In 2007, shares of Apple (AAPL) declined a stunning 57%. In contrast, shares of AAPL rallied almost 53% in 2010. You know what the takeaway of those two facts knowing not much else is and what it portends for 2011 for the average day trader? The answer to the takeaway is “nothing’ and the answer to what it means for the future is “nothing.” There are two major points. First, particularly in the first few trading days of the year, people come in with preconceived notions as to what they think will happen on a given year. It’s bad enough when someone has an unwavering belief on what he/she thinks will happen on a given day, but it is poisonous to let what one think will happen for the year to affect one’s minute-to-minute trading. If one were to think, say, that QE2 would cause all asset prices to go up as has been the case in recent months, it doesn’t mean that shares of AAPL won’t fell two points in the next six minutes. Preconceived notions are just that- notions. Furthermore, it’s so easy to forget- day traders trade day-to-day…not year-to-year. It doesn’t matter- as a day trader, you can have whatever long-term opinion you want about a stock…it doesn’t mean that the direction of that stock won’t go opposite of that on a given day or given minute. The bottom line if you’re a day trader (particularly one with a very short time horizon for your trades)- don’t be set in your ways as to what you think will happen this year and don’t forget that you are trading for the here and now rather than what may be.
Markets overnight were once again notably strong throughout the world. Benchmark averages in Tokyo rose 1.7%, Hong Kong 1%, London 2.4%, and Frankfurt 0.5%. Oil is just shy of $92/barrel, gold is off by 1%, the dollar upticking a little, and bonds are down slightly. Futures are modestly positive. Factory orders (-0.4%) are out at 10AM, FOMC Minutes at 2PM, and Auto Sales (3.7 million) and Truck Sales (5.3 million units) at 3PM. It was notable yesterday that prices did back off a little but not notable enough to stem the strong uptrend, I’d surmise. Trading will likely be quite choppy today with an upside bias as big names such as AAPL trade higher on another upgrade. The focus will likely continue to be on the rare earths, big cap tech, small caps in the news, and any relative weakness/strength plays that stick out in the early part of this year.
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 after participating in Facebook funding
MCP, AVL- closed near a high
AAPL- closed near a high
AFOP- closed near a high
BIDU- closed near a high
ITMN- closed near a high
DHRM- closed near a high
WYNN- closed near a high
GOOG- closed near a high
BAC- closed near a high after taking a $2 billion charge to settle buyback claims on home loans sold to Fannie Mae and Freddie Mac
XPL- closed near a high
BKS- closed near a high after issuing strong same-store sales data
MOD- closed near a high
ANAC- closed near a high after being initiated with a “Buy” rating at a couple of brokerage houses
LEAP- closed near a high
AA, AXP, INTC- featured on “Mad Money” last night
USAT- expects to report record quarterly revenues and gross profit for its 2nd quarter
VGZ- announced results of a new feasibility study at the Batman Deposit in Australia
XOMA- announced development and commercialization agreement for XOMA 052
Bad-The following stocks have bad news and/or a weak technical pattern
ISPH- closed near a low after its cystic fibrosis treatment missed key goals
CHGS- closed near a low
Earnings:
TUES JAN 4 BEFORE
None today
TUES JAN 4 AFTER
MOS SONC
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
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