FRI. APR. 30- Navigating The Oil Slick A few days ago, I wrote a piece about paying attention to all parts of the newspaper rather than just the business and sports sections of the daily rag/Internet site if you day trade. Such a very bold example occurred yesterday. I was taken aback when three people asked me some derivation of the inquiry âI didnât know there was an oil spill near the United States. When did it occur and where did it happen?â Of course, this has been the top story in the news for quite some time now, but it harks back to making sure one is well-read about everything because one never knows when one will need said knowledge base for trading (much less educated about current events). There are numerous horrific environmental consequences which do not make for an eco-friendly world and of course numerous fantastic entities to help serve a âgreenerâ world such as an entity like (http://www.tinygreenbubble.com). However, this is a day trading blog so I am going to stick with some pretty amazing economic facts. According to the Christian Science Monitor from an April 27 article, the oil spill from a Transocean Deepwater Horizon oil rig was swelling dramatically in size with almost 50,000 gallons of oil pouring into the Gulf of Mexico on a daily basis. The accident thankfully is generally a derivation from the stable norm for the industry but underscores the fragility of the deepwater oil drilling business (much less puts into doubt President Obamaâs plans for expanding offshore drilling). Economically, some are now saying that the spill may well be bigger than the Exxon Valdez oil slick and may well cause serious damage to the already delicate fish and shrimp nurseries off the coast of Louisiana by this weekend. Specifically in day trading land, while many people were lunching, there was quite an opportunity. All sorts of rumors floated that the spill may be the worst of all time (or not as bad as thought), legislation would be tightened on oil drilling (or not), and that Obamaâs plan was in immediate danger (or not). Stocks such as RIG, HAL, CAM, APA, OII, and BP became major trading vehicles around 12:30PM-1PM ET as various news pieces and confirmation of a presidential speech came to fruition. Thus, the daily epiphany is two-fold: first, one never knows when something can happen. If itâs a 73 degree sunny day and you want to go outside (G-d knows I wanted to do so), know you are taking the risk of missing terrific trading opportunities. Second, besides the obvious Boy Scout âbe preparedâ theme, do keep up with what is going on with this oil situation. It may well have major repercussions for not only the planet and the United States, but oh yeah, it will very much affect day trading as well in the coming days. Markets in Asia were up sharply overnight with Tokyo up 1.2% and Hong Kong ahead 1.6%. European markets are lightly mixed with the bourses in a band of down ¼% to up ¼% depending on the nation. Oil and gold are both ahead again with the euro notably strong. The two major headlines overnight are of the Greeks seemingly on the verge of accepting an austerity package while the Feds have launched a criminal probe into Goldman Sachs (GS). Futures are focusing on the former with prices a little higher. For today- the last day of the month- it looks like the mo-mo train will continue. It likely will not be a dramatic trading session as the weather will be beautiful so lots of Manhattanites will likely leave a little early to get nine holes in. Focus on the myriad of earnings plays, the relative weakness plays, and try to do most of your trading in the morning. Keep a weary eye to GS and the euro. 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 WYNN- good earnings DNDN- closed near a high on its Provenge approval SHOO- mentioned on âMad Moneyâ last night ABG- closed near a high after posting great earnings RAS- closed near a high after posting great earnings ITRI- closed near a high after posting great earnings EVVV- closed near a high after posting great earnings SPG, BXP, VNO, EQR- among the REITâs closing near their highs yesterday GTI- closed near a high after posting good earnings HRS- closed near a high after posting good earnings BC- closed near a high after posting good earnings TWC- closed near a high after posting good earnings HOT- closed near a high after posting good earnings ORLY- closed near a high after posting good earnings CSTR- great earnings APKT- great earnings SWKS- good earnings and mentioned on âMad Moneyâ last night VSEA- good earnings AMCC- decent earnings THOR- great earnings DLB- good earnings KLAC- decent earnings DHI- decent earnings VFC- decent earnings JRCC- decent earnings RPRX- FDA may lift clinical hold on testing of Proellex at low doses CVX- decent earnings Bad-The following stocks have bad news and/or a weak technical pattern GS- Feds have now launched a criminal probe into the companyâs mortgage practices BP, RIG, HAL, CAM- all closed sharply lower on the Gulf oil spill story IRM- closed near a low on poor earnings HAR- closed near a low on