You know how they say that no two snowflakes are alike? Well no two people are alike either (even amongst the identical twins that I know!). My wife for instance absolutely loves skydiving while I have an abject fear of heights if I am not in a confined space. By the same token, she refuses to eat sushi- a cuisine that I love. My mother is an acclaimed calligrapher whereas my penmanship...well, it can use some improving. But I have a head for numbers whereas she despises math. In the same vein, no two stocks are alike. For instance, Citicorp (C) will trade in a very narrow range all day long in high volume spike pockets while a stock like Mastercard (MA) will trade at much higher prices in much lower volume at a much higher spread. More on point, the things in the middle trade differently too. Comparably, Visa (V) will trade in a general correlation with an MA but the individualized movement within the broader trend can be much bigger on a percentage-basis. In comparison to C, Bank of America (BAC) can and will move rapidly to a market event on much lower levels of volume. So the key question to think about is a subtle one- immediate-term time-horizon traders will trade an MA and a V the same way and a C and a BAC exactly the same way. In a word, don't. If trading, say, 10,000 shares of C, why would one trade twice as much of BAC if it's going against them in particular when the BAC delta is much higher than that of C? Now, of course, there can be some good reasons such as one is hoping for a big move with a big position in a relatively big mover. But most traders should never treat the two the same because even if they are in the same sector, they could still have different news (maybe C is downgraded and BAC is upgraded by a brokerage house). Thus, if you have success in a given stock over time- something you should religiously study by looking at your past trades- stick with what works.
Markets in Asia were weaker overnight with Tokyo down 1.2% and Hong Kong off 1%. European bourses traded lower initially but have come back; they are now mixed with Frankfurt up 0.2% and London down 0.3%. The dollar is marginally weaker across the board, gold is notably down by about 2/3% with oil down slightly. Bonds are flat. Futures were down sharply overnight (7 S&P handles and 50 Dow points) but have come all the way back. The Case-Shiller Index is out at 9AM with a 3.4% gain expected and a reading of 52.9 expected for Consumer confidence at 10AM. The tone of the market remains good but it will likely be choppier today with yesterday closing so weak. Look for one of those days with a bid underneath the surface but a huge rally not taking place either. The ‘bouncing ball’ effect seems apt with no urgency to sell things right now..yet there’s no new reason to buy thus prices will be trapped all day in all likelihood in a narrow range.
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
RIMM- unveiled Playbook Tablet computer
CGNX- great earnings guidance
CXW- good earnings guidance
LDK- closed near a high after receiving major financing
RINO- closed near a high
NPD- closed on a high
BIDU- closed near a high after a brokerage upgrade
GBX- closed near a high after updating earnings
AMCN- closed near a high
REE- closed near a high
LULU- featured on “Mad Money” last night
CCSC- 5 million share IPO debuting at 16.50, above expected range of 14-16
WAG- good earnings
Bad-The following stocks have bad news and/or a weak technical pattern
JBL- poor earnings
ENTR- share offering
UNFI- share offering
NR- share offering
AEC- share offering
MTB- closed near a low amid worries about merger talks breaking down
CSGS- closed near a low after a brokerage downgrade
EDU- closed near a low
ISLN- closed near a low after a Goldman Sachs downgrade
INFN- closed near a low
AAPL- closed near a low
GS- closed near a low
MON- closed near a low
WYNN- closed near a low after a brokerage downgrade
KBH- cut to “Sell” at Goldman Sachs
Earnings:
TUES SEP 28 BEFORE
WAG
TUES SEP 28 AFTER
ZZ
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
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