WED. JUN. 30- An Important ECB Auction I'm going to post this a little early as it is very important with the follow-up tomorrow morning: The stock market got absolutely hammered today. Overnight on Monday night, there was a revision of a leading economic indicators number in China as well as a weak industrial production number in Japan. The trouble was shoved on to Europe as debt spreads widened anew with the likelihood of default in many of the poorer nations rising sharply. But that was yesterday. What will likely tell the story tomorrow is exactly how the broader averages react to some European Central Bank mechanisms. Namely, tomorrow morning, the European Central Bank will offer Europeâs banks three-month loans ahead of having to repay the equivalent of $540 billion to the ECB as a key tenet in the ECBâs attempt to fight the financial crisis. The demand for the three-month monies will likely indicate just how much banks are still relying on the European Central bank for immediate-term funding. This announcement will be made around 5:15AM ET Wednesday morning. Because market rates are lower than the 1% currently charged by the ECB, only banks with very limited access to cash will be in on the auction as banks can borrow three-month funds from one another in the marketplace at a rate of around 0.75% currently. But financial institutions are very worried about lending to one another because of Europeâs sovereign debt crisis. Should demand be very high, it will indicate that banks are still finding it very hard to fund themselves. Thus, the auction will set the tone for the day in Europe as it will be a pretty good measure of the immediate state of the banks.
Here is balance/update for today- Markets fell in Asia with Tokyo down 2% and Hong Kong off 0.6%. The trend, however, shifted in Europe as the news from the ECB was good with banks formally requesting much less money than was forecasted by the general consensus. Thus, the immediate-term implication is that the weaker banks arenât in quite as bad a shape as many thought they were. In turn, this changed the broader market outlook with the euro rallying almost 1% and London and Frankfurt both rallying about 0.5%. Things were lookinâgoodâ¦and then the next domino this morning fell when ADP data came in worse than expected portending a negative jobs report on Friday. As of this writing, the European bourses have lost all of their gains and futures have come all the way in as well. As the futures really failed to go deeply negative with the pounding everything has had and as it is the end of the quarter, look for a little bounce today. Trading will be very choppy, but there does seem to be a concerted effort for a little lift this morning. The plays will be in the fertilizers with MON having reported, the big cap techs as the RIMM/AAPL war heats up, and the relative strength/weakness stocks with the markets likely to be thrashing around all day. 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 TSLA- closed near a high on its IPO debut AZN- closed near a high after a judge upheld the companyâs patent for Crestor ABII- announced deal with CELG which values ABII at 58 cash plus .2617 CELG shares or about 72 based on last nightâs CELG close STST- announced deal to be acquired by BA for 34.50 in cash MON- decent earnings Bad-The following stocks have bad news and/or a weak technical pattern GIS- poor earnings ZZ- poor earnings CLF- closed near a low RIMM- closed near a low after rumors of an AAPL/VZ deal RIG- closed near a low DNDN- closed near a low V- closed near a low WYNN- closed near a low MEE- closed near a low BA- closed near a low BTU- closed near a low BKS- closed near a low after posting terrible earnings DNDN- closed near a low Earnings: WED JUN 30 BEFORE AYI MON WED JUN 30 AFTER APOL SCHN SWHC WOR Erik R. Kolodny- Chief Markets Strategist Brendan P. Byrne- President Joseph R. McCandless- Managing Partner D. Timothy Seaquist- Managing Partner www.epiphanytrading.com