poor earnings APOL, CECO- among the education stocks closing sharply lower after critical comments from a Department of Education spokesperson MET- poor earnings MFE- poor earnings WFR- poor earnings MWW- poor earnings MCBC- poor earnings ATHN- terrible earnings NETL- poor earnings MXIM- poor earnings QLGC- poor earnings DRIV- poor earnings CQB- poor earnings TSO- poor earnings AMX- poor earnings NDAQ- poor earnings MSTR- terrible earnings AXL- poor earnings Earnings: FRI APR 30 BEFORE AGN AGP AIV AON AVP AXL CEG CVH CVX DISCA DHI ENDP ITT JRCC NDAQ NWL PAG SPG UFS VFC Good luck 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. MAY. 3- Volatility Is Baaaaaaack (Hopefully) The VXX (an instrument used to attempt to replicate the S&P 500 VIX volatility index) had its first higher close on a month-to-month basis since March 2009. What is interesting about this to me is that this was the first month in quite some time that I felt was actually an âupâ month for the markets- mainly because I am biased by tracking stocks such as AAPL every day. Thus, I was a little surprised to see that the S&P 500 was only ahead 1.5%. So, what exactly is different? First, as evidenced by Friday, Goldman Sachs (GS) is behaving even worse than many market observers would expect it to particularly when the investigation into the company went from civil to criminal on Friday- a development that was actually largely expected! Second, commodities had a bang-up month. Very quietly, gold approached $1,200 an ounce anew with oil having breached $86/barrel. New developments such as the burgeoning crisis in the Gulf of Mexico contributed to the dramatic ascent in prices. Third, the threat of contagion in Europe became quite real. Greeceâs bonds went into freefall with yields on bonds rising in nations such as Portugal, Ireland, and Spain. Counterbalancing all of this has been a tide of money from Europe looking to find a home, very strong corporate earnings and economic data, and hope- hope for an economic recovery and continued improved performance overall. For much of the last year, the atmosphere was one of living in fearâ¦now it is one of that aforementioned âhopeâ with some âgreedâ tossed in for good measure in smaller stocks and remnants of âfearâ showing how much air can be taken out of stocks on news such as what has occurred in GS. Thus, as we begin May, realize the atmosphere for the first half of the month at least will be one of volatility as the latter third of earnings season winds up along with more of a resolution to the Greek situation in the immediate-term and a more concrete picture of what will happen at GS combined with renewed terrorism fears based on the events of Saturday night in Times Square. Be ready. Markets overseas were generally lower overnight but somewhat muted because of the May Day holiday. Hong Kong fell 1.4% with Germany down about 0.25% but markets in places like Tokyo and London were closed. There is a wealth of headlines this morning. Thereâs been an (expected) approval for an austerity package for Greece. There was an attempted car bomb attack in Times Square on Saturday (which thankfully failed big-time). Thereâs been a sudden increase in taxes in Australia on mining entities. The estimates on the oil slick in the Gulf continue to grow. The net of all of this is a bit of a rise in commodities and a weakened euro as doubts remain over whether Greece will adhere to terms of their deal much less if the damage is truly contained. Yet, AAPL is way ahead on positive sales data with GS sharply higher upon getting a vote of confidence from Warren Buffett over the weekend. This combination is leading to a small rise in the futures. Track GS and AAPL for signals as to what will happen today; the likelihood is that the markets will maintain a small rise in a quiet session. Focus on big cap techs and financials, the oil drillers, and the 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 BPOP- 3 of 10 Puerto Rico-based banks were closed with BPOP acquiring the assets from one of them POZN- won FDA approval of its arthritis drug (Vimovo) OFG- acquired assets of Eurobank (EUBK) from FDIC KT- closed near a high GFIG- closed near a high after posting earnings OCLRD- closed near a high CTIB- closed near a high after posting earnings AGN- featured on âMad Moneyâ on Friday night DLB- closed near a high after posting earnings CAL- announced mergers of equals with UAUA; CAL shareholders will receive 1.05 shares of UAUA for each CAL share they own BRK/B- announced decent earnings over the weekend RPTP- announced phase 2a NASH study met primary endpoints SYY- decent earnings VRX- decent earnings DTG- rumors of a bidding war for the company Bad-The following stocks have bad news and/or a weak technical pattern ENP- announced lower than expected dividend as well as an intention to explore an alternative to its partnership with DNR MEE- closed near a low amid worries of government action regarding the companyâs operations WLP- closed near a low after California rescinded its planned rate increase AAPLâ closed