On Monday, President Obama opened a tiny space in the nearly half-century-old U.S. embargo against the communist regime of Fidel Castro in Cuba. Ostensibly, American telecommunications entities will be allowed to commence providing their services for Cubans. Also, restrictions on family ties to the island will be relieved a bit as well. Mind you, the White House machinations do not eliminate the 47 year-old trade embargo, but it is an olive branch of sort to the Cuban government. Forgetting the politics much less potential effectiveness of Obama’s gesture, there is most definitely a day trading aspect to this matter. It is why I implore everyone all the time to pay attention to every piece of major news out there; one can always find opportunities. In this specific case, it was time to think of industries affected. For instance, how many cruise ships would go to Cuba? Sure enough, on Monday, Royal Caribbean (RCL) traded its heaviest volume in over two months yesterday in closing ahead more than 15%. Shares of the Herzfeld Caribbean Basin Fund (symbol:CUBA) rallied a stunning 41% on Monday amid record volume. Thus, pay attention to the headlines; oftentimes, one can find trades out of seemingly nothing- and the stocks can remain in play for some time to come…as they undoubtedly well in this case as rumors (and reality) of the Cuban situation come to fruition.
Markets overnight were down marginally throughout the world with stocks losing 1% of their value in Tokyo and about 0.5% on average throughout Europe. Oil is up a little, gold is flat, but the bond market is notably strong in the early going. Futures are weaker on INTC’s disappointing outlook, but not dramatically so. It looks to be a somewhat placid day with an increasing flow of earnings news, but nobody in the first-tier (those really start in earnest tomorrow). Yet, with GS indicated weaker anew, there is no rush to own stocks albeit no outflow with a flush of the futures. For the day, it is a dangerous intra-day environment with a relative dearth of news and a lot of options squaring. Look for marginal downside action, but keep on eye on BAC/C in particular because if the banks begin turning back up, they will lift the market with a ceiling over things as INTC seemingly caps any major rally today.
Watch list:
04152009Eriklist.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
CSX- good earnings
EBAY- spinning off its Skype division
CYH- among other hospital stocks which rallied after HCA announced a lower patient bad-debt ratio
EGLE- strongest of the dry bulk shippers; closed near a high
BSDM- closed near a high on terrific strength after receiving FDA clearance for their BSD 510k
CPE- closed near the high of the day yesterday
Bad-The following stocks have bad news and/or a weak technical pattern
INTC- beat earnings for quarter, but issued hazy forward guidance
LLTC- poor earnings
FNF- closed near a low after announcing a stock offering; offering for 15.8 million shares priced at 19 last night
GS- an ugly day yesterday; closed on its low…MS should move in sympathy
COF- closed near a low
PNC, BAC, ASBC, CBSH- among the banks closing on or near their lows of the day
VNO, SPG- among the weak REIT’s which closed near their lows of the day
INFY- poor earnings
ABT- neutral earnings, but lukewarm guidance
LUFK- missed earnings estimates significantly
COF- rate of bad-loans increased sharply in March from February…8.08% to 9.33%.
KMT- warned badly on outlook
BTU- missed earnings estimates by a wide margin
Earnings:
WED APR 15 BEFORE
ABT ADTN AMR
BTU LUFK PGR
PJC
WED APR 15 AFTER
ASML ATR CCK
KMP LSTR PLCM
Good luck today.
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
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