THURS. JUL. 1- When Rumors Become News Many times, weâve heard the phrase âbuy the rumor, sell the newsâ or vice versa. But how many of us truly know what it means for day trading purposes? For those somehow not aware, there is inevitably a move in a stock leading up to a major event as bigger players place bets as to how said event will turn out. For instance, as Apple (AAPL) has turned out device after device after device, the stock has run-up to each recent release with it pausing or even declining a little upon the actual date of device release. Nobody (or at least almost nobody) knew what the numbers would be but the perception was that the numbers would be great. So entities buy in anticipation of the fun event and then when the event happens, what other trigger is there to keep things going in the immediate-run? On an emotional level, my adrenalin and excitement level were/are always higher as summer vacation approached as a kid and in the two days before attending a major concert or athletic event than while actually starting summer break or while in the 1st hour of a U2 concert. Conversely, my dread and worry levels tend to be higher in days leading up to the passing of a loved one when death seems fairly certain than in the hour after the inevitable horrible event. The plays on emotion are applicable to trading as well and perhaps personify why stocks should not be shorted on the way up or bought on the way down if youâre a day trader. Instead, wait for the trigger and act on that. For instance, the day British Petroleum (BP) eliminated its dividend (June 16, 2010), the stock staged a nice bounce. Why? Because the news was expected so shorts rushed to cover when the event happened. Conversely, Apple (AAPL) fell almost 10 points from Thursday morning when lines began to form for its iPhone 4 to Monday morning as the companyâs device sold admirably, but there was no new immediate-term trigger to spark the stock higher. Thus, as we had into earnings season, be ready for this phenomenon particularly in stocks that have had large run-ups or declines ahead of their earnings. If they keep going, but then turn on a dime intra-day, look to go with the turn through unchanged. For instance. if XYZ has run up from 10 to 30 this quarter, beats earnings expectations dramatically, opens at 30.25 the day of release and looks to go negative, donât be worried about shorting 30. Conversely, if a stock falls from 30 to 10 in three months, misses earnings estimates, opens at 9.90 but traded 9.99, be ready to buy 10 and 10.01. In short, the whole rumor leading to news concept can be a very good one to properly utilize by day traders- but only by being patient and on entities that are moving. Markets overnight were predictably lower across the board with Tokyo down 2% and most of the European markets down about 1%. The yen is the strongest currency across the board with the dollar falling below the 88 yen level, oil is down 1.4%, and gold down 0.5%. Bonds are slightly higher. Futures were down very sharply overnight, bounced all the way back to positive, but have seen those losses resume about halfway back on poor jobless claims data. For today, look for a bit of a bounce. There will likely be a little more pressure initially on stocks but the âtellsâ such as AAPL, GS (despite a cutting of estimates by JP Morgan) and BP (despite the hurricane) all leaning higher. Furthermore, the late day selling yesterday seemed a little artificial end-of-the-quarter-like. Focus on big cap tech as well as relative strength plays particularly in the first hour or two. After that, it will be choppy and much quieter ahead of the jobs report tomorrow. 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 SWHC- decent earnings GYRO- closed near a high ahead of a story that the company will receive a $100 million payment via winning a lawsuit ARNA- signed marketing and supply agreement with Eisai for lorcaserin STZ- decent earnings Bad-The following stocks have bad news and/or a weak technical pattern DNDN- Center of Medicare and Medicaid Services receive informal inquiries for a determination of autologous cellular immunotherapy therapy of prostate cancer thus the government is trying to determine if Provenge is necessary or reasonable APOL- poor earnings GS- closed near a low WYNN- closed near a low TSLA- closed near a low in a massive intra-day reversal CLF- closed near a low POT- closed near a low GOOG- closed near a low FCX- closed near a low PNC- closed near a low SAB- closed near a low AMED- received notice of a formal SEC investigation Earnings: THURS JUL 1 BEFORE STZ THURS JUL 1 AFTER None today Erik R. Kolodny- Chief Markets Strategist Brendan P. Byrne- President Joseph R. McCandless- Managing Partner D. Timothy Seaquist- Managing Partner www.epiphanytrading.com
