Epiphany Trading Daily Blog

MON. SEP. 13- Trading Appropriately In The Immediate-Term

In this relatively slow intra-day trading environment, many people are sorely tempted to trade with more size to make up for the lack of movement. When things are moving, one can obviously trade their normal share size to capture profits on their target moves. The problem with the slow(er) tape, speaking for me alone, is that the moves which I’ve become accustomed to garnering over periods of seconds now occur over periods of minutes. Yet, what I and many other people continue to do is act as if rapid profits are attainable (which, in some cases, they are). Thus, I for instance can be right about a move…but it may take 15 minutes and 36 seconds rather than 1 minute and 36 seconds. Furthermore, as time horizons for moves become a bit less compressed, there is a lot more jiggling in prices within the grander movement. What this has led to for many traders (including myself) is an attempt to break the stasis by trading a few more shares than normal in any given trade. The issue is that by trading in an immediate-term mindset with lower liquidity and smaller deltas, one almost guarantees oneself small losses over time by forcing oneself to exit in illiquid conditions when wrong. Thus, if you’re attempting to trade for immediate-term moves, this is not a time to boost trading size; rather the opposite is true in capital preservation mode.

Stocks rose throughout the world overnight with Tokyo ahead 0.9% and Hong Kong up 1.9%. In Europe, the bourses are all up about 1%. The dollar is slightly weaker across the board, gold is flat, bonds down slightly, and oil up almost 1%. There were three main stories overnight. China’s industrial output numbers came in much better than expected, there were a couple of positive economic numbers in Europe, and there was finalization on Basel rules for banking regulation. Futures are up sharply state-side. The only economic data out today is the Treasury budget (forecasted -$95 Billion) at 2PM ET but that is usually not a market mover. Earnings flow is nonexistent. But merger mania is back in style a bit this morning. For the day, look for some giveback of the gains but a positive day once again on a bit heavier volume as the crowd seems finally ready to start anew. Focus on the merger stocks, the bevy of small biotech stocks in the news, and relative weakness plays (particularly early on).

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

BDCO- closed near a high after LNG received approval to export liquefied natural gas

DIN- closed near a high

KV/A- closed near a high after receiving FDA approval to bring its 1st product to market

RIG- closed near a high after a report from FBR Capital which indicated RIG’s Macondo liability may be lower than expected

LULU- closed near a high after posting good earnings

MA- closed near a high

AMZN- closed near a high

CMTL- closed near a high

CGNX- featured on “Mad Money” on Friday night

DTG- HTZ raised its bid for the company to $50/share

ARST- received $43.50/share takeover bid from HPQ

SNTS- added two drug candidates to pipeline

INO- achieved successful phase I completion of its VGX-3100

OXGN- positive Zybrestat study results

ARIA- announced phase II initiation of Ponatinib trial

AONE- featured on CNBC’s “Squawk Box” show this morning after opening the largest lithium ion automotive battery manufacturing plant in North America

Bad-The following stocks have bad news and/or a weak technical pattern

PCG- closed near a low after a gas-line explosion in San Francisco

RDCM- closed near a low

WHR- closed near a low

SCOK- closed near a low

AVGO- closed near a low

PCX- warned on 3rd quarter sales volume

SGEN- negative phase IIb Lintuzumab results


Earnings:

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
 
As I discuss in my firm's chat room daily, I've dabbled a bit re scale. For instance, yesterday, I bought 1/2 my position in PCG through unchanged at 10:02AM ET as there was no follow-through selling from Friday on their natural gas explosion. When it got positive, I bought the other 1/2 just above unchanged.

With this said, my focus quite honestly (for myself much less what I see unbiasedly when I am not in positions) is that there is a vast amount of noise particularly with the markets not racing higher or lower and with the low volume at that. So, the moves aren't as 'clean' these days which is why I for one am trying to adapt by holding at least 1/2 of any given position a bit longer than I would have, say, a year ago.

Quote from DEM BONES:

Erik,with the extra jiggling going on would you consider scaling into your positions?
More...
 
