The last major down week for the stock market involved massive movement in the non-equities markets and signified a bottom to our intermediate-term trading range. I wrote about this several hundred Dow points ago here:
http://epiphanytrading.blogspot.com/search?q=hedge
Well, definitely look now as the same thing took place yesterday- except in inverse. The Chinese stock market suffered its worst decline in months on Tuesday night with prices settling down 5% after trading down as much as 7%. The rout set off some turmoil in other markets; the dollar staged a rather bizarre rally while oil prices suffered a massive 6% decline. Gold and the other metals followed in tow, down 1%-2% across the board. The bond auction results were also poor. What does this all mean? A yellow light. Basically, when the equities markets are quiet, one should take cues from the other markets and try to read messages. The Chinese market sold off not because of ‘bubble fears’ as was so very widely reported, but on fears that the government may take steps to curb liquidity via interest rate boosts or other mechanisms. In turn, this led to a sell-off in Hong Kong which set the stage for a negative open on Wall Street. Well, there has been a correlation in 2009 with China and oil ergo many hedge funds long China and short the dollar were long oil. This all led to a reversal yesterday of sorts as funds pared profits albeit in rapid fashion. All of this may be but a blip in the road of this bull market (yes, kids, it is a bull market…the NASDAQ is up over 20% on the year), but one should certainly keep an eye on the non-American equities markets moreso than usual in the immediate-term. The next couple of days are critical; odds favor the markets shaking everything off as the Dow is down a total of 0.5% amid all this turmoil in three days… so trade accordingly.
Overnight, prices rebounded in Asia with the Asian markets up about 1% on average. European bourses followed suit with the bourses up 1% to 1 ½% across the board.Commodities are bouncing in turn with oil up just over 1%. Sure enough (read aforementioned blog post), American equity futures are showing significant strength this morning. Look for a resumption of the recent rally today. It is the busiest earnings release morning of the quarter so look for rampant opportunities in the stocks issuing earnings along with a burst of activity in select microcap stocks.
Watch list:
07302009Eriklist.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 specified.If 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
INO- surged yesterday after its swine flu news, but announced share offering
AXL- closed near a high
AFL- decent earnings
HIG- good earnings
CCI- decent earnings
NETL- decent earnings
GNK- decent earnings
ESRX- good earnings
AMKR- good earnings
FLS- great earnings
AEM- good earnings and featured on “Mad Money” last night
CVD- good earnings
CBT- decent earnings
LPS- good earnings
POT- featured on “Mad Money” last night
TER- good earnings
ORLY- good earnings
AMSC- good earnings
CI- good earnings
DRC- good earnings
IP- good earnings
NYX- good earnings
ABG- good earnings
MOT- good earnings
RSG- good earnings
TYC- decent earnings
MA- great earnings
CVC- good earnings
K- good earnings
NWL- good earnings
WYNN- good earnings
VCI- good earnings
Bad-The following stocks have bad news and/or a weak technical pattern
TBL- closed near a low
V- decent earnings, but revenues not great
CLF- slightly poor earnings
VAR- bad earnings
NTRI- bad earnings
OI- bad earnings
AKAM- bad earnings and guidance
GMCR- bad earnings
FMC- bad earnings
RYL- bad earnings
CTV- bad earnings
DRIV- bad earnings
SYMC- bad earnings
GMR- bad earnings
FISV- bad earnings
CERN- bad earnings
ELY- poor earnings
CL- bad earnings
DOW- bad earnings
OSK- bad earnings
PH- bad earnings
OCR- poor earnings
XOM- bad earnings
Earnings:
THURS JUL 30 BEFORE
ABC ABG ABX
ADP AMSC AOC
APA AVP AVY
BC BDX BEN
CAB CI CL
CLI CMI CMS
CNX COL CP
CRS CVC CVG
DLR DOW DRC
DRE EK EME
ENDP EXPE FAF
GT GTI HP
IP IRM K
KBR KIM KMT
KSU LZ MA
MOT MYL NBL
NRG NWL NYX
OCR OMX OSK
PCBC PCZ PDE
PH PTEN RSG
RYN SBH SCG
TEN TRV TYC
VCI VTR WMI
WYNN XEL XOM
THURS JUL 30 AFTER
ARIA ARBA BEC
BEZ BOOM BMR
BMRN CPHD CPT
CYH DIS DLB
DNB FSLR GERN
GFIG GNW IM
LVS MET MFE
MHK MPWR MWW
PBI PDLI PKI
SGMS SGY SWN
SYNA TSYS VPRT
VSEA WRI WSH
YRCW
Good luck today.
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
Joseph R. McCandless- Managing Partner
D. Timothy Seaquist- Managing Partner
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