FRI. JUL. 2- Jobs, Jobs, Jobs, Jobs, Jobs Many times, people use euphemisms or exclamations needlessly. âToday is the hottest day everâ or âThat was the absolute worst show Iâve ever seenâ or âMy kids are the most awesome kids on the face of the planetâ (well, that one is true in my case!). Well, I wonât go on record as saying todayâs unemployment is the most important one reported, but it is a pretty big one. There are several key benchmarks that the market follows at the present time (such as the European debt crisis). One of the bulwarks, however, is the job market in the United States. For the economy to truly recover, the job market must recover with it in at least some fashion. Wednesday morning, after some very positive news regarding the state of the relatively poorly capitalized European banks as the group did not have to get quite as much emergency money from the ECB as was originally thought. However, the ADP June employment report released Wednesday morning showed only 13,000 jobs were added from May to June versus an expectation of 61,000. The rate of new jobs fell below the five-month job creation average as well as south of the 55,000 jobs created number last month. This indicates that the trend of private employment seems to be decelerating. The importance of this report is that ADP is a private company versus the Federal government jobs report we will see this morning. Thus, barring a total surprise, realize that whatever number we see today may well be factored in to the mix but this is certainly one jobs number to monitor. Markets in Asia were mixed overnight with Tokyo up 0.1% but Hong Kong down 1.1%. Prices are rebounding at this early writing in Europe with London up 0.8% and Frankfurt ahead 0.4% in a bit of a snapback from yesterdayâs deep declines as Wall Street bounced while European markets were closed. After the breathtaking moves of the last few days, everything is quiet right now ahead of the jobs report with bonds, commodities, and the currencies little changed. The jobs report is the clear catalyst today. If the number comes in good, look for a huge bounce and a quiet session overall with much of the action taking place between 8:30AM ET to 10:15AM ET. If neutral, expect a mild sell-off followed by a decent rally. If bad, thereâs going to be a sell-offâ¦but I still donât think it holds after stocks failed to decline yesterday despite mammoth moves in things like currencies. Regardless, trading will be much thinner and likely more quiet overall ahead of the long weekend. Focus on big caps- particularly financials and techs with relative strength and weakness depending on the tone of the market. Glance also at drillers and overseas miners off of the Australian tax compromise. Get ostensibly all of your trading done before noon as people are exhausted and will be off to the beach. 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 AMED- closed near a high in a near island reversal despite receiving a formal SEC inquiry BJ- closed near a high on takeover speculation V- closed near a high RIG- closed near a high IDT- closed near a high FSLR- closed near a high NE- closed near a high Bad-The following stocks have bad news and/or a weak technical pattern WIBC- suspended its dividend and warned on its earnings outlook HITK- received FDA warning letter over certain products REGN- closed near a low HRBN- closed near a low LHCG- closed near a low on AMEDâs probe IBCA- closed near a low after filing to offer stock and noted it expects federal regulators to pursue a formal agreement with its banking subsidiary SSCC- closed near a low as it re-debuted as an IPO after emerging from bankruptcy Earnings: None today Erik R. Kolodny- Chief Markets Strategist Brendan P. Byrne- President Joseph R. McCandless- Managing Partner D. Timothy Seaquist- Managing Partner www.epiphanytrading.com
TUES. JUL. 6- Hot Temps And Low Volumes One recent Friday, I posted a piece about potential illiquidity as well as various sharp moves which could take place that day. Apparently, I underestimated the response to it as well as a few questions Iâve gotten over the last few weeks so I want to try again on a variation of that piece. In the past two days, I had three different people ask me why they werenât getting as many fills as they have been used to receiving. One other person told me that his trading software wasnât working the way it used to. This is the simple answer: it is summertime. It is a blanket answer. This is what a summer market is like (and it typically gets worse as the summer progresses with the exception of the end of the quarter and during earnings season) as far as trading volumes go. Furthermore, in weeks like this, people take vacations. Itâs a four day week so itâs only four days off instead of five plus itâs a time before many of the