Tuesday, September 14, 2010
TUES. SEP. 14- Basel Is Not A Spice
A term tossed around yesterday was “Basel III.” It was arguably the number one influential factor with regard to yesterday’s stock market action yet most traders (including myself) could not give a coherent explanation of exactly what it was. It all started in 1988 in Basel, Switzerland when a group of central bankers published a set of minimal capital requirements for banks. The requirements were cemented by the G-10 nations in 1992. Basel II in 2004 updated all of this in an attempt to create a worldwide benchmark which banking regulators could use when creating regulations much less the amount of capital needed to safeguard the many varied risks that banks encounter. Fast forward to the present. Basel III is an attempt to shore up some of the concepts from Basel II in particular with tighter definitions of capital requirements, conduits to attempt to limit counterparty credit risk, and a provision for non-subjective liquidity ratios. Basel III will specifically require banks to hold high-quality capital totaling at least 7% of their risk-bearing assets. It is a gigantic rise over the current 2% but is much lower than what banks were worried about; it also has a phase-in algorithm extending to January 2019 or later. The net of all of this is that most big banks worldwide fit the criteria already. Thus, the market initially rallied yesterday because the fears of an overhang, i.e. banks being forced to sell shares of stock to raise capital, were dissolved. There was also a sigh of relief that most banks are OK and that there weren’t any surprises. However, the market drifted lower yesterday in the afternoon because a lot of this was somewhat expected plus it makes one wonder where exactly the limbo bar has been placed here. If all that was required to be a major league baseball player was the ability to swing a baseball bat, I am guessing many more of us would be major league baseball players. That said, the thought that banks are being given a green light to make more loans is of course a good thing overall. So, in a nutshell, this seems to be a one-day event as there is a slew of economic news out this week domestically…but it was a pretty major market-influencing event to be sure yesterday.

Markets were quiet overnight with Tokyo down 0.2% and Hong Kong ahead 0.2%. The action in Europe is quite similar with every major bourse within a whisker of unchanged. Retail sales data came out slightly stronger than expected this morning which gave a brief lift to futures. Gold is notably stronger to the tune of 1% with the dollar slightly weaker across the board. Business inventories (0.8%) are out at 10AM. Look for a quiet day with prices not straying too far from yesterday’s levels. The bias seems to be a tinge lower with the dollar falling a bit. Focus on the earnings plays and retailers such as BBY, the small cap biotechs in the news, and the stocks that closed near their highs yesterday for potential short covering this morning.

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

ZUMZ- decent earnings guidance

GS- closed near a high

DTG- closed near a high after receiving a $50/share bid from HTZ

DIN- closed near a high

LULU- closed near a high on continued earnings momentum from Friday

JKS- closed near a high

CDII- received major contract from Beijing Tianrum Construction

JNY- closed near a high

CIE- closed near a high

GGC- closed near a high

PTC- closed near a high

ULTA- closed near a high

RVBD- closed near a high

MMYT- closed near a high

QLIK- closed near a high

XNPT- closed near a high

IRWD, FRX- positive phase 3 Linaclotide results

BBY- great earnings

CBRL- decent earnings


Bad-The following stocks have bad news and/or a weak technical pattern

POWI- cut revenue guidance

LH- closed near a low after acquiring Genzyme Genetics from GENZ, but it will be dilutive to earnings

DYP- closed near a low after their auditing firm was changed; also, there was an exodus of executives and directors

INET- closed near a low

VOLC- notes offering

FUL- poor earnings

DGI- cut earnings guidance

GMCR- acquiring Van Houtte; sees deal

Earnings:

TUES SEP 14 BEFORE

BBY CBRL KR

TUES SEP 14 AFTER

PLL



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. SEP. 15- Moving In Bunches

The S&P 500 has been up 9 of the last 10 trading days. Before that, it was down 7 of the previous 9 trading days. Before that, it was up five days in a row. In months much less years past, prices would obviously have strong mini-trends within a trading range over a series of days, but to the degree to which this occurs now. There are several reasons for this. First, the newsflow within the channels is particularly in focus. Whether it be worries over the poorer nations of Europe to optimism about the prospects for the domestic jobs market, notable news is having an impact that can last for days. Second, volume- or lack thereof. It is much easier for prices to be pushed up or down when there are fewer participants and it’s so easy for trends to be exacerbated when someone is stuck badly in a wrong position because their exiting further impacts the situation. Third, the advent of entities such as hedge funds take huge positions which can cause enormous trend moves. Witness yesterday when the dollar touched a multi-year low against the yen while gold soared 1.5% as a fine example. As day traders, it’s not up to us to truly question this activity but to go with it. On days like yesterday, the forces of positive comments from the likes of Suntrust (STI) can combat an earnings warning from steel entity Nucor (NUE) when the market has risen for several days. Thus, obviously be ready to change with the trend if the trend changes. But don’t anticipate it changing. If you are doing immediate-term trading rather than longer-run stuff, this is certainly an era where it is much better to be reactive rather than proactive (as long as you don't chase moves while 'reacting').

