MON MAR. 2- Trouble In The Citi

Early Friday morning, the U.S. government announced that it is going to boost its ownership of Citicorp to as much as 36% which would allow the company access to more capital yet enable the Feds to take on far more control of the damaged banking scion. As part of the deal, the government will convert up to $25 billion in preferred shares to shares of common stock. It is important to note that the latest plan does not allow for the direct injection of money into C but it gives the government much more of a voting stake and control over the bank’s operations. There are other wrinkles here as well which is why nationalization has not been an option; for instance, a high government stake could impair C’s ability to operate in many of the nations in which it has businesses. For day trading purposes, there are two takeaways. First, any and all banking stories will shake up things for some time to come. Indeed, trading in things like C, BAC, and JPM was crazed on Friday with volume on C approaching two billion shares. Yet, most of the trading in those types of plays (particularly low priced stocks like BAC and C) is designed for scalpers- and scalping is not something that can easily be done. The other point is that if one is indeed able to find a fluky trade here and there, it can make his/her week. For instance, just after 7AM ET on Friday, C was actually trading higher. Presumably, the stock was up on hopes that the financial system would now be more stabilized. Yet, with the news of the semi-nationalization and having had such a huge run-up, shorting thru unchanged and holding for a bit was very much the prudent thing to do; indeed, the stock fell from just over 2.50 to just below 1.20 in a little over an hour! So, don’t get caught up in tiny machinations in these banking stocks particularly, but if there is something to do, do it in size and realize the gravity of the situation in this sector.

Markets crumbled world-wide overnight. Warren Buffett noted that the economy was in ‘shambles; at Berkshire’s annual meeting over the weekend and the markets took their cue from there. Asian markets were down 3% to 4% across the board with European stocks following a similar path down. With a dearth of good news out there along wit ha paucity of participants due to the terrible weather in the New York area, it’d seem that the markets will likely stay lower all day and merely chop around in this lower sub-7000 Dow range. The one corollary is that if the banks rally for whatever reason, look for the market to come back- if this is the case, buy whatever is the strongest just after the open because those are the stocks that will move the most to the upside.


Watch list:
322009Eriklist.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

TXT- selling one of its divisions to raise cash

ENDP- positive FDA approval on its Valstar product

AMZN, IBM, RIMM- among bigger-cap techs closing with gains Friday; no real trades here per se, but something to monitor as techs may well lead the way in any market rally

ALTH, BHP- mentioned on “Mad Money” last night

ATHN- traded up nicely after-hours on Friday after being belted due to poor earnings in regular hours trading

CSV- staged major reversal in latter part of week; closed on high

CYD- rallied sharply in last few minutes of day; likely reversal ahead today

PSTI- received FDA approval to commence ‘first-in-human’ placenta-derived stem cell trial

CEDC- beat on earnings, raised guidance, but warned on revenue

ARCC- decent earnings

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

RF- got crushed on the close on a sell imbalance; if it opens lower and the market strengthens, it is very likely a ‘buy thru unch’ amid the 40 cent downtick on the bell

TEG- continued its decline; closed near low of day

CTV- closed near low of day on terrible earnings

GE- closed near low of day after cutting its dividend

PFG- closed near low of day

SLM- closed near low of day

MIR- closed near low of day

WFC- closed near low of day

ZION- closed near low of day

AMGN, CELG- closed near low of day

WGOV- warned on earnings

MGM- Moody’s cut its rating after hours

IHO- closed on a low

CEDC- closed at a new trend low

ZMH, MDT, SYK- all closed near their lows in a weak medical electronics sector

BEN- closed on a low

MR- closed near a low

PL- closed near a new trend low

CHK- cutting output massively

WFC- mentioned negatively in “Barron’s”

PNC- slashed its dividend

PWRD- beat on quarter, but warned on year earnings-wise



Earnings:


MON MAR 2 BEFORE

AIB ACAS ARCC

ATPG CCO CEDC

CNO DISH EIX

FCN OSG PGH

PWRD ROSE WEN

MON MAR 2 AFTER

ABM EGLE FR

HPT IDCC MDR

MTZ MWE PDLI

PRX TIVO


Good luck today.

Epiphany Trading, LLC

http://www.epiphanytrading.com/

Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President