The watch list can now be found on the "Trade of the Day" thread at: http://www.tradeoftheday.org/
The blog will continue to be posted here and can also be found on our forum via the Epiphany Trading Blog thread.
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Happy New Year’s Eve everybody! Does your calendar say December 18? Mine does as well, but my internal trading calendar knows today is the last real trading day of the year. According to Yahoo Finance, four companies report earnings on Monday…and then nobody else for the duration of the year. My brother –a teacher- wrapped up his school year on Friday; most kids in the Tri-State area finish up this year. Most hedge funds and mutual funds have wrapped up already in not wanting to lose performance. Most politicians will be done pontificating for the most part after this weekend. So, what typically happens is that these last two weeks of the year can often be an extraordinarily fruitful time on a selected basis for trading particularly in the smaller capitalization stocks as any company can issue any kind of press release at any given time; an early example of this is the best trade of the week- PALM- yesterday afternoon just after the close. Furthermore, stocks can indeed get exaggerated moves. However, the bottom line is that liquidity and news flow slow to negligible levels and large parts of the day are relegated to observing and waiting for the limited opportunities that come one’s way. Things can happen; events such as the tsunami in Indonesia in 2004 and the assassination of former Pakistan premier in 2007 occurred in the last couple of weeks in December and did cause some movement in the stock market. The boom of the late 1990’s was also extraordinary as small illiquid stocks would just take on a life of their own. But now? It’s a different time so tread extraordinarily carefully in the next two weeks as no matter what happens, volumes will be light. As for today, it will likely be slow, but there may be some fireworks. With many money managers making today their last day, they will look to wrap up. There will also be a number of changes to the S&P 500 index on the close and a rebalancing of the index at that. So, volume will definitely come in late this afternoon. In short, realize things change on Monday morning volume-wise and likely environment-wise so be very very very nimble as there will be some action today ahead of that happening.
Markets in Asia were down overnight to the tune of about 0.5% overnight on the heels of Wall Street’s losses. However, the trend shifted in Europe due to the strong U.S. futures after RIMM smashed expectations last night with the bourses up about ¾% average. Oil is up 1.5%, gold is flat, and the dollar is a tinge stronger. Futures are up nicely due to the earnings flow. For the day, the most likely scenario is that the bid holds with things quiet overall and a burst of volume toward the end of the day on the aforementioned S&P changes. An alternative scenario would be on in which the dollar goes nutso and the markets sell off on follow through on a wild options expiry. But it just isn’t likely on what will be the last day of trading for many people ahead of a blizzard in many parts of the country at that.
S&P changes in S&P 500:
MJN replacing MBI
V replacing CIEN
ROST replacing DYN
CLF replacing KBH
SAI replacing CVG
S&P 400:
DYN replacing ROST
KBH replacing CLF
CVG replacing SAI
CIEN replacing BTH
SNH replacing DY
GMCR replacing KELYA
ATW replacing ELY
S&P 600:
DY replacing SNH
KELYA replacing GMCR
ELY replacing ATW
Also, there will be a bevy of rebalancings on the close in the S&P 500 so there will be a lot of volume in the last half hour of trading today.
Reiterating-
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
RIMM- terrific earnings
NKE- good earnings
ORCL- great earnings
APSG- decent earnings
HITK- closed near a high
ODFL, CNW- closed near a high amid rumors of trouble at YRCW
WGO- closed near a high after posting great earnings
WHR- closed near a high
HPJ- closed near a high
GEOY- island reversal in closing near a high after announcing an irregularity in its GeoEye-1
VRSN- raising fees for Internet domains
SMOD- decent earnings
SNIC- closed near a high
CHK, RRC. PEP- on “Mad Money” last night
DEER- raised earnings guidance
TTWO- poor earnings, but Carl Icahn disclosed an 11.2% stake in the company
KMX- decent earnings
CELG- positive drug data
Bad-The following stocks have bad news and/or a weak technical pattern
PALM- poor earnings
DRI- poor earnings
BEC- poor earnings
A.CN- poor earnings guidance
APOL, ESI, CECO, DV- all closed near lows yesterday amid rumors that the on-line schools may lose their accreditation
LDK- closed near a low; share offering coming after it disclosed yesterday that it needed capital in order to stay solvent
AEM- closed near a low in a weak gold sector
FDX- closed near a low after posting terrible earnings
AMZN- closed near a low
GS, JPM, STT- among financials closing near a low
BCR- made extremely negative comments about guidance
MFN- closed near a low
Earnings:
FRI DEC 18 BEFORE
KMX
Good luck today.
Epiphany Trading, LLC
http://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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