nationâs schools close for a couple of months so a lot of vacation hotspots are still relatively inexpensive and sparsely populated. There are always other triggers as well; for instance, the week after Memorial Day was also the week before the weekend of the CFA Exam. Many of you will read (or re-read that) and scoff. Having known many people who have taken parts (or all) of that very difficult test, let me tell you that the study level is extraordinarily extensive with much cramming done the week before the exam. So, a lot of people (even traders whoâve been around upwards of 10 years) are focused on learning the minutia of things like lease accounting instead of tracking the direction of BPâs stock price. Now, to the credit of our traders, Epiphanyâs May trading volume was the heaviest on record. In June, the volume was even heavier! But as we head out of Independence Day into July, expect illiquidity to be more of a rule than an exception. Adapt by holding things a tinge longer, make sure you constantly have orders at the ready, and be even more focused in your research and market analysis. This is part of the business. It can be extraordinarily busy and active; it can also be slow at times. Itâs just the nature of the markets (plus, traders would rather be on the golf course or tennis court in the summer than in front of the computer). But mainly, my best advice is two-fold: on days when there are things to do, it absolutely boggles my mind when people leave early routinely. This is a job. When opportunities are prevalent and the markets are moving, be there to earn a living. On the opposite side is my second piece of advice- when markets are calm, donât get frustrated and donât overtrade. And by the way, get out and enjoy the sunshine as much as possible; enjoy life a bit more when the weather is nice in the hours after markets are closed. Thus, if markets are moving, be ready with a clear mind and if thereâs not as much to doâ¦donât do as much. 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 THO- closed near a high after reporting no accounting changes after an accounting review ONP- closed near a high AMAP- closed near a high FIS- reaffirmed outlook and also announced private offering of notes to repurchase stock Bad-The following stocks have bad news and/or a weak technical pattern TSLA- closed near a low amid a two day massive reversal from its IPO high IOC- closed near a low UAUA, CAL- closed near lows after CAL reported weaker-than-expected revenues GOOG- closed near a low DNDN- closed near a low ADS- closed near a low AFAM- closed near a low after announcing it was being probed by the SEC TGB- an independent Canadian panel said that TGBâs proposed gold-copper project in British Columbia would have significant negative environmental effects in the region Earnings: None today Erik R. Kolodny- Chief Markets Strategist Brendan P. Byrne- President Joseph R. McCandless- Managing Partner D. Timothy Seaquist- Managing Partner www.epiphanytrading.com
WED. JUL. 7- The VIX Tell In the ever-changing increasingly complicated world of day trading, the puzzle is always evolving-albeit with different shapes in different combinations. One needs to follow every potential signal from bond prices to currency movements to commodity prices to try to begin to make an educated guess as to the immediate-term direction of the stock market. Such a signal began to pervade late last week. The major market averages did decline last Thursday and Friday, but not by a lot despite a steady stream of poor news such as the jobs data. Notably, the VIX declined measurably both days (almost 8% at one point on Friday). For those not familiar with the index, the VIX is the symbol for the Chicago Board Options Exchange Volatility Index. The VIX is a mechanism which represents a measure of the marketâs (specifically S&P 500) expectation of volatility. In general, the VIX tends to move inversely to the general market. But very notably last week, the VIX began falling despite the market descending. While it is true that part of the decline was due to time decay with options expiration taking place on Friday, the fact that the VIX fell that much despite the market falling indicating a quick immediate-term pop. This is what happened on Tuesday morning. Following the pop, bonds failed to react with gold and the dollar down so selling did resume. Thus, while it can be quite dicey to utilize the VIX as a trading indicator on a day-to-day basis, there are times in which a move can be prognosticated with