near a low GS- closed near a low after the Fed said it was launching a criminal investigation into GS TSL- closed near a low VSEA- closed near a low after posting bad earnings MSTR- closed near a low after posting bad earnings OSK- closed near a low for 2nd day after posting earnings FSS- closed near a low after posting bad earnings FTBK- closed near a low in continuing a massive reversal WFR- closed near a low after posting bad earnings GMCR- closed near a low for 2nd day after posting earnings SPG- closed near a low after posting earnings WLT- closed near a low for 2nd day after posting earnings WYNN- closed near a low after posting earnings JOYG- closed near a low MTD- island reversal in closing near a low after posting earnings CSTR- island reversal in closing near a low after posting earnings BHP, RTP- Australia imposed a somewhat anticipated surcharge type tax on these resource companies Earnings: MON MAY 3 BEFORE AUXL AWI CLX L MD SYY VRX MON MAY 3 AFTER APC ASIA AUY CAR CNQR CRK EOG EXR FMC FST GNK HCN HLF HOLX LF MCK NTRI PBI PFG SM VMC Good luck 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
TUES. MAY 4- Cancer Research The approval by the FDA of Dendreon's (DNDN) prostate cancer vaccine Provenge was a major coup for the company. It is in fact the only product that the company has been developing; they took a huge gamble and won with several analysts estimating the company could reap billions of dollars in revenues within a decade. The company has waged a three-year war with regulators over its drug. It has been a frequent subject of discussion among traders and scientists alike. Provenge is the first therapeutic entity which is designed to treat the body's immune system to destroy tumors rather than the common alternative which is to attack the tumors directly. Pretty heady stuff- the stuff of what has been entirely science fiction until now. I don't think it's a stretch to note that almost everyone reading this piece if not everyone has been touched by cancer in some way whether it be directly or a family member or friend. Thus, the FDA approval of Provenge opens up an array of possibilities in the world of cancer research. For day traders, the focus can now go on to companies attempting to develop drugs in the cancer immunotherapy genre rather than just an anecdote to the problem (instead of solving the problem). Companies such as tiny Oncothyreon (ONTY) and Celldex Therapeutics (CLDX) to big companies such as Bristol Myers (BMY) are feverishly attempting to develop similar products using similar methods. What this now does is open up a whole new group of stocks for day traders- particularly now- as the focus once the DNDN fever settles down is "who's next." Thus, expect shares of tiny companies to randomly soar (and fall back) as rumors spread over the coming days much less years as people in general (including day traders) try to play the game of "who can be the next DNDN." Markets throughout the world were weaker overnight with Hong Kong down 0.2%, but China down over 1%. Most European bourses are down 1% as well. Commodities are mixed with oil down over 1%, but gold up a little. The dollar is again the strongest currency with it up slightly against the yen and the euro now testing 1.31. The major triggers seem to be worries about the approaching oil slick to the U.S. coastline and rumors that Spain will soon need a bailout as unemployment exceeds 20% there. Futures are retracing about half of yesterdayâs gains at this point. For today, look for a very choppy session with prices remaining on the downside. Track the euro and keep an eye on the drillers and earnings plays as your main stocks to trade on the session. 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 SLXP- positive phase III results for Xifaxan MCK- great earnings NTRI- great earnings CSTR- closed near a high TEX- closed near a high on vague takeover rumors ASIA- good earnings PFG- decent earnings SM- decent earnings SNCR- good earnings HLF- decent earnings NKE- mentioned on âMad Moneyâ last night CVS- decent earnings IPXL- great earnings CTSH- good earnings PFE- decent earnings Bad-The following stocks have bad news and/or a weak technical pattern CLF- closed near a low ENP- closed near a low BZH- poor earnings and share offering LF- poor earnings HOLX- poor earnings GNK- poor earnings PBI- poor earnings EOG- poor earnings APC- poor earnings FMC- poor earnings DEER- closed near a new trend low TNL- poor earnings PEI- share offering AOL âclosed near a low MAC- poor earnings SU- poor earnings TEVA- poor earnings ADM- poor earnings EMR- poor earnings OSG- poor earnings RDN- poor earnings COCO- poor earnings SHOO- poor earnings Earnings: TUES MAY 4 BEFORE ADM AMT ARM BHI BZH COCO CTSH CVS DIN EMR HNT HSIC LNT MA MAC MLM MMC MRK MRO NYX OSG RDC RDN RTI SHOO SU TEVA VNO TUES MAY 4 AFTER ACAS ATW BRE CEPH CHK ECLP FRT INT IPI MWA MYGN ONXX PXD SBAC SGY TIE TRLG UNM XCO XL Good luck 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