Markets in Asia were up overnight with Hong Kong slightly up by 0.1% but Tokyo rallied 2.3%. The Japanese government stepped in to try to stem the rise of the yen which sparked some short covering in the stock market there. Prices are slightly weaker in Europe by about 0.3% average for the bourses with the leading trigger seeming to be a disappointing jobless claims number out of Britain. New York Fed data was slightly disappointing at 8:30AM although Export/Import Prices came in as expected. Industrial production gains of 0.3% are seen at 9:15AM along with a Capacity utilization of 75.0; crude inventories are due out at 10:30AM. Gold is slightly lower with oil down 1%. Bonds are weaker with the dollar surging against the yen by 2 ½ yen although flat against the euro. Futures are down amidst all of this murkiness along with a host of earnings warnings from smaller companies. Look for a choppy day similar to yesterday but with a bit of a downside bias. Trading-wise, focus on the earnings warnings, the companies with news out last night (buybacks, media, and such) and the small-caps which closed near their highs yesterday.

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

CREE- closed near a high

NUVA- closed near a high after releasing earnings

RDWR- closed near a high amid rumors of an imminent deal

GOK- closed near a high

BPI- closed near a high

AUMN- closed near a high after announcing an expansion of its gold drilling program

THOR- closed near a high

SVNT- received FDA approval of its gout drug

AAPL- featured on “Mad Money” last night

PLKL- decent earnings

MA- announced up to $1 billion buyback of shares

Bad-The following stocks have bad news and/or a weak technical pattern

NBIX- disappointing top-line results of CRF1 to treat depression

STLD- earnings warning

CLF- closed near a low after updating its 2010 North American coal outlook

ARNA- closed near a low after negative FDA comments released about the company’s diet pill

LLEN- closed near a low

MDAS- closed near a low after announcing an $850 million acquisition

NOVL- rumors that the company has reached a deal to sell itself in two parts

Earnings:

WED SEP 15 BEFORE

None today

WED SEP 15 AFTER

AIR DBRN




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. SEP. 16- Saving The Yen?

For seemingly day after day in this space, I have made reference to the dollar declining to a multi-year low against the yen. Well that certainly changed dramatically yesterday. The Japanese government made a huge (solo) attempt to halt the advance of the yen which has impaired the earnings of exporters. They did this in promptly smashing a six-year plus time spate of not intervening in the currency market as the yen traded to its highest relative point in 15 years on Tuesday. It is very hard to imagine that a singular (rather bold) move by the Japanese government will work. If someone drops a ball from 20 feet high, when the ball hits the ground, it’s going to bounce (just not as high as the 20 foot level from which it was dropped) but the force of gravity will force it to settle on the ground over time. The only way the bounce can be sustained is if say, there was someone on the ground to catch it and throw it back up. It’s the same thing here. It is up to Prime Minister Kan to do things like nag at the Japanese Central Bank (JCB) to the central bank to increase bond purchases, grow an in-place bank-loan package, and/or put pressure on the JCB to lower interest rates. The Bank of Japan seemed to be on the same page in releasing complimentary statements about the move as they want clearly to do what they can to stimulate economic growth so as to offset risking a long period of deflation. I do not know nearly enough about the situation to even hazard a guess as to what will happen nor is this the place to pontificate on the intelligence of government intervention in such a tough situation. I just bring all of this up because it had a dramatic impact on the yen in the world’s currency exchange yesterday. Furthermore, all of this may well affect equities in time as many hedge funds were caught short the yen while on a macro level, it’s a very good immediate-term test to see exactly how strong the yen (and the markets) really are- and with it potentially the strength of the global economy.

