Sorry for being New York-centric here in the start to this, but I’ll do my best to broaden out my main point. A few days ago, I was in midtown Manhattan after having taken my kids to the Big Apple Circus. We’d eaten before-hand and the kids were tired so after having awakened very early, we decided to go home (both kids fell asleep within five minutes of getting into the car). We were at Lincoln Center on the day before the New York marathon- a day in which the Long Island Railroad was running at about 10% capacity. There were two obvious ways to go. First, take the Queensboro Bridge (about 2 ½ miles away), but there was an accident on the upper level of the bridge with ‘extensive delays.’ Alternative #2 was to drive towards downtown and take the Midtown Tunnel (about 4 miles from where we were) but there were two accidents on the way there and an ‘extensive delay’ at the entrance of the tunnel. Well, my wife didn’t care if we took the Queensboro because the kids could sleep. My mother-in-law wanted to go toward the tunnel because she thought I could worm my way around the traffic. Both may well have been right. But I chose a different alternative- drive away from everything, take the Triboro, and circumvent things by winding up on the Cross Island and then the LIE. In English for non-New Yorkers, I drove several miles out of my way in the opposite direction first…envision a check mark and a diagonal line; I took the check mark route. By doing this, I was able to avoid the traffic mess but it was still a slight gamble because that route could have rapidly clogged up. I think I was right to do it as they eventually discussed delays on the radio of upwards of 1 ½ hours at the bridge and tunnel and I actually got home in 1 ½ hours but there is of course no definitive answer. This leads to my two points…one a singular and one a plural. First, I am definitely one of the most risk-averse day traders that could ever be. When I enter a trade, I know where I am wrong immediately and for the most part, when wrong, I am able to stick to those exits. With that in mind, when presented with facts, I go with what I see and make the best guess. If I know I am going to be stuck in traffic in route 1 and 2, I know there’s a 100% chance I’ll be stuck if I take those routes, but a much less chance if I take a route where’s no traffic with a great shot of getting home faster with the risk being that it’d 15 minutes more or so if I am wrong. So it is with trading. People ask me all the time why I trade the way I do using the methodology that I utilize. Why? Because I find it provides me with the best odds of making money consistently. And now the “we” point. There are different ways to get to the same place- garner a living at day trading. Different styles work for different people- at different times. The trick is to figure out exactly what works for you- while constantly tinkering- and giving everything you have- going “all in” to your choice. I know this whole piece sounds New Agey and obvious at that, but it’s not. At least 10 times a week, somebody will pitch an idea for a trade to me with logic that may work for an investment but if, say, LVS was downgraded yet is nearing unchanged on the day, I want to buy LVS for a two minute time horizon rather than worry about their revenues in Macau and how that may impact the business. If my goal is to make 1-2 cents in a trade on large size, I know to try to trade a stock with a narrow range rather than a stock like, say, Ford (F) yesterday which may be good for that style of trading some days but not when it’s moving 60-70 cents. So, please, pick what works for you and your personality but truly do your homework and thinking in understanding the risks (and rewards) of your particular choice.
Markets were actually relatively quiet overnight with Tokyo up 0.3%, Hong Kong ahead 0.8% with London and Frankfurt both trading within 0.1% of unchanged. Here’s the thing- everything else is really moving. The dollar is stronger against the euro, gold and silver are both up, but oil is down. Bonds are closed for Veteran’s Day. Futures are getting mauled after a warning by CSCO overnight. For the day, look for a fairly volatile low volume morning certainly on a stock-by-stock basis. There’s no guidance from bonds nor economic news so prices will be likely be contained in a narrow range but will be ragged until it slows mid-morning at which point everything likely gets very quiet. Focus on the networkers, the metals, the various earnings plays and share offerings, and relative strength plays.
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
SOA- closed near a high after posting good earnings
TSLA- closed near a high after posting good earnings
PEGA- closed near a high after posting good earnings
SFUN- closed near a high after posting good earnings
RL- closed near a high after posting good earnings
ROA- closed near its high on the day of its IPO
RIMM- closed near a high amid rumors it will introduce a new device in competing against AAPL
BJ- closed near a high on takeover rumors
DNDN- positive report on Provenge
AERL- closed near a high
AAPL- closed near a high
AMZN- closed near a high
NFLX- closed near a high
BIDU- closed near a high
SLW, EXK- closed near their highs
BRKS- decent earnings
AAP- good earnings
GRRF- decent earnings
IR- being added to the S&P 500
KSS- decent earnings
PUDA- closed near a high
AFOP- closed near a high
CPC- closed near a high
SVN- closed near a high after posting earnings
TTM- closed near a high
GKNTD- closed near a high
HT, WFR- featured on “Mad Money” last night
VIA/B- decent earnings
Bad-The following stocks have bad news and/or a weak technical pattern
RINO- closed near a low amid being mentioned negatively in a newsletter
KRO- closed near a low after an overallotment of a share offering was priced at 40- far below yesterday’s close
DF- closed on a low
AONE- closed on a low after posting poor earnings
SMT- closed on a low after posting poor earnings
CAGC- closed on a low after posting poor earnings
IDSA- closed on a low after posting poor earnings
GRNB- closed near a low after deferring TARP dividend and interest payments
CSCO- terrible earnings; JNPR, CAVM, ALTR, FFIV, and BRCM among others will likely move in sympathy
ASTI- share offering
SRDX- terrible earnings and share offering
HPJ- poor earnings
RST- poor earnings
KLIC- poor earnings
PRU- share offering
CLNE- share offering
ANW- terrible earnings
WPI- secondary offering of 10.5 million shares by selling stockholder
AKAM- competitor LVLT signed multi-year agreement with NFLX
Earnings:
THURS NOV 11 BEFORE
EJ SCR VIA/B
THURS NOV 11 AFTER
DIS GMCR MSCC
NVDA SPWRA YONG
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
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