Yesterday, a G-20 summit took place. The G-20 is a group of nations representing about 90% of the world’s population; the leaders meet every so often (along with the president of the E.U. Commission and the chief of the UN, World Bank, and IMF). The original point of the first summit in 1999 was to allow for developing nations to have more of a say in international discourse. This point remains intact, but the shift has focused (naturally) to the self-interests of each of the members much less the bloc itself. The point of this particular meeting was that the G-20 aimed to restore stability to the financial system much less economic growth. The G-20 nations desire to have worldwide cooperation on global stimulus measures, new goals for global regulation of financial instruments and entities, and a means to make it much more difficult to create a tax haven. The main idea is that, so far, there seems to be an issue with the first thought in that there was a distinct disagreement between much of Europe and the U.S. as to how to restore financial stability. So, what may work state-side cannot be applied overseas (and vice versa) simply because the leaders of the European and American nations cannot agree on a uniform way to proceed. Furthermore, while there are always protests, the near riot in London on Wednesday indicated what could be a long hot summer ahead if the frequency of the protests against the worldwide financial system increases. For day traders, all we can do is pay attention to the tape. Despite the images of bloody protesters and police using nightsticks- on live TV- the market shook off those images in rallying very nicely yesterday. Thus, it is urgently important to be aware of the worldwide schematic, but realize we are not trading on what may be as day traders; rather, we trade what is actually occurring rather than what (some of us) think should be occurring.
Markets were relative placid overnight throughout the world. Markets were up about ¼% on average in Tokyo and Hong Kong with prices mixed in Europe as the FTSE is down ½% ranging to the German DAX up ¾% as of this writing. .With a neutral jobs report and RIMM earnings terrific, there just is no major impetus to sell stock right now. Look for the rally to hold in a quieter day than recent with the corollary that financials- the recent leaders of the pack- trailed behind yesterday. So, if they weaken a bit, it will temper the overall strength.
Watch list:
04032009Eriklist.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 (preferably to the downside in a downside market and the upside in an upside market) 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
RIMM – outstanding earnings; beat on quarter and raised guidance; other big-cap tech should follow such as AAPL, IBM, AMZN, and GOOG along with competitors such as PALM
GPN- great earnings
GILD –positive phase III results on its blood pressure drug
CELG- mentioned positively on “Mad Money”
YRCW- among the truckers which closed near a high
CLNE- closed near a high of day
ASCA, MGM- among casino stocks closing very strong
AWI- continued its recent run-up with huge gains yesterday in closing near its high
Bad-The following stocks have bad news and/or a weak technical pattern
MDRX- poor quarterly earnings
MU- missed on quarter
KIM- doing a 70 million share offering to raise cash
CYOU- closed on a low
FSLR- filed for a mixed securities offering
CAE- poor earnings
USO- mentioned negatively on “Mad Money”
NVO- negative results from the FDA over the Liraglutide trial yet the company claims that the company’s 2009 earnings view should remain intact
Earnings:
none
Good luck today.
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
FAIR VALUE = -275 BUY PROG = -175 SELL PROG = -375
ReplyDeleteCASHIN'S COMMENTS
FRIDAY, APRIL 3, 2009
[AN ENCORE PRESENTATION]
On this day in 1860, a group of entrepreneurs launched their dream. And what a dream it was! They were in the telecommunications business. The nation was suddenly bi-coastal. At both oceans America was thriving. And these guys knew that communications was the key to the future
So, on this day, the first Pony Express rider left St. Joseph, Mo. on his leg of the 1966 mile route to Sacramento California. The cost was $5 per 1/2 ounce (it was later cut to a buck). Ten days later the mail arrived in the Golden State (to the amazement of nearly everyone).
They promoted the service well-very well. The image of a rider fighting off storms, Indians and various animals while rushing your mail was an instant hit. It was a depiction of pioneer life like none before or after. America bought it then and bought it now. The Pony Express thrives to this day in image and movie retelling as the epitome of American survival.
Even their recruiting posters smacked of the romance and risk inherent in the endeavor. One example read: "Wanted: Young, skinny, wiry fellows not over 18. Must be expert riders willing to risk death daily. Orphans preferred."
Unfortunately, while it sold as an image, it failed to sell as a service. While the image has lasted nearly a century and a half as a national standard the company lasted only 18 months as a business.
Even though the Pony Express used tried and true methods that had been used by Ben Franklin almost 100 years before (and by Darius of Persia nearly 2,000 years before that), the situation failed. What they missed in their calculations was something called the telegraph. So in less than 18 months they were out of business.
To celebrate invite someone who doesn't look like Ben Franklin to play "Pony Express" - - It's a lot like Post Office only there's more horsing around.
Thursday's market wasn't horsing around. It was off to the races from the opening bell.