Markets overnight were generally slightly lower overnight with prices ranging from unchanged to down about 0.3% on the Asian markets and European bourses. Oil is down 1%, gold up another 0.5% with currencies and bonds flat. Futures are down slightly on the heels of a weak UK jobless claims number with PPI and jobless claims domestically in-line with estimates. Phily Fed is out at 10AM with an estimate of 0.0. Ahead of options expiration tomorrow, it looks like another quiet and choppy day. The bias right now is to the downside, but there are many things in the green so look for a truly stock trader’s day with lots of individual moves. Focus on the companies with earnings such as FDX, the myriad of stocks in the news (share offerings, acquisitions, et al), and any A-B-A2 to the upside in any stock with positive news in this short covering environment.

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

DBRN- decent earnings

AIR- decent earnings

GME- stock and debt buyback

SVNT- closed near a high after the FDA approved its gout drug

AAPL- closed near a high

SPN, DVR- closed near a high after the Interior Department intimated that several oil wells in the Gulf of Mexico must be plugged

TNDM- closed near a high

HOG- closed near a high amid vague takeover rumors

MCK- closed near a high amid takeover rumors

AUMN- closed near a high

CO- closed near a high after announcing a stock buyback

GOK- closed near a high

LPNT- closed near a high on takeover speculation

OPNT- closed near a high

FUQI- closed near a high after a showing at a Chinese jewelry fair

PIR- decent earnings

BCRX- positive phase 2 results from BCX4208



Bad-The following stocks have bad news and/or a weak technical pattern

NPSP- share offering

AEL- notes offering

MSB- closed near a low

PWER- closed near a low after rival SMA Solar warned of margin pressure

FDX- poor earnings guidance

CFN- 30 million share block sold by CAH at 23.47



Earnings:

THURS SEP 16 BEFORE

FDX PIR

THURS SEP 16 AFTER

ORCL RIMM


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. SEP. 17- Atoning- Redux

I am not going to be in the office tomorrow. However, the blog post I wrote last year (one of the hardest and most introspective which for me made it one of the best in my eyes…and something I will update in due time) is particularly apt. So, forgive me for the re-post, but if I am going to repeat myself, this is the one to do it with.

From Sep. 28, 2009:



Today is Yom Kippur. For Jews, it is a very solemn day and is in fact nicknamed “The Day of Atonement.” For the stock market, it is usually a very slow day as many traders- Jewish and non-Jewish alike take all or part of the day off. Newsflow slows to a crawl usually and liquidity is at a premium. So, in line with the personal hefty matters I’ll be thinking of in synagogue later this morning, I’m going to switch things up. There is an absolutely beautiful prayer/song I’ll be reciting later called the Ashamnu (you can listen to it on You Tube, I am sure). In the prayer, there is a list of many of the general sins we’ve committed over the year (gossiping, hitting, jeering, mocking, and so forth). As we say the Hebrew words for the sins, we make a general ball with our left fist and touch our heart as a ‘shame on me’ theme along with a quest for forgiveness. In line with this, here is a short list of trading sins we have all been guilty of (certainly ones I’ve been guilty off at times in the last 12 months) which have caused me to lose money. I encourage each of you to read it, add to it, note them…and of course ask for forgiveness from the Trading G-d! Or of course, simply make an internal plea to be better about it in the next 12 months…and keep in mind, I have lost at least $1,000 over the course of the last year committing each of these sins (and much more in some cases):


1. I have scalped unnecessarily at times I should not have.
2. I have been overly exuberant when having a winning trade and overly depressed when having a losing trade.
3. I have let other things on my mind get in the way of my trading.
4. I have traded from fear when I should have put on bigger size in a trade.
5. I have traded from greed when putting on too much of a size in a trade in which I should not have done so.
6. I have not gotten out in the ½, ¼, ¼ method when right.
7. I have hoped for better results when wrong in a trade and held on too long.
8. I have traded a stock on momentum when there was no reason to do.
9. I have traded counter to the market.
10. I have traded illiquid stocks.
11. I have occasionally traded a stock in the middle of the range.
12. I have traded a stock without stagnation.
13. I have traded a stock in which I thought I could make, say 10 cents on 10,000 shares and promptly lost three days of work
14. I have, when doing poorly traded without seeking confirmation and lost money.
15. I have been frustrated when trying to short stocks that cannot be borrowed.
16. I have exited a stock when there was literally no reason to do so.
17. I have entered a stock when there was literally no reason to do so.
18. I have let go of my beliefs as to what I think would happen to go with the crowd.