Wed. May 5- British Elections Iâve written in immense detail in this space about the problems facing Europe specifically in Greece, Spain, and Portugal, most recently warning of a pick-up of volatility in Mondayâs piece. The European problems in turn led the euro to a breach of the crucial 1.30 to the dollar yesterday and put immense pressure on American stocks. I am sure there will be more to write on this topic as the situation deteriorates on the other side of the pond, but I want to briefly discuss a new European topic that few traders are paying attention to at this point. Namely, there are elections in Britain on Thursday. There are numerous topics on the table there which can have a substantial impact on the worldwide trading community such as continued talk there of a transaction tax on stock transactions. Most notably, what we may well see is the most divided parliament in over 100 years with the general end of two-party rule. As of this morning, most polls put the election results around the following numbers: Conservatives 35%, Labour 30%, Liberal Democrats 25% with the other 10% split among even smaller parties. With scandals such as British taxpayers footing bills for duck ponds and pornography (British politics is actually amazingly interesting), there looks to be a major shake-up of parliament with Labour losing its majorityâ¦but no one party taking control! It is likely that David Cameron- the Conservative leader- will have the first shot at forming a government but heâll need major alliances to get anything done. Now, while it can be good to have divided government, it is not good to have such a paralyzed government that itâll be ostensibly impossible to get anything done without major compromise- something very worrisome when many market experts worry about the British pound much less economy. So, keep a weary eye to the election results coming out of Britain as the week progresses as there may well be some impact come Friday morning particularly if the euro continues to plunge. Markets were lower overnight throughout the world with Hong Kong down 2.1%, Germany down 0.5%, and London almost 1%. Oil is down 2% more although gold is slightly ahead. The dollar is flat against the yen but strengthening once again against the euro with the 1.29 level rapidly approaching. With the declining euro and pictures of Greek riots being flashed on TV, futures are falling again as well. Look for a weaker open with the euro leading the way today. Barring a freefall, there will likely be a slight bounce in the markets mid-day as the U.S. is seen as a bit of a safe haven right about now plus there will inevitably be rumors about Greece being released from the euro currency. Focus on the big caps, the relative strength/weakness plays, and the earnings plays once again. 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 OSIR- received FDA orphan drug status for Prochymal XL- decent earnings CHK- decent earnings SLXP- closed near high NTRI- closed near high after posting earnings IPXL- closed near high DVN- decent earnings RRD- decent earnings TWX- decent earnings Bad-The following stocks have bad news and/or a weak technical pattern ITMN- FDA did not approve lung-drug Esbriet; CLDX, DNDN may move with it MYGN- terrible earnings TRLG- terrible earnings SBAC- poor earnings NWS- poor earnings ONXX- poor earnings BHI- poor earnings CMA- Fed issuing warrants CRAY- poor earnings CAGC- closed near low significantly under stock offering price WLK- closed near low after posting earnings CLH- poor earnings FWLT- poor earnings SPW- poor earnings GRMN- terrible earnings PWR- poor earnings Earnings: WED MAY 5 BEFORE AGU ANR AYE CTB CTL DVN FWLT GRMN HK ICE ID IT MED PHM PKD PWR RRD SIRO SPW TRW TWX UPL VSH WCG WMB XTO WED MAY 5 AFTER ADCT BMC CBS CECO CELL CLR CNW CXW ESS EXM EXPD FLS JAZZ KIM LVS MUR OEH PL PRU RIG SLXP VALE Good luck 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. MAY 6- Australia Mining Issues Last weekend, the Australian government imposed a proposed 40% tax on resource companies in a move designed to raise the government's coffers. It was a somewhat surprising move with three potential dampening effects and/or one positive effect. The positive first- what if it works? What if no behavior patterns change and everything goes along hunky-dory? According to Prime Minister Rudd, Australia would have taken in an additional $35 billion Australian dollars- a very sizable amount of money over the last decade. But at what cost? First, there have been numerous mergers, expansions, and acquisition in the resource industry in Australia in the last year. Companies such as BHP Billiton and Xstrata to grow many come to a halt on the Australian plan. The reason is simple: the proposed plan (scheduled to take effect in 2012) effective raises the bar for prospective buyers in the resources industry in Australia simply because profits will automatically be reduced due to the tax at the margins. Deals such as the proposed acquisition of MacArthur Coal by Peabody Energy (BTU) are now in danger because the acquisition targets suddenly don't have the same potential for profits. Second, there