Recently, I was in a checkout line at Staples with my daughter, Rayna. There was a massive bin of Silly Bandz- last year's arguably hottest product. What would have cost several dollars last year for a pack of 24 animal bands was marked down to $1. I asked someone there about it and was told the store had put everything out in an effort to unload them. I had to go back a week later...and almost none had been sold. Fads like this have come and gone through time from Cabbage Patch dolls to Garbage Pail Kid stickers. But it's been the same in day trading. First, awesome day trading stocks in the past such as WCOM or KIDE permeated the trade blotters of many day traders including myself on a nearly daily basis. But times constantly change and the docket of stocks to trade constantly evolve as well. It's up to the trader to constantly seek out new ideas- and realize when the time to trade other stocks has passed (declining volume, loss of liquidity, et al). The other note is that certain types of trades were great but no longer exist. One of my favorite types of trades to do, for instance, would be to buy or short from a huge pool of liquidity near an intra-day high or low. With the advent of algorithms and increased liquidity overall, this trade has been all but phased out. It's quite commonplace now for a stock like BIDU or XOM to have an offer for 250,000 shares on an offer, the liquidity to gradually disappear, the stock to rally six cents, and then fall 32 cents in the next minute. Sometimes the stocks reassert their trend...sometimes not but that type of picking away at liquidity action for a quick gain is no longer viable. Thus, in the vein of the Silly Bandz, be aware that the pool of stocks to trade as well as the types of trades out there constantly change and we as day traders need to be pro-active in evolving with them.
Markets were mixed overnight throughout the world with Tokyo up 0.4%, Hong Kong down 0.3%, Frankfurt up 0.2%, and London down 0.2%. Like I said, mixed! Oil is notably weaker in trading 1.5% lower, but gold is flat. The dollar is off a little and bonds are flat. There’s no economic data today. Stock futures have been drifting in a narrow range overnight with a slight downside bias. Look for a quiet session today with a lot of choppiness with movement not far from the unchanged line. The focus will be on earnings, small cap biotechs such as OCLS, small cap momentum plays moving around yesterday which closed near their highs, and takeover rumor plays such as BIG.
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
MERC- closed near a high
KNL- closed near a high
AIG- closed near a high
POT- closed near a high
AAPL- closed near a high
CMI- closed near a high
RPRX- closed near a high
IGOI- closed near a high
HILL- closed near a high
CSL- closed near a high after posting earnings
TGA- closed near a high as fears for the company’s business cooled re Egypt
HAIN, LULU- featured on “Mad Money” last night
HRLY- received $19/share cash bid from KTOS
CNXT- received unsolicited bid from Golden Gate which would top bid from SMSC; the price is $2.35-$2.45 per share
CSPI- decent earnings
SNCR- decent earnings
XIDE- great earnings
MGM- upgraded at Bank of America
MT- decent earnings
SVVS- decent earnings
VSH- decent earnings
OCLS- received new FDA 510(k) clearance for microcyn-based dermatology hydrogel for management of atopic dermatitis
Bad-The following stocks have bad news and/or a weak technical pattern
FCX- closed near a low
GFC- closed near a low
NFLX- closed near a low
DHR- closed near a low in a near island reversal after announcing buyout of ESV
TRGL- closed near a low amid rumors of France conducting studies on shale oil and gas
HUM- closed near a low after posting poor earnings
SYY- closed near a low after posting poor earnings
CPW- closed near a low after announcing a share offering
FMC- bad earnings
BDX- bad earnings
GLUU- bad earnings
VECO- poor earnings
LNCR- poor earnings
OPXA- share offering
PFG- poor earnings
AVP- poor earnings
CVH- poor earnings
BZH- poor earnings
ELN- poor earnings
NYX- poor earnings
TEVA- poor earnings
ALLT- poor earnings
BR- poor earnings
FSLR- negative talk out of Morgan Stanley re solar 2011 global shipments
Earnings:
TUES FEB 8 BEFORE
AGCO AVP BR
BZH CHBT CNC
CVH ELN ETR
FIS GET HGG
MAC MLM MT
NYX SLE SVVS
TEVA TIN VSH
TUES FEB 8 AFTER
ATML AXL BGC
CERN CMP CRL
DIS GIL ILMN
MOTR OPEN PBI
PPDI PPS PTP
RNR TTWO XL
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
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