And here is a list of things I vowed last year I would not do…and have kept my vow for the last 12 months.

1. I have never not one time called out how much money I made in a stock the instant I exited a trade nor have I even clapped my hands and exclaimed how well I did when right. It is obnoxious boorish behavior and impresses nobody when done over time. I did it for the last time ever 1 ½ years ago and saw a look of genuine jealousy and anger from a good friend of mine and hated myself instantaneously. Reputations speak for themselves.
2. I have never come in late to work on my own volition outside of traffic accidents or other external factors.
3. I have never left work earlier than I had to. I actually hate this one because there are things I’d rather do than play a computer game all day long. But, I have to pay my mortgage.
4. When exiting stocks properly, I have held on to my winners longer than I ever have on average this past year.
5. I have adjusted my schedule to come in even earlier during earnings season to allow for even extra time. Getting up at 4:30AM instead of 5:30AM to make extra income when it needs to happen for added income is not a big deal.
6. I accepted the market for what it was. As the roaring bull market of 2009 commenced in March, I did not disbelieve it; I just went with what was in front of me.
7. Whenever I really need a break- due to exhaustion or trading-related strings of winning or losing which affected my emotions- I’ve taken a quick walk rather than forcing things.
8. I can look in a mirror and say I made my best effort amidst a time constraint in trying to help anybody I could in terms of things like configuring software for them…although I know I can always do more.
9. I have gone stretches of as long as four hours intra-day without making a trade…and not felt like I needed to press buttons.

In the Jewish faith, the symbol for the number ‘18” is the same as the Hebrew word “life.” So, I aptly named 18 sins and made a list of only ½ along in the spirit of genuine humility as to things I’ve been good about. Unfortunately, I could keep going on the list of trading sins…and have to really think about the vows I’ve kept successfully to add to that. But, all I can do is vow to myself and to each of you that I’ll try and do better in the next 12 months.

As of this writing, futures are nicely ahead on positive earnings strength from things like ORCL and RIMM. With it an options expiration day, look for a very active open and close and a somewhat dull middle five hours. The bias should remain to the upside barring something major out overnight. The focus will be on the techs because of the earnings from RIMM and ORCL, the biotechs with news such as ALKS and ARNA, and a myriad of smaller stocks that closed at or near highs today which closed up sharply on continued exaggerated moves 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

ALKS- FDA announced approval for Vivtrol for Opioid dependence

RIMM- decent earnings with good earnings guidance, but did warn of margin pressures

ORCL- great earnings

TXN- boosted dividend and stock buyback

AAPL- closed on a high

FSLR- closed near a high

AUMN- closed near a high

CF- closed near a high

AMZN- closed near a high

DARA- closed near a high

SINA- closed near a high

FN- closed near a high

Bad-The following stocks have bad news and/or a weak technical pattern

ARNA- FDA rejected its Lorcaserin product

MEE- forecasted weaker operating results

CHSI- closed near a low

PWER- closed near a low

Earnings:

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. SEP. 20- Doing What The Market Says To Do

A rather long time ago, a friend of mine (not me, I promise) who is otherwise uber-intelligent did something pretty stupid. He went to the barbershop for a haircut as his hair was slightly long. When the barber asked him if everything was as he liked it, he asked for a little more to be cut in the back and the front. The request was granted. Now he felt it was slightly even. So more came off. Before he knew it, he was almost totally bald. There are distinct times that doing absolutely nothing and taking the hand one is dealt is absolute right thing to do. By simply not being a perfectionist, my friend would have had (almost exactly) the haircut he wanted. The same is true in the day trading arena. I had to miss the start of trading on Friday due to circumstances way beyond my control. When I looked back, I noted that the Dow fell almost 100 points in mere minutes just after the bell- an otherwise wonderful opportunity. As frustrating as that was (and it was very frustrating), when I commenced trading around 1PM, the pace had slowed for the day. In fact, from 1PM-4PM, the NASDAQ traded in a range of eight points. You know what I did? Very little. I traded less than 10,000 shares and walked away $100 richer. What took me many years to understand is that when the markets are good, one has to go full throttle. When the market is slow- no matter one’s personal circumstances- one has to go much slower. It is that type of environment where many people get into trouble because they churn themselves up in taking many small losses and leave the trading desk poorer and angry. Basically, it’s the good trading markets/years that can make people a terrific living…it is the stasis type of environment that knocks most traders out of the game.