is a concern that the tax could halt Australia's nascent recovery. Resources companies compose about 10% of Australia's economy thus investment in crucial infrastructure much less the incentive to ascertain even more resources diminishes. Furthermore, it almost destroys the playing field for smaller start-up entities as they have to work that much harder to succeed. Finally, day traders (much less all American investors and government officials) will be watching the situation as it develops. There has been talk on and off of a similar tax in the United States. The likelihood of such a tax has diminished in recent weeks with the oil spill in the Gulf of Mexico, but with oil prices trending toward $100/barrel, it is entirely plausible that we may see a similar situation (or at least talk of a resources tax) spring up again as we progress toward Election Season 2010. Markets in Asia were hit very hard overnight with Tokyo off 3.2% after a three day holiday, Hong Kong almost another 1%, and China 3% plus on worries their economy is slowing. As of this writing, the trend shifted a bit in Europe with the bourses up from 0.2% in London to 0.6% in Frankfurt. The bounce is partially because the U.S. stock market was near its intra-day low when Europe closed yesterday and partially because there was no other major news overnight. Oil is flat, gold up almost another 1%, and the dollar is a bit stronger across the board with the euro now under 1.28 to the dollar. For today, ahead of a jobs report tomorrow and after a failure by the markets to implode yesterday, the feeling is a bit more muted with cautious optimism out there. Despite the euro tumbling to almost 1.27 and TGT posting weak sales data, the futures failed to really break down in the early going. Thus, look for a quieter session today barring a complete collapse of the euro with prices on both sides of unchanged. Conditions will likely be fairly thin so it is much more of a âpick your spotsâ session than weâve seen in recent days with a heavy reliance on relative strength/weakness trades. 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 RIG- decent earnings FLS- decent earnings MED- great earnings JAZZ- good earnings SYMC- good earnings ADCT- good earnings CELL- good earnings CLH- mentioned on âFast Moneyâ last night FSYS- good earnings MGA- good earnings PCS- good earnings SMG- good earnings CAAS- good earnings KERX- begin phase III registration program of Zerenex DPS- decent earnings Bad-The following stocks have bad news and/or a weak technical pattern JDSU- poor earnings BMC- poor earnings CECO- poor earnings CBS- poor earnings HIL- terrible earnings MUR- poor earnings CETV- closed near a low after posting terrible earnings WHX- continued to decline after posting earnings Tuesday morning EZPW- closed near a low TKLC- poor earnings TGT- weaker-than-expected retail sales data Earnings: THURS MAY 6 BEFORE ARG BVF CI DNR DPS DTV EP FSYS FTO GAP HEW HOC LAMR MGM OCR PCP PCS PNW PXP RRI SFY SMG THS TKLC WNR THURS MAY 6 AFTER BGC CLNE CNQ CPT CROX DCT GXP HANS HLIT HME KFT LEAP LVS MELI MIL PRE PSA ROVI RST SGMS SQNM STEC WRI WTW Good luck 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. MAY 7 - The Takeaway From An Extraordinary Day As noted in our chatroom and over our audio feed, for once, despite my status as the Great Pontificator, I was at a loss for words (stop cheering/jeering, please) for quite some time. After thinking about it, I thought about writing a piece about the electronic markets versus the specialist system, just the computers, how things like this can happen, and about 10 other things which I will think about and write about over time once I feel more comfortable doing so with the passage of time and the acquiring of knowledge. Five distinct thoughts do come to mind which are worth discussing for all traders. First, from my vantage point, I was smart enough yesterday to trade when things were a little more settled in getting/out of positions rapidly, but when there was complete chaos, I decided to step away. I had absolutely no clue what was going on. I half-expected to see that a dirty bomb was tossed among the throngs of people in Athens with the image of the riots plastered on our television. I did not know if a terrorist got lucky with a car bomb in New York. I did not know if a nation defaulted on its debt. I did not know. I did not know. But what I did know was that it was better to be a bystander with no positions than to hemorrhage money. The time to try to make money was around 15 minutes after the calamity when things were volatile yet calmer. Second, I donât want to hear one person yap about they should have been done this or they should have done that. See number one. I certainly did not know what was going on (have I mentioned that yet?) and Iâm not taking a stab in the dark when I say that most people didnât either. Most could not buy PG at 39 or Accenture at 0.01 a share unless they had orders (which are still being investigated). What if I bought a mere 1,000 shares of AAPL at 230 and it fell to 130? Iâd be out $100,000 in minutes. Third, letâs go over the concept of the âfat finger.