If I had a dollar for every time I heard the words “I wish I’d have held that much longer” not only from others but from my own loud mouth, I’m guessing I’d have a net worth of $100 million or so. Well, let’s discuss a rather fascinating and unusual thing that happened late last week. On Thursday, shares of New Oriental Education & Technology (EDU), the biggest provider of private educational services in China, closed at an all-time high on the heaviest turnover in two months. In fact, the shares had rallied 14% in the previous week-and-a-half. I showed this chart to a few people when they all walked in the door on Friday morning and they all universally agreed that on a strict technical basis, the action in EDU was pretty darn good with no warning of anything majorly negative. That didn’t stop EDU from issuing an announcement at 4AM on Friday morning in which it indicated that student enrollment was sharply below prior guidance. This great acting stock, which closed at an all-time high the day before, cratered in trading down as much as 20% before recovering slightly. Now, if your goal is to swing trade with a time schematic of weeks to months, that is one thing. But if you are aiming to make trades with a time horizon of seconds to minutes, there’s no point in worrying/thinking about what happens ‘next.’ It’s not your game or trading area. Yes, there will be times that I for example will sell the last piece of my position for a net profit of 24 cents…and watch whatever I was in rally over a point in seconds. But a) far more often, I know I can avoid the pitfalls of an EDU by doing what I’m supposed to do and b) it doesn’t matter what happens outside of my game plan. For instance, I am not an EDU analyst thus if I made, say, 75 cents in a trade in 10 minutes and it moves four more points in the next two days, well, I do not aim to begin to guess how an EDU will react longer-term as there are too many factors beyond my control (geopolitics, whatever is going on in China on any given day, the overall market, and so forth). Thus, if you’re a day trader, use this EDU case as but one more example in not worrying about “what could have been.” Sometimes, “what could have been” not only yields poor results, but it’s utterly unpredictable…so why try to predict it if your area of trading specialization is to focus on the immediate-term?
Markets in Asia were higher overnight with Tokyo up 1.4% and Hong Kong Kong ahead 1%. The trend continued in Europe although not to the same degree with most bourses up 0.1% to 0.3%. The dollar is marginally weaker with gold and oil both up slightly. Futures too are up a little bit. No economic reports are on the docket. It’s quiet but impressive that the gains from last week are holding amid a rash of mergers this morning. Look for the gains to resume again today albeit at a slower pace than from Friday. Focus on the myriad of mergers, big cap tech, strong microcap biotech stocks, and relative weakness plays (particularly from about 9:30AM-10AM).
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
HSFT- closed near a high
KNXA- closed near a high after a couple of brokerage upgrades
LAMR- closed near a high on a brokerage upgrade
REE- closed near a high in moving in sympathy with MCP
MIPS- closed near a high on a brokerage upgrade
AMZN- closed near a new record high
BIDU- closed near a new record high
CREE- closed near a high
GS- closed near a high
ROVI- closed near a high
IBM- closed near a high
QLIK- closed near a high
NFG- closed on a high
FSLR- closed near a high
AGU- closed near a high
MCP- closed near a high upon commercial launch of Earth-based water purification technology
WYNN, LVS- closed near a high
RIMM- closed near a high
V- closed near a high
STRA- closed near a high
GOOG- closed near a high
JOYG- closed near a high
AXE- closed near a high after declaring a special cash dividend
ANF- closed near a high
CAVM- closed near a high
RRD- closed near a high
MCHP- featured on “Mad Money’ on Friday
ACV- to be acquired by Unilever for 37.50/share in cash
CALM- good earnings
SGEN- positive top-line results from its SGN-35 product
AAI- to be acquired by LUV for 3.75/share in cash plus .321 shares of LUV
Bad-The following stocks have bad news and/or a weak technical pattern
NKE- island reversal in closing near a low despite posting good earnings
PEET- closed near a low
ISRG- started at “sell” by Goldman Sachs
Earnings:
MON SEP 27 BEFORE
CALM ZLC
MON SEP 27 AFTER
JBL PAYX
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
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