A phrase I’ve used with increasing frequency and timbre on our chat room as well as in general conversation is “that’s too hard for me” when presented with a trade which seems to be that won’t work in the immediate-term. As I get older (not necessarily wiser…but definitely over), I find that whereas I was once willing to fight (right or wrong) if I wasn’t sure of how an event would turn out, I am not quite as willing. I don’t know if it age’s, exhaustion, or something else. I have always been a very risk-averse day trader (and no, that’s not a paradox of terminology). I don’t routinely trade stocks like Intel (INTC) or Microsoft (MSFT) unless there is a news event but in this computer-driven age of day trading, I’ve become increasingly selective about my trades. After doing a lot of thinking about it, there are a few (very quick) musings/themes that come out of this. First, say it with me: “I am not perfect.” No. Don’t make it into a joke and say “Erik, you’re not perfect!” There are just some things no matter what I/you do that no matter what, it’s just not attainable for one reason or another. I know people who do things like build houses; I have trouble banging a nail in straight. Yet realist I am, I know that I may be able to learn how to build a house but it’d be extraordinarily difficult for me…so why to do something that is a major inefficient time-soaker? Same thing with trading. I for one have a decent feel for what will happen in the next two minutes but don’t have nearly the same degree of surety as to what will happen over the next six weeks so I focus on the immediate-run. Second, I’ve accepted the not knowing and the results that come from it. If I am not almost 100% confident as to whether a stock will go up or down in the next six weeks, I lose my right to feel upset if I happen to be right. Same in immediate-term. Third, I’ve long accepted based on self-analysis of my trading results that it pays not to guess. If I’m right exactly 50% of the time when I guess (and usually it’s less than that), I still lose after ECN fee’s and such. Finally, it’s worth noting that I constantly tinker and always try to improve my trading techniques. But just as most professional athletes cannot play two professional sports nor can say a classically trained pianist be expected to play the guitar like Jimi Hendrix, there are some trades and types of trades that are just too difficult for one with a focus on the immediate-term to discern as to whether they will work. So, while there is no excuse for not doing homework in focusing on what you’re good at trading-wise, there is no shame in saying “I don’t know” when presented with a prospective trade. Save your capital for the trades you are confident in doing because of the tremendous preparation to ready for them and the supreme confidence from doing the right things repeatedly.
Markets overnight were strong in Asia as those indexes played catch-up with Tokyo and Hong Kong both up in excess of 1%. In Europe, the bourses are generally slightly weaker. The dollar is a little stronger with oil and gold a little weaker. Futures are quiet due to the massive nation-wide storm along with a bit of a hesitancy to jam stocks higher in the immediate-run because of the huge run-up of the last couple of days. ADP came out slightly stronger than expected. Crude Inventories are out at 10:30AM. The futures are a bit weaker amid the earnings flow (particularly with BRCM’s negative numbers). Overall, the markets will likely be much quieter today than in the last three days with no real bias. The focus will be stock-centric once again on the earnings issues mainly, Chinese plays in case of follow-thru from BIDU’s numbers, and relative strength plays in any market upblip particularly early on.
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
MTW- closed near a high after posting earnings
BIDU- closed near a high after posting earnings
LXK- closed near a high after posting earnings
SIMO- closed near a high after posting earnings
UPS- closed near a high after posting earnings
PCX- closed near a high after posting earnings
TUP- closed near a high after posting earnings
NVLS- closed near a high after posting earnings
BKS- closed near a high on rumors that BGP was on the verge of declaring bankruptcy
LVS, WYNN- closed near a high
MON, POT- closed near a high
X- closed near a high
AAPL- closed near a high
FCX- closed near a high
YOKU- closed near a high
XOM- closed near a high
AZC- closed near a high
MDR- closed near a high
MTL- closed near a high
IMAX- closed near a high
CYOU- closed near a high
TA- closed near a high after amending its lease agreements with HA and settled litigation
APKT- good earnings
ADS- decent earnings
ERTS- good earnings
WFR- decent earnings
UIS- decent earnings
VRGY- announced it received an initial draft from ATE to acquire VRGY for $15/share in cash
NAVI- TWC to acquire company for $5.50/share in cash
PRGO, ARMH- featured on “Mad Money” last night
INO- reported positive response in Dual-Antigen SynCon DNA vaccine for preclinical trial for prostate cancer
MTXX- HIG Capital increased takeover offer for company to $8.75/share in cash
TWX- decent earnings
AOL- decent earnings
LZ- decent earnings
SU- decent earnings
CAM- decent earnings
SU- decent earnings
HSY- decent earnings
MAT- decent earnings
ANN- raised earnings guidance
MCZ- entered into agreement with MSFT for audio headphones
Bad-The following stocks have bad news and/or a weak technical pattern
AUTC- closed near a low after a negative post in “The Forensic Factor”
PCAR- closed near a low after posting earnings
CHRW- poor earnings
BRCM- bad earnings
AFL- poor earnings
JDAS- bad earnings
MWA- bad earnings
NWK- bad earnings
PLT- poor earnings
NOA- poor earnings
KTCC- terrible earnings
SGEN- share offering
CHTP- announced plans to modify its Study 306, a phase III study for Northera
GNW- poor earnings
WHR- poor earnings
HSP- poor earnings
NFLX- app from Boxee box delayed according to “WSJ” and AMZN developing a film-streaming service according to “FT”
Earnings:
WED FEB 2 BEFORE
AGN AOL ARW
AVY CAM CVG
GNW HSP HSY
IACI LVLT LZ
MAN MAT MMP
MRO NDAQ SU
TMO TWX WHR
WED FEB 2 AFTER
ACE AMP ARE
ATW AVB BMC
CNQR CYMI DNB
EQR EW FBN
GMCR HIG ISIL
LNC NETL NLY
NWS.A SOLR THQI
TSO UNM V
VMC YUM
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
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