Mark To Market Modification Milder Than Expected But Sustains Rally For Second Day – The Financial Standards Board tweaked the onerous "Mark to Market" rule they had imposed near the stock-market's top. While the modification was far more limited than many proponents (including yours truly) had hoped, any relief was – a relief.
The limitations of the change became evident as the trading day wore on. Early in the session many financials extended their Wednesday anticipation rallies. But, as the session progressed, the glow of the financials began to dim. Some felt that was just because they had run too fast, too far. Others (again including yours truly) thought the ebbing of enthusiasm was based on the realization that the MTM modification was a half loaf at best.
If the MTM changes free up bank reserves and promote lending, there will be a second leg of debate. Many bright people (and even your author) had seen the flaws in the 2007 MTM. If Washington had heeded those calls and suspended the new MTM for six months, we might have saved the American taxpayer a couple of trillion dollars. It was a cheap and easy experiment yet the powers that be stayed busy holding hearings and pointing fingers.
There were several anomalies in the market yesterday. First was the late fade in the financials that we noted previously. Second was the failure of the VIX to drop sharply in the face of this strong multi-day rally. Lastly, the market stopped right on a key resistance.
In Thursday's Comments was said that there was very critical resistance at S&P 840/845. The intra-day high turned out to be 845.61 which is close enough for government work.
Overall, it was another solid session for the bulls. There were clear signs of the "reflation" play. Oil spiked. Grains rallied along with things like building metals and lumber. The market seems to think things around the globe may be bottoming at least.
Cocktail Napkin Charting – As noted above, the rally stopped at the upper edge of the resistance band at 840/845 (S&P). For today we'll start with those numbers for near term resistance. Higher resistance looks like 865/870. Minor support is 825/830 and then 813/818.
We think stocks are now overbot. The folks at Bespoke seem to agree. They show 76% of the stocks in the S&P trading above their respective 50 day moving averages. Those heady levels have been followed by market pullbacks.
Cashin's Comments Page 2
Friday, April 3, 2009
Is Something Actually Working? – While G-20 and Washington hearings keep making headlines, one aspect of the "rescue" may actually be producing benefits. Here is a take on it from Bloomberg this morning:
April 3 (Bloomberg) -- U.S. Federal Reserve Chairman Ben Bernanke is delivering what he promised five months ago, record- low mortgage rates and a refinancing boom that’s putting cash in consumers’ pockets.
Fixed 30-year mortgage rates fell to a record low for the second consecutive week last week, hitting 4.78 percent, Freddie Mac said yesterday in a statement. The rates are the lowest in records dating to 1971, and come after Bernanke told Congress in November that helping the most creditworthy borrowers was essential to reviving the economy.
Mortgage applications in the U.S. rose for the fourth straight week last week as a decline in borrowing costs spurred homeowners to refinance, while purchases of new houses unexpectedly rose in February. The Fed’s effort to bring down fixed rates may give consumers as much as $25 billion, said Mark Zandi, chief economist of Moody’s Economy.com.
“It certainly gives further fuel to consumer spending,” said Nicolas Retsinas, director of Harvard University’s Joint Center for Housing Studies in Cambridge, Massachusetts. “It puts more money into circulation.”
The extra cash may help boost first-quarter consumer spending by 1 percent to 1.5 percent, said Barton Biggs, managing partner at New York-based hedge fund Traxis Partners LLC. Consumer spending accounts for about two-thirds of the U.S. economy.
The article goes on to outline the benefits of refinancing to household budgets. It even cites signs of the record low mortgage rates helping the housing market find a bottom. No finger pointing and posturing. No screaming of villains and victims. Just early signs of progress and healing. Thank you Mr. Chairman!
Consensus –The jobs data may tell us a lot about the market. If the numbers are worse than expected and the market rallies, the bulls could gain courage. Rallying on bad news is often the sign of a bottom. Recall all that stuff about climbing the wall of worry. Given the overbought condition, it may be tough to rally. In any case, it is essential that you stay very, very nimble.
Trivia Corner
Answer - This trip was 48 miles. Assume that Bob drove x miles at (y-5) mph and then x miles at (y+5) mph. The total time was:
x + x = 2 hours
y-5 y+5
therefore, x = y2-25
y
In the first hour, during which Bob drove less than x miles, Bob drove at (y-5) mph; so Bob drove (y-5) miles. Therefore, in the second hour Bob drove (y-5) + 8 - i.e., (y+3) miles. The total distance was (2y-2);
Thus x = y-1
Combining y2 – 25 = y (y-1)
Yielding y = 25
x = 24
Today's Question - "She loves me; She loves me not!" - pluck one letter from each word and use the remaining letters to spell the name of a flower. A) Stared; B) Openly; C) Snappy; D) Store; E) Dismay