In this era of negativity, particularly amidst the gains of yesterday, here are a few positive signs which hopefully maybe perhaps indicate that the pace of the economy’s decline is at least slowing if not gradually coming to an end- should of course the banking crisis pass without further incident: producer prices have risen for the last two months intonating that the risk of deflation is less than it’d appear; furthermore, the consumer price index rose for the first time in six months in January. The index of LEI (leading economic indicators) has also increased for the last two months indicating forward underlying strength in the economy. Despite stocks like Dryships (DRYS) failing to show life, the Baltic Dry Shipping Index has doubled from its low. Pending home sales rose in December with applications for mortgages having risen as well in recent weeks. Retail sales went up about 1% in January (even if most of the sales undoubtedly occurred at relatively low prices). New orders for consumer goods went up in January. LIBOR has fallen to just over 1%, down from 5% merely weeks ago indicating liquidity is in the global system. The corporate bond market had the most activity last month than it did in any month since May. Is the economy ready to blast off? No. There is a crisis of confidence and nobody knows how much toxicity exists on the balance sheets of the world’s companies. For day traders, all of these aforementioned factors in this piece offer evidence as to why the market can spring at any given time as it did yesterday; all it took was JPM indicating that things were at least stable to spark a sharp bounce yesterday. Thus, be even more attuned to the political and economic ramifications of any given numbers and policies- and be ready to trade off of said data.
Markets throughout Asia bounced for the most part with Tokyo up 2% or so. European bourses also bounced on the heels of Wall Street’s performance yesterday. Nothing dramatically changed from last night to this morning, but there is a little more short covering in the financials masking some overall market weakness. Look for the banks to lead the way today; some more short covering is likely to ensue as long as the financials hold up OK. Overall, it’ll likely be a fairly choppy session and quieter than yesterday.
Watch list:
2252009Eriklist.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
MELI- decent earnings
RRC- beat earnings guidance
CRI- decent earnings
CBI – good earnings
MF- buying back debt
NTRS- closed on the high
KPPC- closed near a high
EGLE- closed on a high
OB- closed on a high
DIN- great earnings
DLM- surprisingly good earnings
Bad-The following stocks have bad news and/or a weak technical pattern
FSLR- beat earnings by a lot, but warned of softening demand for next quarter
WYNN- atrocious earnings
XCO- bad earnings
HCN- bad earnings
HLF- bad earnings
CCI- warned for the quarter
DWA- bad earnings
FCSX- traded sharply lower after-hour as they could potentially default
HPY- closed on the low of the day
ARP – closed on the low
MAPP –closed near a low
Earnings:
WED FEB 25 BEFORE
ABK BRY CETV
CMS CNP DIN
DLM DLTR DNR
EV FTR GAS
HK KBR
KWK LXP MSO
PEI SCI SJM
SKS SPW TJX
VMED
WED FEB 25 AFTER
AEL AGO ATN
CLF COGT CRM
DCI EQY ES
ESRX FLR FLS
GDP GVA LTD
MEDX MRX NTES
NUVA PXP PCR
PDGI PSYS TRLG
URI
Good luck today.
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
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