For all you homeowners out there (including myself), the median home price plunged by an astounding 15.3% year-to-year from December 2007 to December 2008 according to the National Association of Realtors. This is the largest annualized decline since the Great Depression. However, the focus for us as day traders is not to focus upon the past, but rather what is to happen. Despite the horrific price decline, there were two very notable pieces of good news in this report. First, the inventory of existing homes for sale fell almost 12% which translates into a very manageable 9.3 month supply of homes. But more notably is that there was an increase of 6.5% in the amount of existing homes sold in December on an annualized basis; this was very quietly the strongest report since the beginning of the decline of the real estate market over two years ago. Now, there is no guarantee that this will maintain itself, but it may well be the beginning of a bottoming process for real estate as supply dwindles a little bit and buyers step in. Again, there are no guarantees here; it may well be a blip, but it is a very welcome blip. For day traders, we have stopped monitoring reports such as this one. Home data must come back onto our radars. The Dow quietly rallied almost 100 points in about 10 minutes early yesterday morning. For some day traders, that little pocket can make (or ruin) a day for day traders out there. So, definitely monitor things like new home sales as well as existing home sales data as these economic reports without a doubt are influencing intra-day trading once again.
In Tokyo, stocks rallied 5% while Australia was up 3% overnight with the rest of the markets closed for the Chinese New Year. Things started positively in Europe, but as commodities prices gave way a little, the bourses have turned moderately negative (all less than 1%). Futures were up strongly state-side overnight, but have given back all their gains and more. Look for this chop-chop to continue all day today. There definitely is a bid in here for equities as the markets tried to rally yesterday, but there also is a ceiling in the absolute immediate-term as the rally failed numerous times. Keep an eye on commodities to see if oil and gold give back which would drag down shares of commodities-based equities and the market with it, but overall, look for a very choppy trading session with prices on both sides of unchanged throughout the day albeit with the bias to the upside.
Watch list:
1272009Eriklist.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
AXP- beat earnings
TXN- beat earnings significantly for the quarter, but warned for the year
VMW- similar to TXN; beat for quarter but warned on year. Watch EMC as well as they own a significant part of VMW
ZION- took huge non-cash charge, but operating earnings OK
NFLX- terrific earnings
MCK- terrific earnings
QLGC- good earnings
CVH- CEO resigned, but actually viewed as positive after-hours yesterday in terms of stock price as company is trying to shore up its image
CR- beat earnings
DGX- closed near a high after posting great earnings
BJS- decent earnings
BMY- solid earnings
JEC- decent earnings
Bad-The following stocks have bad news and/or a weak technical pattern
AMGN- missed earnings slightly for the quarter
GGG- met earnings, but hazy on outlook
AFL- despite repeated guidance reiterations and statement of adequate capitalization, stock keeps falling. Looking for short thru yesterday’s low of 19.35 or a A-B-A2 to upside
GNK-suspending their dividend and stock buyback program
THMD- closed near a new trend low yesterday
RF- broke to a new trend low; look to short thru Mon low of 4
DOW- CEO tried to talk company up on CNBC interview this morning, but noted the board may have to cut the dividend
MHP- beat on quarter, but warned on year
GLW- missed earnings and warned on next quarter’s earnings
DD- missed earnings for quarter
Earnings:
TUES JAN 27 BEFORE
AKS ASH AVY
BJS BMS BMY
BTU CBE CHKP
CP CRS CVG
DD EMC ENR
FMER FPL HSY
JEC KCI KRC
LXK MHP NUE
NYB PBKS RYN
STE STJ TIN
TRV VLO VZ
WAT WDR X
TUES JAN 27 AFTER
ALTR AMLN CHRW
DV ELX EWBC
GILD MOLX NSC
SYK TSS VPRT
YHOO
Good luck today.
http://www.epiphanytrading.com/
Erik R. Kolodny- Chief Markets Strategist of Epiphany Trading, LLC
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