Whenever I visited the Bronx Zoo way back in the day (although with two kids, I am sure more visits are coming!), I was always fascinated by chameleons. The lions, the tigers, the zebras, the elephants...meh...I liked looking at them, but those chameleons I could have stared at for hours. The way they could subtly change colors to blend in with their surroundings...I guess I am a pretty simple kid but I still think that's neat. I could not but help but think of that a few Friday mornings ago. The market had been churning listlessly higher as it had been for a couple or three days (particularly many of the momentum plays) with little change in the first hour. Suddenly, the floor caved in with the character of the market changing markedly. I'd been trading almost exclusively on news flow that morning since Ford (F) reported earnings at 7AM and by 9:45AM, I had my best day of the young year going. But as the tenor of the markets changed, so did what I was doing. Why? Because I had seven losses (all small) in a row. I had to undergo a sudden metamorphosis of my own into more of a momentum and hyper-speed mode rather than shorting F down 9 cents on the day when they missed their earnings at 7AM. There are three takeaways. First, things constantly change. Specifically, economic and political events change. After taking by seven small hits (which amounted to 20% of what I'd earned on the day), I stopped and educated myself that much more on what was going on and what may happen the rest of the session. Second, on a dime, the market changed. It was akin to being at the beach on a beautiful warm afternoon but an afternoon thunderstorm kicked in and drummed up waves. The smooth market had rapidly become volatile. Finally, If I didn't compress my time horizon and adapt rapidly in trading in terms moreso of momentum rather than news as well as in seconds rather than minutes, I was gonna lose all of my good work. So rather than trading the F's of the world, I started doing things like shorting the weakest stocks (MWW) when they went through lows and buying relative strength (NFLX) when they ticked through highs in market up pockets. Bottom line: when fear rules rather than greed, the exacerbated moves are to be embraced and adapted to rather than causing a frozen fright. I noted seven times on the chat room on that Friday not to build positions. Most of those individuals who ignored that warning went on to lose significant money on Friday while those who modified what they were doing in line with the speed of the market came out OK. From fear comes opportunity...I still struggle to live by that credo in every facet of life, but it cannot be truer- particularly if one accepts fear as a part of life and has a rational understanding of what is causing that fear.
Markets overnight were up in Asia with Tokyo up 0.2% and Hong Kong up 0.5%. But everything else- everything- is quiet. European bourses are barely straying from unchanged, oil is exactly unchanged as I type, gold is up slightly, bonds are flat, and the dollar isn’t budging. Futures are down slightly on some negative tech news along with worries over the health of Steve Jobs. The CPI indicated slightly more inflation than expected at the consumer level with jobless claims worse than expected as well. The LEI (0.2%) and Phily Fed (21.9) are both due out at 10AM. As the temperatures warm and news flow slows ahead of options expiration tomorrow, the market should be fairly quiet today with a very modest downside bias. The focus will once again be on the rampant earnings flow, big cap techs in the news such as AAPL, and small caps which have shown seemingly excessive moment the last few days (KV/A, GFC).
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
AAN- closed near a high after posting earnings
LZB- closed near a high after posting earnings
RIMM- closed near a high after an upgrade by Citigroup
ANF- closed near a high after posting earnings
ROC- closed near a high after posting earnings
XEC- closed near a high after posting earnings
CENX- closed near a high after posting earnings
TSLA- closed near a high after posting earnings
APD- closed near a high after withdrawing its bid for ARG
KV/A- closed near a high
LNG- closed near a high
INUV- closed near a high
AHD- closed near a high after the ATLS/CVX merger was finalized
AVEO- announced agreement with Astellas to develop Tivozanib
WMB- boosted dividend by 60% and announced split of itself into two entities
CLF- great earnings
RBCN- great earnings
ITMN- decent earnings
IO- good earnings
JAH- decent earnings
CBS- decent earnings
JOYG- will be added to S&P 500 index
TBL- decent earnings
TRW- decent earnings
WTW- good earnings
ABX- decent earnings
CPO- decent earnings
ONP- good earnings
TDSC- good earnings
CXDC- mentioned on “Squawk Box” this morning
DPS- decent earnings
CPO- decent earnings
Bad-The following stocks have bad news and/or a weak technical pattern
GFC- closed near a low after the person named president and chairman withdrew his name from consideration for the positions
NFLX- closed near a low
CAGC- closed near a low
ROVI- closed near a low after posting bad earnings
TNGN- closed near a low after calling off discussions for a possible stock-for stock merger
NVDA- poor earnings
NTAP- poor earnings
ECL- poor earnings
ESRX- poor earnings
ITRI- bad earnings
AEM- poor earnings
SKX- poor earnings
NFX- poor earnings
OII- poor earnings
EHTH- poor earnings
SNPS- poor earnings
ST- share offering
AAPL- rumors abounding on health of Steve Jobs after new pictures emerged
ORLY- poor earnings
Earnings:
THURS FEB 17 BEFORE
ABX ACOR APA
CAB CPO DPS
DUK ECL HOS
HUN LIZ LTM
NNN PDC PDE
RS SJM SPW
STRA TBL TRW
VCI VTR WM
WMB WTW
THURS FEB 17 AFTER
ARUN ATHN BCSI
BMRN BRCD BUCY
CECO CF EOG
INTU JWN MOH
OIS SPWRA
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
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