Last year, before worries about such things as, say, the collapse of the financial system pervaded conversations around dinner tables all across the world, there was talk of something else out there. How quickly we forgot. And that something else? A superspike in oil. Quick..anybody...where did oil close yesterday? Anybody? OK, some people probably know, but I did an impromptu survey yesterday of a few people and nobody could tell me within five dollars a barrel where the price of oil settled at the close of oil trading. I mean, think about this- we as day traders (much less as citizenry) were so worried about the trajectory of oil prices last year that the S&P 500 for awhile actually moved nearly tick-for-tick in the opposite direction of oil. Where am I going with this? two places. First, let's stick with the theme here. Certainly, oil is not irrelevant as an economic entity to be sure. At a sustained level of $65-$75 barrel, it is still in a much higher range than where it was merely four years ago. It's just that we're all used to paying $2.75/gallon at the pumps now and accept it considering we were all paying $4.50/gallon or more last year. But in the stock market, there is currently very little correlation between where oil goes and where the stock market goes on an intra-day basis. Oil has chopped around for weeks now yet that has not stopped the equity markets from rallying during that time (or falling last week). In short, nobody is watching with baited breath. That leads to my second point. The issues with Iran right now are very serious. Whether Iran has a cache of nuclear uranium and whether Iran's purposes with that product are peaceful -economically speaking- are not important right now. What is important is that Iran is one of the top oil exporters in the world. If there is even a whiff that there could be a war involving Iran, oil prices suddenly become very relevant again. Very very very relevant. Thus, for now, start watching oil again with some more focus. Don't rely on it for trading, but listen to the daily rhetoric and see how oil reacts day-to-day to the news to gain clues about how serious the situation is or could become. Nobody else is really watching as a general rule so I reiterate- do not use oil as an indicator right now for how equities will perform. But, the undertone of the politics is deteriorating somewhat rapidly right now so be well aware that it is a very fluid situation. The mere talk of a war with Iraq in 1991 caused oil prices to literally double in a very short time span. Thus, we all need to be aware that history can and often does repeat itself...not that it will here, but the very possibility of it is something all day traders must monitor.
Markets in Asia rebounded nicely overnight with Tokyo up 1% and Hong Kong 2% in playing catch-up. However, prices in Europe are down fractionally with Europe down ¼% on average. The rest of the world’s markets from gold to currencies to bonds are quiet. For today, look for another quiet session (albeit not as quiet as yesterday) and choppier at that. There’s going to be a battle of the window dressers- managers looking to take profits in some of the big movers versus those trying to show they were “in.” So, look for some illiquid swings in some of the big percentage gainers and losers of the quarter with a focus on the microcaps.
Watch list:
09292009Eriklist.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
TIV- closed near a high
RINO- closed near a high
AM- closed near a high on continued short covering following its earnings last week
HIG, PFG- closed near their highs in a strong insurance group
WAG- decent earnings
CPSL- decent earnings
DVAX- initiated phase III trial of Hepatitis B Vaccine in people with chronic kidney disease
GCI- terrific earnings guidance
Bad-The following stocks have bad news and/or a weak technical pattern
SQNM- CEO and several others fired after inquiry launched into mishandling of Downs Syndrome data related to company’s prenatal test
MBI- S&P cut its debt rating to ‘junk’
RIMM- closed near another new low
CLSN- closed on a low after announcing a stock offering
Earnings:
TUES SEP 29 BEFORE
CPSL WAG
TUES SEP 29 AFTER
DRI JBL MDRX
MU NKE OMN
WOR ZZ
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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