MON. JAN. 26- Trader Tax?

There has been talk of a “financial-transaction tax” which would be assessed on trades of stocks. It is at the point where it has been discussed in Congress according to various newspapers and Internet sites. The tax would be 0.25% of the value of both the buy and the sell side of the transaction. So, assume you bought $40 million of stock and sold $40.1 million for a trading profit of $100,000 in a year..well, now you are down $100,000 because Uncle Sam gets an extra $200,000 (0.5% of $40 million). This whole concept is being discussed as part of the “sin tax” category and is sickeningly gaining a bit of momentum. An article published by Bob Herbert in a January 12 edition of the “New York Times” received a great deal of positive feedback under the comments section as traders are now being viewed as the devils that caused this crisis. The article is below:
http://www.nytimes.com/2009/01/13/opinion/13herbert.html?_r=2&ref=opinion

Such a tax would put about every day trader out of work. The tax is designed to make entities hold positions longer. All this will do is cause the capital markets to ostensibly stop functioning. Volumes and liquidity would disappear due to a dearth of participants making things even worse than they are now. The good news is that such a tax seems highly unlikely to pass. Sheila Bair, the head of the FDIC and soon-to-be Treasury Secretary Tim Geithner are philosophically opposed to such a tax; furthermore, President Obama seems in no immediate-term rush to raise taxes of any sort to anyone. But, this is a situation to monitor over coming months and we must all be vigilant in being politically active when warranted to oppose such a tax as we’d all need to find a new line of work should such a tax be assessed.

Markets throughout the world were relatively placid overnight. Most of the Asian markets were closed to celebrate the Chinese holiday with Tokyo the only major Asian exchange open; it closed down 1%. European markets are trending a bit higher as they were pounded Friday morning when the U.S. market was open, but the bounce is weak. State-side, futures are actually slightly weaker despite the big merger deal. Look for a fairly quiet day with the bias to the downside. It will likely be quite a bit choppier and more difficult overall than the four trading days last week so be careful.

Watch list:
1262009Eriklist.zip

Reiterating-
Please understand that if the ideas do not get to the hoped for set-ups cited below, more often than not, one should not blindly trade the symbol next to said idea.
If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf 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

DOW, ROH- FTC approved deal on Friday; there may be news on deal terms at any instant

GERN- had positive stem cell news on Friday; likely to sell off a bit if it opens higher as some of the institutional clients take profits amid reports it could take upwards of 10 years for the company to show results

BK, CMA, SIVB- closed near highs

GS, MS- closed near highs

CRA- mentioned on “Mad Money”

ABX- among others, very strong…very quietly, the gold sector was extraordinarily strong on Friday

WYE- being bought out by PFE for 33 in cash plus .985 PFE shares; look for a trade here particularly at retail rush time at 8AM. Other trade here is to see if spread widens.

ACV- decent earnings

COV- good earnings

DGX- good earnings

JPM- re-initiated with a “Buy” rating at Goldman Sachs

MCD- good earnings, but may see profit-taking

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

GE- very weak on Friday; likely not a trade (at least an easy one), but worth watching for any newsflow

DRIV- weak on Friday in closing at a 2009 low

FUN- closed near a trend low on Friday

GTXI- missed earnings late Friday afternoon

CRXL- WYE not buying the company after all.

CAT- terrible earnings and warned substantially for next year

ETN- missed earnings estimates badly

KMB- missed estimates and warned

WCG- warned on outlook

TSN- bad earnings

GWW- bad earnings

Earnings:

MON JAN 26 BEFORE

ACV BOH CAT

COV DGX DHR

ETN FCF FCX

GWW HAL KMB

MCD ONB SEE

TSN WFT

MON JAN 26 AFTER

ALB AMGN AXP

CNW CR FNB

GGG MCK NFLX

OLN PTV PRXL

QLGC RGA SLG

STLD TXN VMW

ZION ZRAN

Good luck today.

http://www.epiphanytrading.com/

Erik R. Kolodny- Chief Markets Strategist of Epiphany Trading, LLC