Focusing On Focus

I admit this is going to be one of the weirder columns, but you are going to have to bear with me on it because it leads to an extraordinarily important point I’ve never truly thought about in depth and certainly never written about. A dear friend of mine (with 10 times my intelligence and 100 times my niceness…although maybe not as good looking!) IM’ed me yesterday morning after a group of us did a pretty good trade in PALM. He told me that he absolutely would have done the trade, but he was in the bathroom. I told him the truth- I too had to go to the bathroom for over an hour. I was trying to make him feel better as I wanted him to know that I had the same, um, stomach pain that he did. I self-depricatingly referred to myself as “demented” as I was afraid of leaving my computer to miss the trade. I felt and still feel bad because he missed the trade and because I didn’t/don’t want him to think he was “weak” for going to the bathroom. But here’s the thing after really giving it some thought: I wasn’t demented. As it turned out, strictly from a pure business standpoint - “holding it in” was the right thing to have done as the best trade I made all day long monetarily was that PALM trade at 8:15AM yesterday morning. This episode leads to two points. First, when anyone asks me what my career goal is and I respond “I’d like to retire early,” and they say “No, really, what do you eventually want to do,” I am not kidding when I say “I seriously want to retire.” On average, I work about 15-18 hours a day four days a week and about 12-15 hours on Fridays. Whereas other people are rightfully doing things like watching TV to relax a little at night, I am working on the blog, reading articles, organizing the watch list, responding to e-mail, and so forth after spending some much needed and desired time with my kids. When everyone is sleeping in the morning, I am studying the overnight stuff and getting organized to be prepared for those 8:15AM trades when many other people are asking questions like “So, what happened overnight?” at 9AM. I want nothing more professionally than to not have to keep up this pace anymore. Ergo I do everything I can mentally do to not miss trades. Thus, while it may not be the best thing in the immediate-term for my kidneys to hold out, I do what I can to truly forget about anything that could make me miss a trade when I think I have one. I don’t answer my phone. I don’t go for a walk. I don’t do e-mail. I don’t partake in conversation. In short, I do what I absolutely have to do to earn a living. The second major point is to do what you can so that you can be here when need be – even on trivial things like going to the bathroom. On a specific point as I keep the bathroom theme going, my little Rayna has gone a week now with dry diapers upon awakening…yay! It clicked in my mind one day last week…I go to the bathroom before I go to bed and the first thing when I wake up; most nights, this allows me from waking up and having to go. Same for my daughter. I also purposely tend to go shortly after I arrive at the office even if I don’t have to do so. Thus, although I still had to go yesterday (!), psychologically, I knew I was gonna be OK so I put it out of my mind. On a macro score, one must know when the major economic events will be (i.e. Federal Reserve meeting at 2:15PM ET yesterday), one must not go to lunch when the market is moving, one must be around earlier and stay later during earnings season, one must not walk out the door six minutes after the NYSE close if at all possible because one gets clues for the next day simply by watching what is going on for an hour plus one should be studying that day’s trades to gain self-insight, one must do research when walking in the door rather than getting on Facebook 10 minutes after arrival, and in short- one absolutely utterly must pay attention to the screen when it is time to do so. One can and should take mini-respites during the day- when it is slow- to clear one’s head. I’m a weird bird because I refuse to take lunch or go away for an extended period because I know anything can happen at anytime…but it certainly puts me in a position to increase my odds of being a profitable trader. Thus, in short, a lot of trading is mind over matter…more if it than most of us (especially me) would realize. ‘They’ always say that the best actors or athletes can perform in front of tens of thousands of people because those professionals drown everything out and go into a ‘zone.’ It’s the same with trading. To be successful at electronic day trading, besides the preparation theme I’ve harped on time and again in order to have self-confidence, one must have searing focus in drowning out everything external (much less internal) as much as possible when trading. In a classic episode of “Seinfeld,” it was noted that one cannot have a little grace. One either has grace or one doesn’t. Well, it is the same with desire- one either has desire for something or one does not.

Markets in Asia were mixed overnight with Tokyo up 1.5% after a three-day respite, but Hong Kong was down 2.5%. In Europe, prices are modestly lower- about 1/4% on average. The dollar is getting hit very hard this morning, gold is modestly higher, and oil and bonds are flat. Futures are slightly positive. For the day, it is likely to be very choppy from the outset. The broader news is good; the accounting news affecting the tech sector is terrific for instance. But yesterday’s sell-off was the most aggressive we’ve seen in awhile. Off-hand, best guess is that the bull market resumes today, but take your cue from how market leader AAPL acts this morning on good news. In the interim, focus upon the smaller stocks once again.

Watch list:
09242009Eriklist.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

RHT- good earnings

CTAS- decent earnings

YRCW- closed near a high

CBAK- closed near a high

VFC, EQT- on “Mad Money” last night

AAPL, RIMM- regulators changed accounting rules to allow revenue to be recognized at the time a device is sold without having to spread it over the life of the device, i.e. an iPhone’s revenue can be recognized at time of sale rather than over the expected life of it

VICL- positive results from animal studies of its cancer vaccine

VITC, CLNY, ARI, ART, AONE- all IPO’s. 11 million VITC @12, 12.5 mil CLNY @20, ARI 10 mil @ 20, ART 25 mil @ 26, AONE 28.1 mil @ 13.50

GNVC- received 4th year of funding from NIAID for its HIV vaccine contract

HLCS- announced publication of first-ever sequencing of single molecules of RNA

AM- decent earnings

COMS- good earnings


Bad-The following stocks have bad news and/or a weak technical pattern

BBBY- bad earnings

PAYX- poor earnings guidance

HERO- share offering and poor earnings outlook

CNXT- share offering

ARE- share offering

PPS- share offering

ATPG- closed on a low after announcing a poor earnings outlook and share offering; share offering will be priced at 18.50

AZO- closed on a low after posting earnings

GS- closed on a low in an ugly reversal

WR- warned on earnings

GET- closed near a low after announcing a five million share offering

MCO- closed near a new trend low after a former employee accused the company of intentionally inflating credit ratings; that person is going to testify imminently at the House Committee on Oversight and Government Reform

ILI- island reversal albeit still up several hundred percent after announcing positive top-line results of a study evaluating a genetic test’s impact on weight loss



Earnings:

THURS SEP 24 BEFORE

AM COMS MKC

RAD SCHL SCS


THURS SEP 24 AFTER

RIMM TIBX





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