When the market is moving, relative strength plays and relative weakness plays can really be good. When there is a news event involved in an individual stock vastly outperforming or underperforming the market, relative strength plays and relative weakness plays can really really be good. When there is a news event involved in an individual stock vastly outperforming or underperforming the market on a given day with the market having a counter-trend day of its own, relative strength plays and relative weakness plays can really really really be good. This apex of a counter-trend day amidst a strong trend is a very powerful spot for trades- and a very rare thing at that. A number of conditions need to be present with the two main ones being a very powerful market and a very powerful counter-trend day on news. The reason this can become a ripe environment for traders is that emotions are higher than normal and if something doesn’t move on the counter-trend day, ‘real’ trend moves can become quite exaggerated. Yesterday was such a session. The broader tape has shaken everything off from Greece to the volcano to downright worries about the financial system. Yet the market was pounded yesterday morning on worries about the Greek situation as well as a number of earnings misses. Because of this, a number of stocks (particularly stocks with good earnings announced) opened weaker but trekked their way back toward unchanged on the session. Now here’s the thing- once these stocks got to unchanged- with the good news- it no longer really mattered what the market did because so many people were short them that they scrambled to cover once the stocks got positive. A partial list of these stocks that you can peruse at your leisure include: SHW, FFIV, MAR, ADS, and GR. Furthermore, stocks that have been strong got much stronger as the session progressed due to the sheer emotion of the shorts; some of these include AAPL, AMZN, WYNN, CREE, SNDK, BIDU, and CMG. The markets may have seemed quiet overall yesterday, but there was a tremendous amount of action underneath the surface. To participate in the action, it is so important to be aware of the newsflow out there…and to make sure that you pay attention to each of the sub-stories/stocks in addition to the overall market to get a picture of the relative strength of some of these beasts particularly in this environment.
Markets in Asia were down overnight with Hong Kong down 1%. However, as Greece agreed to take aid from their EU compatriots, things shifted in Europe with the bourses up from 0.8% in London to just over 1% in Frankfurt. The dollar is stronger against the yen, but surprisingly flat against the euro. That is the feature that will lead the way today as questions become raised about potential contagion effect in Europe as well as exactly what will happen next with the aid package. Futures are positive across the board on follow through from yesterday along with strength in some of the key financials. For today, follow the euro and follow the reactions of the earnings plays to their actual earnings. Track the stocks which had rampant short covering yesterday (many of which are highlighted below). From there, be very nimble but particularly play the stocks with earnings and relative strength/weakness albeit with smaller size than normal as stocks are gonna be moving.
Reiterating-
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
AIG- closed near a high
AAPL- closed near a high
SHW- closed near a high after posting great earnings
WYNN- closed near a high
FFIV- closed near a high after posting great earnings
MAR- closed near a high after posting great earnings
CREE- reversed in closing near a high
SNDK- closed near a high after posting great earnings
BIDU- closed near a high
V- closed near a high
ADS- closed near a high after posting great earnings
NFLX- closed near a high after posting great earnings
GR- closed near a high after posting great earnings
CMG- closed near a high after posting great earnings
TXT- closed near a high after posting great earnings
SCSS- closed near a high after posting great earnings
URI- closed near a high after posting great earnings
MKSI- closed near a high after posting great earnings
ISLN- closed near a high after posting great earnings
DHRM- closed near a high as an IPO
TCK- closed near a high
MOS- closed near a high
BUCY- closed near a high
IOC- closed near a high
WDC- decent earnings
AXP- good earnings
COF- great earnings
SYNA- great earnings
RMBS- good earnings
RVBD- good earnings
CYT- good earnings
EMN- great earnings
ACTG- great earnings
CSTR- set deal with Universal and Fox to offer DVD’s 28 days after release
APWR- announced press conference for its Texas and Nevada facilities
JCI- decent earnings
PCX- decent earnings
ERIC- good earnings
Bad-The following stocks have bad news and/or a weak technical pattern
QCOM- closed near a low after posting terrible earnings
DCTH- island reversal in closing near a low despite announcing positive drug data
SPSC- closed near a low as an IPO
ACUR- FDA Panel rejected ACUR’s Acurox
AMZN- poor earnings
MSFT- poor earnings
NCR- poor earnings
CYMI- poor earnings
PMCS- poor earnings
CAKE- poor earnings
FII- poor earnings
DV- poor earnings
BCR- poor earnings
STM- poor earnings
DDR- poor earnings
BUCY- poor earnings
ABFS- poor earnings
TRV- poor earnings
IR- poor earnings
WL- poor earnings
Earnings:
FRI APR 23 BEFORE
ABFS CMS COL
DOV ERIC EXC
FLIR HON IR
JCI PCX SLB
TASR TROW TRV
WL XRX
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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