The brick and mortar retailers and on-line sellers alike are arguably in more focus today for day traders than any other day of the year. The reason for this is that Black Friday is often an indication for how the entire holiday shopping season will go. Black Friday got its name because it is the day that retailers in theory go into profitable territory for the year (meaning their net gross margins are about 8%). And today is Cyber Monday as those of us who didn’t want to battle the lines at Macy’s over the weekend tend to commence their holiday shopping. Thus, indications that many people tend to think are ridiculous such as tracking the amount of parking spaces taken up in a parking lot to the number of hits to a given website are often crucial pieces of data used by retail analysts. Early indications have already begun turning in of this anecdotal evidence as well as foot traffic populace and of course the amount of sales. What we of course don’t know is something that reminds me of the old change commercial on “Saturday Night Live” whereby a firm’s primary business was making change. When asked how the entity made money, the faux bank president said “Simple. Volume.” This of course makes no sense because it’s a break-even. Well, it’s the same thing today- a company may have record sales but if they are discounting their merchandise, it’s a whole lot of sound and fury not signaling much. So as you look and study the numbers (which has hopefully been done by the time you’re reading this no matter your style of day trading as the holiday shopping season interpretation will likely matter a lot to the stock market today), Don’t try to interpret how a company is doing based on the headlines. Rather, be aware of them and instead focus on the action of the stocks (particularly retailers) if you’re trading them.
Markets overnight were higher in Asia as South Korea cancelled its war games plans with Tokyo up 0.8% and Hong Kong ahead 1.3%. However, the tone is different in Europe as news begins sinking in that Ireland has indeed received a near $100 billion bailout. But with the euro weakening, stocks sold off there a bit as London is off 0.5% and Frankfurt about 1%. Right now, the dollar is up almost 1 ½ euros, oil is up 0.5%, gold down 0.5%, and bonds up a bit. Futures are down but off of their lows. There is a battle between weakness from to the Irish debt crisis versus strong early indications in many cyber retailers. Look for this tug-of-war to maintain itself all day on light volume with relative strength in the NASDAQ. The focus will be on the cyber retailers, the big cap techs, the casinos, and small caps with relative strength.
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
NFLX- closed near a high
BORN- closed near a high
REE- closed near a high
BSFT- closed near a high
ASYS- closed near a high
SYUT- closed near a high
AMRN- positive phase III data from its Marine Study for AMR 101 to be used as a treatment for very high triglycerides
SHOO- mentioned positively in “Barron’s”
Bad-The following stocks have bad news and/or a weak technical pattern
FCX- closed near a low
GS- closed near a low
UNH- poor earnings guidance
SWC- 37 million share secondary offering
Earnings:
None today
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
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