the move of yesterday morning one such time. Markets overnight were down throughout the world with stocks off 0.6% in Tokyo, 1.1% in Hong Kong, 0.6% in London, and 0.7% in Frankfurt. Oil is modestly higher, gold a little lower, the dollar mixed with the yen stronger across the board, and bonds are a tinge higher. All of this is leading to a slightly weaker picture on Wall Street. Donât look for a lot of excitement today with most external markets relatively docile. Prices will probably straddle either side of unchanged with low volume and news. The focus will be on sectors such as banks with the STT pre-announcement, drillers with BP continues its recent resurgence, and selected smaller stocks such as TSLA which have been beaten back in recent days. 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 NEXMD- closed near a high amidst a huge percentage gain STT- raised earnings guidance Bad-The following stocks have bad news and/or a weak technical pattern IMAX- closed near a low amid disappointing results from âTwilightâ weekend box office numbers DNDN- closed near a low TSLA- closed near a low CLF- closed near a low ADS- closed near a low CTRP- closed near a low amid reports that several Chinese domestic airlines have lowered the commissions they pay to travel agents FCN- warned on earnings guidance LBY- closed near a low DECK- closed near a low LNCR- closed near a low PVH- closed near a low FBC- closed near a low FDO- poor earnings SKH- reported a jury returned a verdict of $671 million against the company related to a complaint filed four years ago Earnings: WED JUL 7 BEFORE FDO WED JUL 7 AFTER None today Epiphany Trading, LLC www.epiphanytrading.com Erik R. Kolodny- Chief Markets Strategist Brendan P. Byrne- President Joseph R. McCandless- Managing Partner D. Timothy Seaquist- Managing Partner
THURS. JUL. 8- Owning Up To A Mistake Even the best baseball players on the planet can get a base hit about 3 out of every 10 times at the plate. The best Broadway performers can have an off night. The best day traders tend to be right about 59 out of every 100 times. I am right about 55 of every 100 trades I make which is not too horribly badâ¦as long as I can make the 55 times stand up for the 45 times I am wrong which is something I've somehow been able to do for almost 15 years. Well, yesterdayâs market prognostication (while not a trade) was not even close to right. If you remember, yesterday, I wrote this: âDonât look for a lot of excitement today with most external markets relatively docile. Prices will probably straddle either side of unchanged with low volume and news.â Well, I was right for a few minutes in that the markets did open barely higher and drifted back toward unchanged. But, really, about the only way I could have been more wrong would have been to call for a 275 Dow point sell-off. There were two takeaways that I have from the bad mistake. First, I have a lot of pride, but have no problem admitting when I am really wrong. One of the major keys to trading is recognizing your own failings and owning up to them. The second thing career-wise is even more important- rectifying the aforementioned tenet. You see, had I been shorting all the way up, Iâd have lost a tremendous amount of money. So, what I did instead was execute a couple of very early trades and thenâ¦I totally missed the initial 50 Dow point blip higher in watching the market rally and educating myself/reprogramming my belief. From there, I quickly realized my initial thought was wrong and knew trapped shorts would cover thus I adapted accordingly for the rest of the session. The moral of the story: when you make a mistake trading-wise, quickly admit it and then quickly rectify it in your own trading. Markets overnight continued to rally worldwide with Tokyo up 2.8% and Hong Kong ahead 1%. The gains in Europe are a bit more moderate with the bourses having rallied nicely yesterday in helping to spark the move on Wall Street with Frankfurt up about 0.7%. Oil is up ¾% with gold and the dollar generally flat. Bonds are a tinge stronger. Futures are resoundingly flat at this early writing. Iâm going to go with what I said yesterday in that markets likely wonât move dramatically but the bias does seem to be to the upside for sure with nothing having been given back futures-wise early on. Track bonds and the yen for clues as the day progresses, i.e. if the 10 year backs off from 3% somewhat rapidly into the afternoon, there will be a bit of a give-back but itâs not likely. Focus on story stocks like MSG, relative strength plays, retailers such as TGT after releasing same-store sales data, and the banks to see if they can hold up yesterdayâs nice gains. 