One of my favorite books out there is Gulliver’s Travels by Jonathan Swift. In the book, Gulliver loves to travel. How appropriate. He comes across two lands. The first is Lilliput. On this ill-fated voyage, Gulliver is washed up on shore somewhere after a shipwreck. Once he awakens, he finds he is now captive by a people who as a whole are about six inches high each. Eventually, he is set free and viewed as a giant in this land with requests to do things like subdue their equally vertically challenged neighbors (the Blefuscudians). Eventually after the Lillipuitians fault him for not fighting their enemy, he eventually escapes their punishment of attempting to blind him and sets sail on a new ship (“Adventure”…as opposed to the QE2 of course). As the story goes, the ship is blown off course by storms and is found by a farmer in the land of Brobdingnag. This farmer is about 70 feet tall. In this land, he is of course the smallest being and must adjust to this- particularly not easy to do after his last adventure. I mean, he’s too small to do things like use a knife and fork and has a special house/box built for him in which he is routinely carried around. Well, many traders tend to view themselves as guests in Lilliput. I hear calls of people making a small amount of money, discussing winning trades, and doing things like talking about share volume. Well, I have a lot of pride, but I don’t delude myself in the least- I am certainly at this point in my career a benevolent guest in the Day Trading version of Brobdingnag. I look up at TV and view traders who make in a day what I make in a year. I see and hear tales of people who have the ability to spend lavishly. I personally know of traders who traded multiples of the size I trade in a day. In the end, although I have thankfully done fairly well over time through nothing but the force of sheer will and discipline (and not in that order), I am reminded daily of how much more I have to go. Whenever I get the Lilliputian chip on my shoulder (particularly after a series of good days) and do things like deviate from my own trading rules, I tend to have a pretty poor day. So, as one plods through the wilds of the day trading environment, certainly speaking for me, it’s much easier to quietly reside in a land of giants in trying to maneuver among them than to view myself as something I am not. The humbleness keeps me from doing stupid things…plus it doesn’t hurt to remember that David, in fact, slew Goliath eventually…and that of course is my hope on a much smaller scale day after day.
The market snapshot this morning is relatively interesting particularly for a Monday morning in November. The Nikkei gained 1% in Tokyo but lost almost 1% in Hong Kong. European bourses are moderately higher by about 0.1% to 0.4% across the board. The dollar is sharply ahead against the yen and the euro. Gold is down slightly but oil is up almost 1%. Bonds are getting drubbed- largely attributed to some negative comments that former Fed Chairman Greenspan made over the weekend. The New York Fed Manufacturing Index came in sharply below expectations, but retail sales came in stronger than expected. Business Inventories (0.9%) are due out at 10AM. Merger mania is in full force this morning with a series of deals. Like I said, interesting. Look for a very choppy day with an eye on merger rumors, bonds, the dollar, and gold for any potential exacerbation of moves along with rumor flow about the Irish debt situation. The focus will be on the merger stocks and their sectors (BUCY, JOYG, CAT, ISLN, et al), the limited earnings flow, techs, the do-it-yourself home repair sector (LOW, HD), and the metals stocks (FCX, et al).
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
ST- closed near a high
MOT, F- featured on “Mad Money” on Friday night
CPA- closed near a high after posting decent earnings
MEI- received five year contract with GM
MEE- “WSJ” reports MT expressed an interest in acquiring MEE
ISLN- received $33.85/share cash deal from EMC
ASYS- good earnings
CSUN- decent earnings
BUCY- received $92/share cash takeover bid from CAT; JOYG may move with BUCY
MCCC- received $8.75/share buyout bid from private investor’s group led by CEO
TSTC- good earnings
Bad-The following stocks have bad news and/or a weak technical pattern
ATRM- warned on earnings guidance
ASTM- filed mixed securities shelf
TORM- closed near a low after posting poor earnings
LVS- closed near a low
MOS- closed near a low
POT- BHP withdrew its takeover offer
PUDA- poor earnings
RINO- terrible earnings
MMYT- terrible earnings
Earnings:
MON NOV 15 BEFORE
CSUN DSX GYMB
LFT LOW MMYT
MOV NOV 15 AFTER
IOC JWN MCP
PWRD RINO URBN
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
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