Markets in Asia were quiet overnight with Tokyo closed and Hong Kong ostensibly unchanged. Markets in Europe are stronger overall with the DAX up 1.1% and the FTSE up 0.7%. Oil is up slightly, gold another ½%, and the dollars and bonds are quiet. Futures are nicely ahead on continued optimism over recent economic numbers as well as a mini-merger Monday. The NAHB market index is out at 10AM with an expectation of 13. President Obama has an hour forum on CNBC today at 12PM. Thus, look for a quiet day with a modest upside bias. The focus will likely be on small biotechs in the news, the various stocks being acquired or rumored to be acquired, and the relative strength plays (particularly stocks which closed near their highs on Friday).

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

SFUN- wonderful IPO; closed near a high

SFSF- closed near a high

LOPE- closed near a high

NTGR- closed near a high

PEGA- closed near a high

FTNT- closed near a high

GSM- closed near a high after posting earnings

JOBS- closed near a high

MSPD- closed near a high

CO- closed near a high

THO- closed near a high after announced an acquisition of Heartland Partners

CHTP- positive phase III Northera trial results showing benefits for hypotension

ID- Safran bid $12/ share cash for the company

NZ- IBM bid $27/share for the company

DFS- decent earnings

LEN- decent earnings

Bad-The following stocks have bad news and/or a weak technical pattern

MEE- closed near a low after warning of a slower outlook

CLF- closed near a low

ARNA- closed near a low after the FDA rejected its lead drug

JPM- closed near a low

PSBH- closed near a low

Earnings:

MON SEP 20 BEFORE
DFS LEN

MON SEP 20 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
 
TUES. SEP. 21- Overdone? No Such Thing.

I lived in Chicago for a number of years. Although I was never a Chicago Bulls fan, I always respected the fact that they were ridiculously good at the height of their best years in the late 1990’s. One year, they won something like 72 regular season games out of 82 played. By the same token, the 1998-2000 New York Yankees were very impressive as well with the 1998 team winning a then AL- record 114 regular season games. But here’s the thing- both the Bulls and Yankees did indeed win championships in their respective leagues the year that they had those monster seasons. But it did not preclude them from winning two more championships in each case. People did not wait around and wonder when it’d end. Instead, fans of both teams and both sports appreciated the great teams for what they were and expected them to win rather than lose. So why is it then that it is the polar opposite when it comes to the stock market? I mean, I get it to a degree- when you have Michael Jordan at the prime of his career, you’re less likely to worry about the Bulls going into the tank than you are when it comes to wondering if spiraling debt can take the stock market down. But really. There is no such thing as ‘overbought’ or ‘oversold.’ Just as great teams in certain times find a way to keep winning, so does the stock market. Indeed there are many reasons for the market to go up right now these last few days with one of the most glaring being that ‘the 2010 money chase’ may well be on. Basically, the fiscal year for mutual funds ends on October 31 and many jobs are on the line so performance can beget performance. But the bottom line is that there is no such thing as ‘overbought’ or ‘oversold’ when doing intra-day trading. Seemingly extended moves can always get more extended and indeed in phases like the one the market has been in for the last few days, the disbelievers tend to miss out- or worse yet- lose a lot of money.

Markets overnight were mixed in Asia with Tokyo down 0.3% but Hong Kong up 0.2%. In Europe, prices are a bit higher with 0.3% gains in London and 0.4% and Frankfurt. Currencies and bonds are quiet. Gold is down slightly, but oil is notably weaker by about 1%. Futures are slightly weaker early on. Housing starts (550K estimate) and Building Permits (560K estimate) are due out at 8:30AM. For the day, it’ll likely be quiet with a downside bias based on the fact that a lot of the recent leaders are ticking slightly lower. Sounds strange, but every morning recently (the last seven mornings), they’ve been higher. The FOMC rate decision meeting results at 2:15PM will rule the day with prices likely remaining in a tight range within that downside bias. Focus on all of the recent momentum leaders for A-B-A2s, the few companies that reported earnings today, and big cap techs and financials (particularly after 2:15PM today).

