Epiphany Trading Daily Blog

[erikrkolodny]

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 Europe’s banks three-month loans ahead of having to repay the equivalent of $540 billion to the ECB as a key tenet in the ECB’s 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 Europe’s 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.

 

[erikrkolodny]

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 aren’t 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 lookin’good…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 company’s patent for Crestor

ABII- announced deal with CELG which values ABII at 58 cash plus .2617 CELG shares or about 72 based on last night’s 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

Quote from erikrkolodny:

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 Europe’s banks three-month loans ahead of having to repay the equivalent of $540 billion to the ECB as a key tenet in the ECB’s 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 Europe’s 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.

 

[erikrkolodny]

THURS. JUL. 1- When Rumors Become News

Many times, we’ve heard the phrase “buy the rumor, sell the news” 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 you’re 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 company’s 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, don’t 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 ‘tells’ 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

 

[erikrkolodny]

FRI. JUL. 2- Jobs, Jobs, Jobs, Jobs, Jobs

Many times, people use euphemisms or exclamations needlessly. “Today is the hottest day ever” or “That was the absolute worst show I’ve ever seen” or “My kids are the most awesome kids on the face of the planet” (well, that one is true in my case!). Well, I won’t go on record as saying today’s 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 yesterday’s 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, there’s going to be a sell-off…but I still don’t 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 AMED’s 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

 

[erikrkolodny]

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 I’ve 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 weren’t getting as many fills as they have been used to receiving. One other person told me that his trading software wasn’t 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. It’s a four day week so it’s only four days off instead of five plus it’s a time before many of the nation’s 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 who’ve been around upwards of 10 years) are focused on learning the minutia of things like lease accounting instead of tracking the direction of BP’s stock price. Now, to the credit of our traders, Epiphany’s 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. It’s 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, don’t get frustrated and don’t 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 there’s not as much to do…don’t 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 TGB’s 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

 

[erikrkolodny]

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 market’s (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. Don’t 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 “Twilight” 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

 

[erikrkolodny]

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 bad…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, yesterday’s market prognostication (while not a trade) was not even close to right. If you remember, yesterday, I wrote this: “Don’t 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.” 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, I’d have lost a tremendous amount of money. So, what I did instead was execute a couple of very early trades and then…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. I’m going to go with what I said yesterday in that markets likely won’t 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 it’s 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 yesterday’s 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

 

[erikrkolodny]

FRI. JUL. 9- Lebron James And Day Trading

I admit it. I enjoy sports. I unfortunately don’t 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 James’s 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. It’s not good to gamble on a 50-50 shot…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 he’d 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, don’t try to make sense out of pandemonium much less overthinking things…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 week’s 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- GOOG’s 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 NTP’s 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

 

[erikrkolodny]

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 we’re at a juncture where profits are expected…but it’s 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 it’s true. As just noted, investors were satisfied a year ago that the world was not ending. It’s 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 companies…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 day’s 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 Friday’s 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

 

[erikrkolodny]

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: “frustration.” Either people were sitting on their hands doing nothing or trying to get in/out rapidly with more shares because the moves weren’t 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 “find other things to do while at your desk in case something happens” 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 “No-Doze” 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. It’s not the world’s 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 you’re 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 you’re having a good day. If during a busier day next week as earnings season kicks into gear, you find you’re 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 won’t 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-A2’s) 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 “Barron’s “article

PNG-mentioned on “Mad Money” last night

VVUS- the FDA noted that VVUS’s Qnexa resulted in “significant” 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 “Barron’s “article

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