â You know how you along with everyone else has hit a button and realized almost instantaneously that you made a mistake, i.e .you meant to buy instead of sell for instance? That is likely what happened yesterday when all was said and done. Fourth, This caused real real pain yesterday. Many people and funds were totally ravaged. Numbers and computers can cause real real pain. Realize that. Finally, donât take away from what actually did occur net-net. The markets finished down about where they were before the mess- over 3%. The euro is crumbling. The oil slick is getting closer. There is real trouble here. I wrote a piece on Monday about how volatility is backâ¦welcome to it, traders. Markets in Asia predictably fell overnight with Tokyo down 3.3% and Hong Kong down 1.1%. In Europe, markets were down sharply, rallied a bit, and then came in with Germany down 1%, London down 0.5%, and Paris down 2.2% as of this writing. Following British elections and the approval of the German parliament for the Greek aid, the dollar is notably weak with the euro back up over 1.27 and the yen back above 92 yen to the dollar. Futures are slightly over. Overnight, the major exchanges agreed to bust trades up or down at least 60% from where the price was from where the intra-day collapse began. What this means is this: if IBM was at 124, went to 3, and back to 123- If you bought it at 20 and sold It at 100, youâre short from 100. So, a lot of those shorts are stuck. Combine with a great jobs report and thereâs an uptick. Off-hand, the markets are going to track the currencies- no doubt about it. But if there is stabilization, look to play this as an A-B-A2 to the upside with the oversold conditions and decent news flow. Trade ostensibly only relative strength/weakness and only big caps. 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 ROVI- decent earnings STEC- decent earnings CROX- decent earnings MED- closed near a high after posting good earnings AIG- decent earnings LVS- decent earnings; MGM and WYNN may trade with it Bad-The following stocks have bad news and/or a weak technical pattern HANS- terrible earnings GXDX- terrible earnings RST- poor earnings CLNE- poor earnings CNQ- poor earnings SQNM- poor earnings SGMS- poor earnings HIL- closed near a low after posting poor earnings SMP- closed near a low after posting poor earnings PPC- closed near a low after posting poor earnings Earnings: FRI MAY 7 BEFORE CF EIX HUN MIR PCG XEC Good luck 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. MAY 10- Viva Europe On Friday, despite the market chaos, it was very notable that the euro was notably higher for the first time in quite awhile. Admittedly, the retracement was but a mere fraction of the ground it has lost against a basket of the world's currencies over the last several months, but it was still a very dynamic feature amid a weak equities environment. The reason for the rally was attributed to persistent rumors that the EU nations and IMF would act in a concerted manner over the weekend to halt the crisis. Fair enough. But markets certainly did not expect the result that did come out. Last night, European policy makers produced a loan package worth almost $1 trillion (not billion- trillion) as well as an array of proposed bond purchases in an aim to halt the euros slide. The 16 euro nations agreed to offer financial assistance of that amount to countries in severe financial straits (think Greece and potentially Spain and Portugal). The clear message is that the euro zone is going to defend its beloved currency through sheer financial will. Over the longer-run, I am not sure what it does as far as sending messages that getting oneself in trouble is inconsequential. I also am not sure if providing good paper after bad is going to necessarily work. In the intermediate-term, there is major upheaval right now in German politics and if they have to restructure the Bundesrat, this deal may need to be restructured. However, what it does do in the immediate-term is buy time. My guess is "a lot" of time. This is why the markets are so sharply ahead this morning. The crisis in the immediate-term is seemingly over because no matter what, Europe is showing it's going to come together to bail out the weak links. You are going to hear a lot of bearish talk these next few days. A lot of it may come to fruition. Ergo if the markets were inherently weak last week mainly over the euro, why shouldn't they rally now that the crisis is over in the immediate-term? Thus as you day trade today, certainly keep an eye on the euro because that is going to tell a lot of the story. But if it is stable, expect much less volatility today much less the next few days as compared to last week and don't get trapped in short squeezes. What was done over the weekend was unprecedented, unexpected, and far above what anybody would ever have thought possible. Let the euro tell the tale as we kick off one of the most important weeks in the history of modern