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

AAPL- closed near a high (at a new all-time high)

VHC- closed near a high

ROVI- closed near a high after signing a contract with AAPL

OSBC- closed near a high

MMR- closed near a high after getting a further capital infusion from FCX as well as acquiring assets from PXP

BIDU- closed near a high

MA- closed on a high

WYNN- closed near a high

TNAV- signed an agreement with S

FTNT, RDWR, NTGR, NICE- mentioned on “Mad Money” last night

AMSC- closed near a high

INFN- closed near a high

EBIX- closed near a high

VVUS- announced positive top-line results from a two-year study of Qnexa

AAWW- great earnings guidance

Bad-The following stocks have bad news and/or a weak technical pattern

HCN- stock offering

HTS- stock offering

CYS- stock offering

BORN- closed near a low

CAG- poor earnings

SNDK- downgraded to neutral at Sterne Agee

Earnings:

TUES SEP 21 BEFORE

AZO CAG CCL

FDS


TUES SEP 21 AFTER

ADBE CTAS DRI



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. SEP. 22- Scale Of Price

For those who remember, one of the main lighter topics of conversation following the exile of the Marcos family from the Philippines was the excess of handbags and shoes that Imelda Marcos possessed. I am not sure if there is a precise estimate anywhere, but most reports indicate that Ms. Marcos possessed approximately 1,000 handbags and 3,000 pairs of shoes. The love of shoes in particular by Ms. Marcos was widely panned by the likes of icon Johnny Carson and many other late night comics. The much more serious side to this is that countless Filipinos were starving as Marcos collected her shoe collection. I bring all of this up because of a lesson that we utilized in a middle school math class. If a destitute women living in the Philippines had but one ratty handbag but was given a new bag, she’d go from possessing one to two handbags (100% gain). Conversely, if an individual later indicted on corruption charges had 500 handbags and acquired another 500 handbags to now own 1,000, well, that too is a 100% gain. In the midst of the recent stock market rally, this very principle has come into pay with the likes of triple digit stocks such as AAPL, AMZN, GOOG, and NFLX. Using the example of AAPL, people are amazed at how, for example, the stock rallied from 269.50 to 287.35 over a few days. Well, would anybody be paying quite as much attention if AAPL rallied from 26.95 to 28.74? No- even though it is the exact same percentage move! Thus, as we continue to trade in what has been a hot market recently, don’t let the scale of price skew your decisions on either the buy or the sell side.

Markets were mixed in Asia overnight with Hong Kong up 0.2% and Tokyo down 0.4%. The tone was decidedly more negative in Europe with Frankfurt off 0.7% and London down 0.5%. The reaction overseas to the Fed announcement has been negative overall in-line with the reversal yesterday domestically. Initially, it was viewed as positive that the fed basically stands ready to do what it takes…but then the prevailing thought became “why are they so eager to be so ready?” The dollar declined yesterday afternoon and is down a little more today. Gold is continuing to mushroom in challenging $1,300/oz now. Oil too is up about ½%. Bonds soared yesterday and are up slightly again this morning. The only economic news is the weekly crude inventories report at 10:30AM. Futures are down a bit after trading nicely higher overnight. Look for a downside day overall with an attempt to rally just after the bell. The upside will likely be capped by the fears of what is out there but the downside limited as well as a number of money managers stand ready to do some window dressing into the end of the quarter after the recent run-up. Focus on relative strength plays particularly early in the day, big cap techs and financials, and the stronger earnings plays for some action.

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

CTAS- decent earnings

PWER- announced stock buyback

ALOG- good earnings

RIMM- closed near a high

BIOF- closed near a high on hopes of an approval by the EPA of its E15

SCOR- closed near a high

TTPA- closed near a high on takeover speculation

CLGX, PLL- featured on “Mad Money” last night

OGXI- positive Custirsen phase II trial

KMX- decent earnings

SEED- reached an agreement with the Chinese Academy of Agricultural Sciences re its BT gene


Bad-The following stocks have bad news and/or a weak technical pattern

ADBE- terrible earnings

PMCS- warned on earnings guidance

DRI- poor earnings

AMAG- closed near a low after pulling out of an investment conference

CHBT- closed near a low after a brokerage downgrade

FUR- share offering

BIIB- indicated there is a need for safety monitoring for Gilenya



Earnings:

WED SEP 22 BEFORE

GIS JEF KMX

WED SEP 22 AFTER

BBBY RHT

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
 
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