We had a huge pecan tree in our front yard when I was growing up. When I say "huge," I mean there were autumn cleanups in which we'd have upwards of 60 brown paper grocery bags filled with pecans. I always think of that tree at this time of year because this is when we'd harvest them, give them to friends, and of course have our stash for a winter supply of pecan pie. I also remember the annual battles wit the squirrels. Boy oh boy could those things be vicious. What was always so annoying to me was how hollowed out some of the pecans would be and I'd have to have a separate pile for those because I didn't want to keep eaten pecans. But even then, I could never get too mad because I had an admiration for the mighty squirrel because besides eating about 1 1/2 to 2 pounds of pecans a week, they are known for being able to harvest/burrow/bury upwards of two pounds of the things a day! In winter, when there are no pecans, they need their harvest to survive. As the calendar turned to December and I sit in a trading room, I thought of that as I hear tales of people thankfully doing quite well in this fairly active and quite vibrant stock market. For that, I am thrilled. What I am not happy about is that many traders tend to forget the lean times when things are going quite well. I've personally heard of dozens of stories of traders who had it all- and then lost it all and more. One of the secrets to success in any business lies in fully realizing that no matter what, every day just isn't going to be a great day. Another major secret is in remembering what got you to that level of success- and not deviating from it. Instead, many traders tend to think the good times will last in perpetuity and start doing things they may not otherwise do simply because they feel so confident- much less acting obnoxiously and boorishly. Those tend to be the traders who are setting themselves up for massive falls. Thus, if you've been fortunate to have a recent run of success- particularly in this wonderful market- remember that although traders may have a higher intelligence quotient than squirrels, squirrels are indeed smart enough to know that lean times can come and the good stretches are there to counterbalance the stretches of smaller profitability.
Markets overnight were higher throughout the world with Asia stronger on an easing (if ephemeral) in Korean tensions with Tokyo up 1.5% and Hong Kong ahead 1.6%. Stocks are nicely up in Europe too with London ahead 0.7% and Frankfurt 0.6%. The dollar is a little weaker, and oil and gold are up ½%. Coffee is at its highest level in 13 years with cotton limit up at a new all-time high. Futures are drifting higher amid a dearth of news and all of the positive buzz (and holiday spirit). Look for the gains to likely hold in quiet trade. The focus will likely be on the earnings plays (JBL, ADBE, et al), stocks mentioned in the media (such as NFLX on “Mad Money” last night), biotechs in the news (INCY), and A-B-A2 relative strength plays as long as the market stays quiet.
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
GS- closed near a high
CHK- closed near a high after Carl Icahn built a 5.8% stake
LVS- closed near a high amid rumors that they may be nearing approval to sell co-op shares in Macau
INUV- closed near a high
IDCC- closed near a high after being mentioned on “Mad Money” on Friday night
AMZN- closed near a high
ADBE- good earnings
JBL- decent earnings
PAYX- decent earnings
LDL- received FDA 410(k) clearance for Cell Freeze storage containers
INCY- announced positive top-line results from Comfort-1 Pivotal Phase III trial of INCB18424 in Myelofibrosis
LCRD to be bought out by ASSA Abloy for $6.25/share in cash
ARNA- closed near a high amid speculation the company is expected to have met with the FDA this month on its Lorcaserin drug
CHTP- closed near a high after accelerating new drug filing following meeting with FDA
PPHM- closed near a high after announcing it complete treatment of last patient in its phase II Cotara brain cancer trial
USG- closed near a high
FNGN- closed near a high
EDAP- closed near a high after its Sonolith i-move received Korean FDA approval
NFLX- featured on “Mad Money” last night
MEE- considering multiple bids according to “The Wall Street Journal”
EPCT- announced Ceplene approved for marketing in Israel
MATK- to be acquired by DSM for $31.50/share
WBC- raised earnings guidance
MCP- announced agreement with Hitachi Metals to pursue formation of joint ventures to manufacture rare earth alloys and magnets
KMX- decent earnings
Bad-The following stocks have bad news and/or a weak technical pattern
ULTR- closed near a low after unveiling a $60 million note offering
RIMM- closed near a low
DRI- poor earnings
ROC- share offering
DANG- closed near a low
LQDT- closed near a low
Earnings:
TUES DEC 21 BEFORE
CAG CCL CMC
KMX
TUES DEC 21 AFTER
CTAS FINL HOV
NAV NKE RHT
TIBX
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
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