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 TSCO- pre-announced positive earnings guidance MSG- closed near a high on speculation Lebron James will sign with the New York Knicks STT- closed near a high after pre-announcing earnings to the upside CLF- closed near a high POT- closed near a high BIDU- closed near a high RIMM- closed near a high AAPL- closed near a high GS- closed near a high AMZN- closed near a high WYNN- closed near a high FSLR- closed near a high RIG- closed near a high UAUA- closed near a high BUCY- closed near a high X- closed near a high SLB- closed near a high FCX- closed near a high V- closed near a high IBM- closed near a high PNC- closed near a high FFIV- closed near a high CREE- closed near a high NFLX- closed near a high CMI- closed near a high JKS- closed near a high ANF- good same-store sales results Bad-The following stocks have bad news and/or a weak technical pattern DRWI- warned on its earnings outlook FDO- closed near a low after posting terrible earnings SKH- closed near a low after losing a court case which could force the company into bankruptcy FCN- closed near a low after posting poor earnings CISG- share offering HAST- closed near a low Earnings: THURS. JUL. 8 None today Epiphany Trading, LLC www.epiphanytrading.com Erik R. Kolodny- Chief Markets Strategist Brendan P. Byrne- President Joseph R. McCandless- Managing Partner D. Timothy Seaquist- Managing Partner
FRI. JUL. 9- Lebron James And Day Trading I admit it. I enjoy sports. I unfortunately donât get to play the games the way I used to do so much less actually watch much sports on TV, but I do keep up with the scores and stats. What always interests me is when sports and trading intersect. Such a case happened this week in the stock performance of Madison Square Garden (MSG). The Dolan family of Cablevision fame own a majority stake in MSG. Furthermore, the addition of famed NBA basketball player LeBron James to any team will impact the value of said team dramatically. It is said that in Cleveland, much of the downtown economy has been centered around Cleveland-born James in the last few years. Thus, any rumor of James playing for say, the Knicks, can impact the value of MSG for sure. For instance, with the near 7% spike in MSG on Wednesday, the Dolans earned $20 million with their stake- an amount of money that would cover the 1st season (and more) of Jamesâs salary. Trading-wise, MSG was moving on the latest rumor and this is where I try to garner my living- making sense of the rumor. Itâs not good to gamble on a 50-50 shotâ¦but it is good to make a calculated bet when the odds are stacked dramatically in your favor. Well, on Wednesday, there was a story out that James would make his announcement about which team heâd play for in Greenwich, CT (not far from New York City). MSG spiked from 20.50 to 21.50 around 3PM ET that day on the thought that the selection would be the Knicks since the announcement was not far from the practice facility of the Knicks. I thought the stock would ease because it seemed to be a coincidence. The stock did decline a bit. But it turned out to be consolidation. When the stock breached its high of 21.50 after not selling off on the rumor, a quick day trader could have made about 20 cents a share in buying thru the high in a matter of a few minutes. So, donât try to make sense out of pandemonium much less overthinking thingsâ¦have a thought as to what should happen as well as a back-up idea and simply apply those plans to your trades. Markets overnight were generally higher across the world with Tokyo up 0.5% and Hong Kong ahead 1.6%. Gains are more moderate in Europe with the bourses generally positive by about ¼%. Oil and bonds are down modestly with gold ½% positive and the dollar slightly positive across the board. Futures are modestly lower. The tone of the market overall remains positive on the heels of this weekâs strong rally, but there seems to be a ceiling in here with the Dow leading the way over the broader indexes yesterday and with AAPL notably weak this morning. Look for a slightly weaker day overall on quiet volume with the bulk of the action coming in the first half of the day. The focus will be on BIDU vs GOOG, AAPL, the credit card companies on a V upgrade by Goldman Sachs, and selected small caps in the news. 