going.
Watch list:
07312009Eriklist.zip
Reiterating-
Please understand that if the ideas do not get to the hoped for set-ups cited below, more often than not, one should not blindly trade the symbol next to said idea.
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
ANDS- got FDA clearance on phase II hepatitis C drug study
MFE- decent earnings
MET- good earnings
MHK- good earnings
NVTL- fantastic earnings
ABAX- good earnings
GXDX- good earnings
RST- good earnings
BEC- good earnings
SGY- good earnings
BMRN- good earnings
DLB- good earnings
VSEA- good earnings
UTHR- closed near a high
MITI- closed on a high
PWRD- closed near a high
EME- closed near a high
KMP- CEO on “Mad Money” last night
ITT- great earnings
Bad-The following stocks have bad news and/or a weak technical pattern
AIQ- closed on a low
LVS- poor earnings; MGM, WYNN likely move in sympathy
DIS- bad earnings
FSLR- good earnings, but stock was down after-hours after its huge run-up
SWN- bad earnings
GNW- bad earnings
PBI- bad earnings
SYNA- terrible revenue guidance
GPRO- bad earnings
PKI- bad earnings
YRCW- bad earnings
IM- bad earnings
GERN- bad earnings
VPRT- bad earnings
DNB- bad earnings guidance
MPWR- bad earnings
ARIA- revised development deal with MRK
BEZ- bad earnings
BOOM- bad earnings
V, MA- island reversals yesterday after posting earnings
MCO- closed near a trend low
AN- in ‘Sell Block’ on “Mad Money” last night; they did, however, beat earnings estimates this morning
SFI- poor earnings
AGP- poor earnings
CVX- missed earnings
Earnings:
FRI JUL 31 BEFORE
AGN AGP AIV
AN AU CEG
CPF CPN CVX
D DRYS ITT
MDC NRF PEG
PKD SFI SNA
SRE TWI WY
Good luck today.
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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