finance. Markets, needless to say, were sharply higher overnight with equities rallying 1.5-2.5% throughout Asia and 4% to 5% in Europe (with France up 8%). Oil is up almost 4%, gold down almost 2%, and the euro up about 2 ½ cents against the dollar. Futures are up gigantic- about 3.5% as of this writing. Today seems to be one of those days where itâs great to be an investor but much harder to be a trader. Many people will use the initial strength as a selling opportunityâ¦but just as many people (if not more) who are short will be scared and will gradually cover (forced or otherwise). Thus, assuming the euro holds the 1.295-1.305 general area, look for relatively range-bound trading following the strong open. Trade relative weakness in particular (as there will be precious little of it) otherwise simply trade the ranges of the big cap stocks. 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, AIG, CLF- all traded relatively strong Friday in closing higher on the day CAGC- decent earnings Bad-The following stocks have bad news and/or a weak technical pattern ITMN- closed near a low once again after their horrible drug data results on Wednesday GXDX- closed near a low after posting poor earnings DRWI- closed near a low after posting poor earnings LEAP- closed near a low after posting poor earnings DTG- closed near a low MRX- closed near a low ACM- closed near a low R- closed near a low MHK- closed near a low PLD- closed near a low VRX- closed near a low AWI- closed near a low TEX- closed near a low BID- closed near a low AMLN- closed near a low HSNI- closed near a low LAWS- closed near a low SGMS- closed near a low CHNG- poor earnings Earnings: MON MAY 10 BEFORE BPZ BR DF DISH DYN ENER LPX NRG SOL TSN WPI MON MAY 10 AFTER AGO FLR LDK LM MBI MDR MDVN MR PCLN SLXP VISN Good luck 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
TUES. MAY 11- What Now, Euro? In a day of short covering on some very crowded short positions, the most crowded of all shorts failed to launch yesterday. Despite yesterdayâs 405 point Dow rally good for 3.9%, a 49 point S&P 500 rally good for 4.4% and a 109 point NASDAQ rally good for 4.8%, the euro currency finished down against a basket of the worldâs currencies. It actually makes some sense when one thinks about it. If you love apples and have three of them at home, they are pretty valuable commodities to you. If you have 175 apples left (some beginning to turn) after youâve just eaten three apples, having all those apples probably doesnât matter as much because all you really need is a few more anyway. Well, there is a certain quantity of supply of euros in the world. All of a sudden, that supply just went up by a tremendous amount. If the rest of the worldâs supply of currencies is steady, well, doesnât that make each euro worth less via dilution? Yet, the markets rallied. Why? This one is simple and harks back to yesterdayâs blog. The belief is that despite the creation of this paper out of thin air (and despite the IMF guaranteeing they will help contribute), these electronic numbers wipe out the immediate issue. Nations like Greece can tap the monies (again, as long as the agreement among the EU countries maintains itself) which creates a bastion of calm. Now, austerity measures will still take effect, but there is a safeguard in effect. What will be interesting for day traders in the coming days is to see if the correlation between the euro and the equity markets remains valid. There has been a near direct correlation in the last few weeks; that changed yesterday with the euro going down on increased supply yet the problem solved in the immediate-run. What we need to watch for in coming days is if the euro truly goes into freefall and if so, would that totally undermine the system on the other side of the pond? Conversely, if the euro stabilizes (or falls gradually in a controlled manner) would the bull market of 2010 assert itself? These are not questions I am qualified to answer. But I know this as an intra-day active trader- it is extraordinarily important in the next 48-96 hours to watch for the relative performance of the euro vs S&P 500 because of the two become decoupled and/or have no correlation, itâll be time to move on (for now) to the next point of focus for the markets. And if the two are still truly correlated with yesterday a mere aberration and the euro slides dramatically from present levels, watch out. Markets overnight were down with prices falling a bit over 1% on average in Asia with declines a bit sharper in Europe as the bourses are down just over 2% on average. Oil is down 1.5% with gold approaching new highs, up just under 1%. The trigger seems to be that oft-discussed euro which is down about 1% against the dollar- to the level where it was trading before the rescue package was announced. Consequently, futures are sharply lower with the S&P 500 futures down about 1% as of this writing. Barring a drop towards 1.25 in the euro, look for a bit of a quieter day albeit a very choppy one with a downside bias with the euro quite weak. Focus on relative strength plays as well as quick moves in the big caps for your trading focus. 