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 WLK- closed near a high after being upgraded NUHC- good earnings POT- closed near a high CLF- closed near a high TSLA- closed near a high ARG- received raised 63.50 takeover bid from APD RIG- closed near a high NANO- reaffirmed earnings guidance SLB- closed near a high SHLM- closed near a high after posting great earnings GOOG- reported it had its search license renewed in China V- upgraded at Goldman Sachs Bad-The following stocks have bad news and/or a weak technical pattern INV- closed near a low after announcing a share offering CPTS- terrible earnings outlook RITT- closed near a low BIDU- GOOGâs main competitor in China likely to react negatively to the positive GOOG China news AAPL- NTP (which previously received a $600 million settlement from RIMM) has sued AAPL for allegedly using NTPâs patented technology for cellular e-mail systems Earnings: FRI. JUL. 9 None today Epiphany Trading, LLC www.epiphanytrading.com Erik R. Kolodny- Chief Markets Strategist Brendan P. Byrne- President Joseph R. McCandless- Managing Partner D. Timothy Seaquist- Managing Partner
MON. JUL. 12- Kickoff Of 3rd Qtr Earnings Season With the release of Alcoa (AA) this afternoon comes the unofficial start of the 3rd quarter earnings season. Every season has certain unique features and characteristics within the backdrop of the overall stock market much less economic picture. A year ago at this time, investors were simply seeking reassurance from earnings results that the level of profitability was at a nadir. People wanted to see that stalwarts such as Coca Cola (KO) were actually still capable of making money. Fast forward a year, a good market, and now a correction amid fears of the dreaded double dip in the economy. Now weâre at a juncture where profits are expectedâ¦but itâs not enough to see that revenues and earnings are there. Rather, what is going to be viewed as needed is growth in both profits and revenues. I know. That sounds funny. But itâs true. As just noted, investors were satisfied a year ago that the world was not ending. Itâs not that way anymore. With the advent of a big recovery and the markets in a fragile and precarious state, this season will seek to truly separate the winners from the losers in terms of companies growing and companiesâ¦not growing. For day traders, the reactions in individual stock prices will be particularly sharp so be aware of every major earnings play as they will affect each dayâs action. Markets were mixed in Asia overnight with Tokyo down 0.3% but Hong Kong ahead 0.4%. Markets in Europe uniformly are trading near the unchanged line. Gold is down ¼% with oil off ½%. The dollar is stronger against the euro but marginally weaker against the yen. Futures are down somewhat notably with markets indicated to erase Fridayâs gains. It is fairly quiet and with the weather nice outside in the New York area, look for fairly typical summer Monday action with lackluster trade and relatively low liquidity with volatility more muted than in recent days ahead of earnings season. Focus on the stocks in the news such as WY and HEW/AON, selected relatively strong/weak tech stocks, the drillers, and the smallcaps which moved Friday such as DCTH. 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 RIMM- closed near a high after announcing it is to launch an applications store and services in China MON- closed near a high after announcing it will maintain export approval status for Roundup Ready soybeans through 2021 rather than 2014 DCTH- closed near a high DNDN- closed near a high FCX- closed near a high V- closed near a high after an upgrade; MA closed near a high in symapthy GS- closed near a high AAPL- closed near a high in shaking off a patent lawsuit POT- closed near a high AMZN- closed near a high FSLR- closed near a high CCF- closed near a high after posting good earnings IDT- closed near a high GBX- closed near a high after posting good earnings DEAR- closed near a high HEW- being acquired by AON for 25.61 in cash plus .6362 shares of AON WY- declared $5.6 billion special dividend Bad-The following stocks have bad news and/or a weak technical pattern AON- acquiring HEW; sees deal as accretive, but it's a major acquisition for the company APA- rumored to acquire a significant amount of BP's assets Earnings: MON JUL 12 BEFORE SHAW MON JUL 12 AFTER AA CSX NVLS Epiphany Trading, LLC www.epiphanytrading.com Erik R. Kolodny- Chief Markets Strategist Brendan P. Byrne- President Joseph R. McCandless- Managing Partner D. Timothy Seaquist- Managing Partner
