TUES. OCT. 19- It's Insaaaaaaaane

It's happened to us all. We're running slightly late for a nighttime appointment, meeting, or a party. We think we know the address of our final destination, we get there, and we see that if we're looking for "1171" and we pass "1151" to come to "1201," we just know it has to be in between the two numbers. So we drive back. We still don't see it. We drive the same strip again. If we do it one more time, it becomes somewhat stupid. If we do it two or three more times, it becomes irrational. If we do it five more times, it becomes insanity. What we should do after the first couple of times is check to make sure we have the right address and/or to see if maybe there exists a little side street where "1171" is located. That fine line between the common sense of pausing to figure out one's mistake and doing something about it (looking for aforementioned side street or checking with someone to make sure the address is correct) and repeatedly driving the
same small stretch of road is a feature of the very mentality of a human being. It is also at the core of the successful versus the flawed trader. It floors me on a daily basis to see people making the same mistakes repeatedly- doing nothing about them- and continuing to lose more and more money. In the past couple of weeks, I’ve personally seen traders do things such as adding to losing positions or getting to work late and not having the first clue what is occurring on any given trading morning as a result. Now one has to make mistakes to learn from mistakes. G-d knows I make mistakes on a daily basis in trading and in life. I know because my wife tells me so (ba-dum-ching)! But if I make the same mistake repeatedly, I am not being immodest when I say I do my best to learn from it. If I found that I didn’t know what was going on news-wise, I’d get to work earlier. If I kept shorting shares as a stock kept rallying- and lost repeatedly, I’d stop doing it. Thus, trading can be hard enough but when one literally insanely does the same thing wrong- while being told it is wrong and not learning from it in hemorrhaging money- trading for a living becomes impossible.

It feels like two weeks since 3:30AM ET. Markets in Asia were up overnight with Tokyo notching a 0.4% gain with Hong Kong advancing 1.3%. Prices are down slightly in Europe with markets down 0.2% to 0.4%. Gold and oil are both down over 1%. Bonds are at their morning low with the 10-year up 5 basis points. The dollar is higher against the yen and euro. Futures are getting hit to the tune of about ¾% on the S&P. The storm started when there was an error in the trading of the SPY at 4:15PM ET which took that conduit down almost 10% by mistake. Then, the earnings flow wasn’t overwhelmingly great with AAPL and IBM getting hit. Finally, this morning, the Chinese Central Bank raised its 1 year benchmark interest rate. Housing starts came in better than expected with building permits worse than expected. For today, look for the markets to trade lower in a choppy random manner in staying down but certainly use AAPL and GS as benchmarks. Focus on the earnings plays such as GS, the techs, the healthcare stocks off of UNH, and any relative strength play particularly in the first part of the session post-open.

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

COF- great earnings

ICUI- decent earnings

LYB- featured on “mad Money” last night

BC- closed near a high

JST- closed near a high

REE- closed near a high

AGN- closed near a high amid positive buzz over the migraine Botox approval

BAC- decent earnings

PH- good earnings

UNH- good earnings

KO- decent earnings

PII- decent earnings

MEE- exploring strategic alternatives according to “WSJ”

GS- decent earnings



Bad-The following stocks have bad news and/or a weak technical pattern

AAPL- poor earnings guidance

IBM- poor earnings guidance

VMW- poor earnings guidance

INFN- terrible earnings

LNCR- poor earnings

HT- share offering

EXAC- poor earnings guidance

CWTR- terrible earnings guidance

MSFT- chief software architect resigned

CBST- convertible securities offering

JKS- closed near a low

MMR- closed near a low after issuing poor earnings

CASH- closed near a low after the OTS indicated it was not prepared to allow MetaBank to enter into any new three party relationships

HRB- closed near a low

BK- poor earnings

LMT- warned on earnings guidance

WFT- poor earnings

SVU- poor earnings

BTU- poor earnings

ITW- poor earnings



Earnings:

TUES OCT 19 BEFORE

BAC BK BTU

EMC FRX GS

HOG ITW JNJ

KO LMT MNI

MTG NYT OMC

OXY PH PII

STT SVU UNH

WFT

TUES OCT 19 AFTER

ALTR BSX GILD

ISRG JNPR SLM

SONC SYK TPX

TUP URI WDC

YHOO

Epiphany Trading, LLC
www.epiphanytrading.com

Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President