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 LDK- decent earnings LM- decent earnings SLXP- good earnings HQS- good earnings TRGL- good earnings ADY- good earnings AAPL- closed near a high AIG- closed near a high and announced Fairholme Capital increased its stake WLT- closed near a high CLF- closed near a high BUCY- closed near a high MEE- closed near a high GOOG- closed near a high BIDU- closed near a high ESRX- closed near a high CTXS- closed near a high NTAP- closed near a high CTSH- closed near a high CREE- closed near a high SNDK- closed near a high BRK/B- closed near a high DHR- closed near a high AGN- closed near a high CXO- closed near a high VNO- closed near a high NFX- closed near a high ANF- closed near a high NKE- closed near a high BTU- closed near a high SWK- closed near a high PXD- closed near a high ATI- closed near a high ZLC- closed a deal to obtain new financing CRUS, AMT- on âMad Moneyâ last night JASO- decent earnings Bad-The following stocks have bad news and/or a weak technical pattern PCLN- poor future earnings guidance MBI- poor earnings FLR- poor earnings NUAN- poor earnings JAZZ- share offering V- closed near an intra-day low in an island reversal DF- closed near a low after posting terrible earnings ITMN- closed near a low DNDN- closed near a low KSP- closed near a low BEE- 40 million share offering Earnings: TUES MAY 11 BEFORE ALD BPZ HEAT JASO MFB SEED TUES MAY 11 AFTER AONE CTRP DIS ERTS HMIN SPWRA Good luck 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
worthless thread, i didn't spend 5 seconds trying to read your endless paragraph and your random stock symbols waste of space, no one cares keep it simple or post charts
JTNet- Many people want a broad understanding (at the top of my list, myself) of what is occurring in the world. I've found (the hard way) that if one doesn't have a specific knowledge base of the forces affecting markets, one tends to lose. As far as the symbols, they are not random. Those are stocks in the news and/or closed near highs or lows yesterday as stated on the blog every single day. To me, these provide momentum-based ideas and are the focus of my trading each day. I don't do a tremendous amount of trades each day; I just pick spots based on that list of symbols. I always write this passage each day: 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. Well, yesterday, as GS got negative on the session, i.e. going thru unchanged, I tried shorting 5,000 shares of the stock although I unfortunately only got 1000 with the trade below (it was the first trade I'd done in an hour and I did not do another one for 1 1/2 hours thereafter): Date Time Sym Side Qty Exe Price Acct Dest Ord Rec ID 05/10/10 13:41:36 GS SLD SHRT 20 143.4 EPIPHANY18 NIX 16775085 05/10/10 13:41:36 GS SLD SHRT 15 143.4 EPIPHANY18 NIX 16775085 05/10/10 13:41:36 GS SLD SHRT 65 143.4 EPIPHANY18 NIX 16775085 05/10/10 13:41:36 GS SLD SHRT 55 143.4 EPIPHANY18 NIX 16775085 05/10/10 13:41:36 GS SLD SHRT 45 143.4 EPIPHANY18 NIX 16775085 05/10/10 13:41:36 GS SLD SHRT 100 143.4 EPIPHANY18 NIX 16775085 05/10/10 13:41:36 GS SLD SHRT 55 143.4 EPIPHANY18 NIX 16775085 05/10/10 13:41:36 GS SLD SHRT 45 143.4 EPIPHANY18 NIX 16775085 05/10/10 13:41:36 GS SLD SHRT 100 143.4 EPIPHANY18 NIX 16775085 05/10/10 13:41:36 GS SLD SHRT 100 143.42 EPIPHANY18 NIX 16775085 05/10/10 13:41:36 GS SLD SHRT 100 143.42 EPIPHANY18 NIX 16775085 05/10/10 13:41:36 GS SLD SHRT 100 143.41 EPIPHANY18 NIX 16775085 05/10/10 13:41:36 GS SLD SHRT 100 143.4 EPIPHANY18 NIX 16775085 05/10/10 13:41:37 GS SLD SHRT 100 143.4 EPIPHANY18 NIX 16775085 05/10/10 13:42:38 GS BOT 62 142.72 EPIPHANY18 NIX 16775864 05/10/10 13:42:38 GS BOT 100 142.72 EPIPHANY18 NIX 16775864 05/10/10 13:42:38 GS BOT 25 142.72 EPIPHANY18 NIX 16775864 05/10/10 13:42:38 GS BOT 100 142.72 EPIPHANY18 NIX 16775864 05/10/10 13:42:39 GS BOT 113 142.72 EPIPHANY18 NIX 16775864 05/10/10 13:42:39 GS BOT 100 142.71 EPIPHANY18 NIX 16775864 05/10/10 13:42:44 GS BOT 200 142.8 EPIPHANY18 NIX 16775903 05/10/10 13:42:44 GS BOT 100 142.8 EPIPHANY18 NIX 16775903 05/10/10 13:44:28 GS BOT 100 142.35 EPIPHANY18 NIX 16777087 05/10/10 13:44:28 GS BOT 100 142.35 EPIPHANY18 NIX 16777087 Had I not honed in on that from yetserday's list, I probably never would have done the trade and missed out on the $750 or so profit I earned on the trade (although I certainly wish it was $3,750...I just was not fast enough to get all 5,000 shares...nobody to blame but myself). As far as "keeping it simple," I cannot make it any more simpler. I provided what I felt to be a relatively easy-to-understand explanation for the reason the euro was down yesterday while the stocks rallied while noting it is weak again this morning along with the implications (or lack thereof) of the euro's performance relative to the other world currencies. I also do not go into specifics for each stock symbol over and above the reasons cited; it is up to each trader to do some homework. I wish you much luck with your own trading.