MON. SEP. 28: Atoning

Today is Yom Kippur. For Jews, it is a very solemn day and is in fact nicknamed “The Day of Atonement.” For the stock market, it is usually a very slow day as many traders- Jewish and non-Jewish alike take all or part of the day off. Newsflow slows to a crawl usually and liquidity is at a premium. So, in line with the personal hefty matters I’ll be thinking of in synagogue later this morning, I’m going to switch things up. There is an absolutely beautiful prayer/song I’ll be reciting later called the Ashamnu (you can listen to it on You Tube, I am sure). In the prayer, there is a list of many of the general sins we’ve committed over the year (gossiping, hitting, jeering, mocking, and so forth). As we say the Hebrew words for the sins, we make a general ball with our left fist and touch our heart as a ‘shame on me’ theme along with a quest for forgiveness. In line with this, here is a short list of trading sins we have all been guilty of (certainly ones I’ve been guilty off at times in the last 12 months) which have caused me to lose money. I encourage each of you to read it, add to it, note them…and of course ask for forgiveness from the Trading G-d! Or of course, simply make an internal plea to be better about it in the next 12 months…and keep in mind, I have lost at least $1,000 over the course of the last year committing each of these sins (and much more in some cases):


1. I have scalped unnecessarily at times I should not have.
2. I have been overly exuberant when having a winning trade and overly depressed when having a losing trade.
3. I have let other things on my mind get in the way of my trading.
4. I have traded from fear when I should have put on bigger size in a trade.
5. I have traded from greed when putting on too much of a size in a trade in which I should not have done so.
6. I have not gotten out in the ½, ¼, ¼ method when right.
7. I have hoped for better results when wrong in a trade and held on too long.
8. I have traded a stock on momentum when there was no reason to do.
9. I have traded counter to the market.
10. I have traded illiquid stocks.
11. I have occasionally traded a stock in the middle of the range.
12. I have traded a stock without stagnation.
13. I have traded a stock in which I thought I could make, say 10 cents on 10,000 shares and promptly lost three days of work
14. I have, when doing poorly traded without seeking confirmation and lost money.
15. I have been frustrated when trying to short stocks that cannot be borrowed.
16. I have exited a stock when there was literally no reason to do so.
17. I have entered a stock when there was literally no reason to do so.
18. I have let go of my beliefs as to what I think would happen to go with the crowd.

And here is a list of things I vowed last year I would not do…and have kept my vow for the last 12 months.

1. I have never not one time called out how much money I made in a stock the instant I exited a trade nor have I even clapped my hands and exclaimed how well I did when right. It is obnoxious boorish behavior and impresses nobody when done over time. I did it for the last time ever 1 ½ years ago and saw a look of genuine jealousy and anger from a good friend of mine and hated myself instantaneously. Reputations speak for themselves.
2. I have never come in late to work on my own volition outside of traffic accidents or other external factors.
3. I have never left work earlier than I had to. I actually hate this one because there are things I’d rather do than play a computer game all day long. But, I have to pay my mortgage.
4. When exiting stocks properly, I have held on to my winners longer than I ever have on average this past year.
5. I have adjusted my schedule to come in even earlier during earnings season to allow for even extra time. Getting up at 4:30AM instead of 5:30AM to make extra income when it needs to happen for added income is not a big deal.
6. I accepted the market for what it was. As the roaring bull market of 2009 commenced in March, I did not disbelieve it; I just went with what was in front of me.
7. Whenever I really need a break- due to exhaustion or trading-related strings of winning or losing which affected my emotions- I’ve taken a quick walk rather than forcing things.
8. I can look in a mirror and say I made my best effort amidst a time constraint in trying to help anybody I could in terms of things like configuring software for them…although I know I can always do more.
9. I have gone stretches of as long as four hours intra-day without making a trade…and not felt like I needed to press buttons.

In the Jewish faith, the symbol for the number ‘18” is the same as the Hebrew word “life.” So, I aptly named 18 sins and made a list of only ½ along in the spirit of genuine humility as to things I’ve been good about. Unfortunately, I could keep going on the list of trading sins…and have to really think about the vows I’ve kept successfully to add to that. But, all I can do is vow to myself and to each of you that I’ll try and do better in the next 12 months.

Markets overnight were solidly lower in Asia with Tokyo down over 2% and Hong Kong down almost 2%. Prices are mixed in Europe with most of the continent flat to slightly up with Germany the notable exception in trading up about 1% following weekend election results. Oil is down slightly, the dollar was crushed overnight but has come back a bit, gold is flat, and bonds are quiet. Newsflow is light but positive with mergers and a few upgrades in the tech sector (notably CSCO and AMAT). Look for an anemic trading day albeit likely to the upside. Monday Yom Kippur’s tend to be very slow so keep powder dry much of the session as there will likely be extremely limited opportunities today.

Watch list:
09282009Eriklist.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

BLDP- BMO Capital Markets upgraded the stock in noting it thought the company was ready to make commercial transition in raising its target Friday morning to 4.50; close near a high

HPJ- closed just off of a high

DRAM- closed near a high after DigiTimes indicated DRAM and NAND flash spot pricing is gaining momentum

BC- upgraded by RBC on Friday; closed near a high

IP- CEO featured on “Mad Money” on Friday

COMS- on “Mad Money” on Friday

ABT- acquiring a pharmaceutical unit from Solvay; ABT indicated it will be accretive to earnings as early as next year

ACS-to be acquired by XRX for 63.11 in a ratio of 18.60 cash plus 4.935 XRX shares



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

SNDA- fell very hard in closing near a low after the lackluster IPO debut of GAME

TRA- closed near a low despite declaring a nice $7.50/share special dividend

RIMM- closed near a low, down over 15%

MA- closed near a low on worries about Congressional legislation re credit card entities

CALM- poor earnings



Earnings:

MON SEP 28 BEFORE

CALM

MON SEP 28 AFTER

none




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