Many times, I hear phrases like “I cannot believe AIG is trading this high.” Or in another era aka 2008 things like “I cannot believe Bear Stearns is this low.” In another vein, I constantly hear things like “There’s no way XYZ is going to keep going higher; it’s already up 250% today!” There are two very basic things to take from these types of comments. First, they are often uttered from positions of ignorance. The very basic fact of the matter is that just because a stock has had a huge move, it does not mean that it may have an even bigger move. The most recent case that comes to mind is that of Vermillion Pharmaceuticals (VRMLQ). This company remains in bankruptcy, but received a piece of good news on September 11: the FDA approved its ovarian cancer test. The stock closed at 4 cents on September 10. On September 11, it closed at 1.29, up over 3,000%! No way it could go even higher, right? Yesterday, three weeks later, it hit 16.25. So, just because the stock skyrocketed did not stop it from trekking still higher. The other basic tenet is that one must differentiate between investing and trading. Going back to the AIG well, let’s just say if I had a dollar for every time I heard someone say that AIG should not be going this way and thus it must be a short, I’d have enough money to go on an extremely nice vacation with my family. One can have an opinion as to what AIG is worth (which may or may not share agreement with fact), but it does not mean that AIG couldn’t keep going higher. So, as you day trade, make sure you do just that- day trade. Do not get caught up in net changes or what your own logic has you think; instead, focus upon the task at hand and the green and red blips on your screen.
Markets were hammered in Asia overnight with losses in Tokyo and Hong Kong exceeding 2.5%. The tone is not great in Europe either with markets down about 1 1/3% on average as of this writing. Oil is down 1%, gold 1/3%, the dollar is slightly weaker, and bonds are slightly stronger. The tone of the overall market is poor. The jobs report came in under consensus (rather oddly considering the ADP report indicated a –250K job loss on Wednesday morning…the number today was –253K). Look for a terrible open. From there, play stocks into selected strength after the hard down week; for instance, if AAPL begins rallying, it likely will bounce due to an upgrade this morning. Otherwise, trading will be very choppy. There will likely be one attempt at a rally this morning as, again, this jobs number was forecasted out on Wednesday. The force (or lack thereof) will give us an idea of where the afternoon goes…watch the tape. Today is a day to watch; likely, we’ll settle into a range in mid-afternoon and stay there after what promises to be a frantic morning, but if that range is broken on either side, the trading day will prove to be very interesting throughout today.
Watch list:
10022009Eriklist.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
BLUD- decent earnings
GPN- decent earnings
SMSC- decent earnings
ONCY- reached protocol assessment agreement with the FDA on Phase 3 trial for Reolysin in head and neck cancer; conference call at 8:30AM ET
TELK- announced positive Phase 1-2a results of Telcyta for patients with advanced lung cancer
FMX- closed near a high on takeover rumors
FNFG, SBAC- on “Mad Money” last night
GFIG- featured on “Fast Money” last night
FSLR- being added to the S&P 500 on a date to be determined
LOCM- a false press release was issued indicating LOCM was to be bought out by MSFT; the company denied it at 9:30PM last night
ATV- rallied sharply in closing near a high after Roth Capital initiated coverage with a “Buy” rating
QLTI- announced sale of QLT, USA for $230 million
AAPL- raised to a buy rating at UBS with a price target of 265
ECHO- IPO- 5.7 million shares at 14
EDMC- IPO- 20 million shares at 18
Bad-The following stocks have bad news and/or a weak technical pattern
A.CN- poor earnings
VRTX- closed on a low after issuing a poor earnings outlook
RDN- fell more than 10% in a very weak financial sector
STEC- closed near a low
ROC- closed on a low after a brokerage downgrade
PAG- closed on a low after canceling deal to acquire Saturn
LEAP- closed near a low after a brokerage downgrade
COF- closed near a low
NUE, X- closed near lows
GS, BAC, JPM, WFC- closed near lows
Earnings:
None today
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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