On December 28, 2009, I wrote this post entitled “My Big Fat Greek Worries:”
http://epiphanytrading.blogspot.com/search?q=greece
The deteriorating economic situation in Greece has indeed become a very sore spot in the world economy. Indeed, it is true that some of the recent decline in worldwide equities is directly attributable to the tightening of credit imposed by the Chinese government. But it is startling at the lack of discourse and number of pundits who have discussed the Greek situation whatsoever. The words “carry trade” became part of every trader’s lexicon last year and it was thought that the unwinding of that trade could cause problems for stocks. Well, don’t look now, but the euro has declined precipitously against every major world currency (including the dollar) in the last several weeks to the tune of almost 10% in taking out the psychologically important 1.40 level yesterday. In turn, this has help unwind the carry trade, lead to stocks selling off, and leave many people wondering what is going on. Well, according to Greek Prime Minister George Papandreou, Greece is a victim of various rumors in the financial markets and denied trying to borrow monies from fellow European partners to finance the nation’s huge budget deficit. However, what is a fact is that Greece must sell about $75 billion of debt this year to finance much less hopefully cut the EU’s biggest budget deficit. And rumor or not, there is massive skepticism that the Greek government even has a formidable plan for tackling its economic problems. The headline that rang a bell with me was that the yield on the 10-year Greek bond rose over 100 basis points in the last week; there are years that 10-year bonds don’t move 100 basis points in developed nations…and this happened in a week! Savvy investors like George Soros firmly believe the Greeks will figure it out. In fact, Soros said as such at the annual Davos Summit yesterday. Yet, as the situation goes in Greece, so goes the euro…and rumor-driven or not, if the markets dictate action needs to be taken, there will be consequences for Europe much less the rest of the world. Thus, all of this will continue to have an impact on world markets for some time to come.
Markets in Asia were hit overnight with Tokyo down around 2% and Hong Kong off 1.2%. The trend totally changed in Europe, however, amid good earnings from MSFT with the bourses up just under 1% on average. The dollar, gold, and oil markets are all quiet. Futures are a bit higher. After what has been a trying month, it looks like the markets should end January on a positive note. AMZN and MSFT are leading the way with things much quieter this morning amid a positive preliminary 4th quarter GDP report. Look for a gentler day with an upside bias; focus once again on the stocks with earnings out and relative strength plays with much of the action focused in the morning.
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
AMZN- good earnings
JNPR- good earnings
MSFT- good earnings
VSEA- good earnings
MXIM- good earnings
EMN- good earnings
FII- good earnings
CAVM- good earnings
AVT- featured on “Mad Money” last night
MSFG- closed near a high after posting good earnings
NFLX- closed near a high after posting good earnings
GMCR- closed near a high after posting good earnings
BRK/B- closed near a high
MAT- decent earnings
WMT- upgraded by Goldman Sachs
PCAR- decent earnings
CVX- decent earnings
Bad-The following stocks have bad news and/or a weak technical pattern
KLAC- poor earnings
SNDK- poor earnings guidance
DRIV- poor earnings
TSRA- poor earnings
VPRT- poor earnings
ARG- poor earnings
ASIA- poor earnings
THRX- FDA needs more info on one of its drugs
CB- poor earnings
GNW- poor earnings
AMCC- poor earnings
PAR- poor earnings
CYBS- poor earnings
QCOM- closed near a low after posting poor earnings
KSP- plunged in closing near a low after posting terrible offerings
NPBC- closed near a low after posting poor earnings
MTZ- closed near a low
QTM- poor earnings
NSC- closed near a low after posting poor earnings
AAPL- closed near a low
X, NUE- closed near a low
FO- poor earnings
NWL- poor earnings
HON- bad earnings
ACI- bad earnings
YTEC- horrible earnings
AVY- poor earnings
Earnings:
FRI JAN 29 BEFORE
ACI ALV ASIA
AVY CVX DOV
FO HON MAT
NWL PCAR UCBI
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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