TUES. JUL. 13- Dealing With Frustration On a day like yesterday when the markets hovered around the unchanged level for most of the session on low volume, one emotion comes to the mind of most 9not all, but certainly most) traders: âfrustration.â Either people were sitting on their hands doing nothing or trying to get in/out rapidly with more shares because the moves werenât as exaggerated yesterday as compared to recent weeks. The people who sat on their hands of course grow antsy and aggravated due to not seeing anything to do while people trying to move in and out of a market not moving tended to spin their wheels. As I fell into the former category in not trading a whole lot yesterday, I had three main thoughts to try to remediate the trading tedium over and above the normal âfind other things to do while at your desk in case something happensâ tag I always maintain. First, traders (including myself) can be upset as they want about the relative paucity of movement, but there is absolutely nothing we can do about it. There are going to be days like yesterday which require âNo-Dozeâ pills in the trading world. Just like we have precious little control over 1,000 point Dow days, we have just as little control over the days in which the market holds near unchanged much of the session. The sooner that is accepted, the better mentally. Secondly, patience is always a virtue but especially so on a day like yesterday. Itâs not the worldâs worst thing to pick out only the best spots and to hold things slightly longer as long as the trades are within the framework as to whatever it is youâre trying to do. Finally, remember how you felt as well as how little money you put in your wallet on a day like yesterday when things are moving and youâre having a good day. If during a busier day next week as earnings season kicks into gear, you find youâre having a fine morning, keep plugging away as the anecdote to the slower sessions. Remember the frustrating feeling and let it keep you hungry. So, as with any negative emotion, try to focus on the positive side of frustration and what you can do to combat it when the time is right rather than trying to create something out of nothing. And realize- on a day like yesterday in particular- you are not alone if you walked away feeling like you wasted a day of your life...which you most certainly did not as long as you learned from it. Markets in Asia overnight were down overall with Tokyo off 0.1%, Hong Kong 0.2%, and Shanghai almost 2%. But the trend shifted in Europe on the heels of good earnings on Wall Street with the bourses ahead anywhere from 1.3% to 1.7%. Currencies are quiet with gold and oil both up almost 1%. Futures are up sharply. There seems to be nothing stopping this immediate-term rally amid sudden optimism about earnings. For the day, there likely wonât be a ton of movement although it should be more volatile than yesterday with plenty of stock stories around. Focus on the earnings plays, the smallcap biotechs in the news, the momentum movers from the last few days (for reversals and A-B-A2âs) and the drillers on the myriad of news from BP. 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 AA- decent earnings CSX- decent earnings NVLS- decent earnings CVX- decent earnings guidance THLD- announced two preclinical presentations on its clinical stage TH-302 drug SNDK- closed near a high AMZN- closed near a high after being upgraded by Blair WY- closed near a high after announcing a special dividend and conversion to a REIT IFLG- closed near a high MBI, AIG- investor Bruce Berkowitz announced large stakes in both companies DSTI- closed near a high DIN- closed near a high after a positive âBarronâs âarticle PNG-mentioned on âMad Moneyâ last night VVUS- the FDA noted that VVUSâs Qnexa resulted in âsignificantâ reductions in body-weight among patients in clinical trials CERN- decent earnings guidance Bad-The following stocks have bad news and/or a weak technical pattern BMTI- 5 million share offering MOS- closed near a low after announcing it may need to close a mine due to an environmental lawsuit FCX- closed near a low CLF- closed near a low ADS- closed near a low after a negative âBarronâs âarticle ID- warned on revenue outlook AMED- earnings warning CVLT- earnings warning INFY- poor earnings Earnings: TUES JUL 13 BEFORE FAST INFY TUES JUL 13 AFTER ADTN INTC YUM Epiphany Trading, LLC www.epiphanytrading.com Erik R. Kolodny- Chief Markets Strategist Brendan P. Byrne- President Joseph R. McCandless- Managing Partner D. Timothy Seaquist- Managing Partner