This will counterbalance Friday’s piece a bit re why there is quite possibly a ceiling on the market, but then isn’t what makes a market the hashing out of both sides? So let’s quickly discuss simply from market action last week three pieces of news. First, quite possibly getting the least bit of press for a major move in the history of network television, did anyone notice that oil was down almost 15% on Wednesday? It is important to realize that commodity stocks help lead up the stock market from its most recent low. Oil, which breached $50 a barrel on Monday morning actually traded below $40/barrel again by Friday morning! Four days and a 20% downdraft. And nobody discusses it. Second, Wal Mart issued a horrific earnings warning on Thursday morning which shoved WMT down yet the market did not sell off aggressively. Finally, we witnessed the worst jobs report in years on Friday- with the unemployment rate coming in worse than expected at 7.2%…and still all that occurred was a low volume non-violent sell-off. So, yes, there does seem to be a cap to everything, but the market is definitely telling me that there seems to be a floor barring something unforeseen as well. For day trading purposes, just continue to realize this is a totally different environment from three months ago and that we remain trapped in a trading range.
Overnight, stocks in Asia were down across the board with the Hang Seng putting in the worst performance- about 3% lower. Prices are down in Europe as well between 0.5% and 1%. Oil is getting clobbered with the dollar weaker anew against the yen. Despite this negative cloak, volumes are relatively low and the selling pressure is not huge. There will likely be some sort of weak rally at some point this morning if no other reason than nobody is selling…but overall, it will likely be a quiet session as earnings season commences tonight amid a relative paucity of news and desire to get actively involved.
Watch list:
11209Eriklist.zip
Good- The following stocks have good news and/or a strong technical pattern
DNA- up on rumors that it’d receive a higher takeover; 87 is where the deal is in place so looking to see if it trades above there
AMOT- up after a bizarre buy imbalance on the open; looking for a short early morning if the rally fails to hold
APEI, HD- on “Mad Money” Friday night
FRD- has been up on speculation that Pres. Elect Obama’s policies will help the company; looking to buy thru Fri high of 9.90 or A-B-A2 reversal
FED- announced tender offer for a significant amount of its senior debt securities
HOLX-raised guidance for its next quarter’s earnings
GTCB-noted that the Blood Products Advisory Committee of the FDA voted that its lead drug (Atryn) is safe; if approved, it’d be the first recombinant human antihrombin available I nthe U.S.
Bad-The following stocks have bad news and/or a weak technical pattern
RMBS- pummeled after losing a case to MU on Friday; may be A-B-A2 to upside if the selling fails to continue early
LEN- down Friday after company accused of being in a Ponzi scheme; the company has vigorously defended itself on TV Friday and press release today. Should bounce today, but if it tries and fails, it is a likely short
CVS- closed near a low after warning; looking to short thru Fri low of 25.50
JPM- was down going on 20% last week in a quiet smashing. Looking for an A-B-A2 reversal or a short thru Fri’s 25.81 low
MASI- pummeled last week; if momentum continues, looking for a short thru 23.59 Fri low
Earnings:
MON JAN 12 BEFORE
None today
MON JAN 12 AFTER
AA INFY
Good luck today.
http://www.epiphanytrading.com/
Erik R. Kolodny- Chief Markets Strategist of Epiphany Trading, LLC
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