The first week of the year proved to be a good one overall for the stock market with most averages broadly higher. As one digs within, there are several breathtaking features on the tape last week. The casino sector was extraordinarily strong with WYNN up 16% on the week. Steels were violently ahead also; shares of X were ahead 15%. Within mining equipment entities, BUCY was up 19% on the week. Things were the same in home builder land with LEN up a staggering 25%. Techs traded randomly with the NASDAQ up just shy of 2% yet GOOG was down almost 5% on the week as of Friday morning. Two distinct trends emerged. First, the strength in the markets has been palpable. The jobs report on Friday was not that hot yet tech was strong all day with every major average finishing at or near their highs by the end of the session. Second, it is indeed a market of stocks in which may sectors are displaying unusual money inflows leading o sharp gains. For day traders, as the VIX falls below 20, the environment has gotten a bit tougher. It is much easier to destroy something than it is to build it up thus man of these stocks are moving in a ’20-steps-ahead-19-back-20-ahead type pattern in an ever-ascending staircase that throws fear into every trader should the trend reverse…and yet it has not thus far with no obvious reason as to why it will reverse. As the unofficial start to earnings season commences this afternoon with the release by AA of its earnings, trade in step with the trend along with the newsflow. While there will be many rough patches along the way, it is a very basic strategy that tends to work quite well over the test of time.
Markets in Asia were generally higher overnight with Hong Kong up 0.5%. Similar gains followed in Europe with prices ahead a similar amount of 0.5% on average. Gold and oil are both up over 1% and the dollar is a bit weaker. Futures are nicely higher again. There seems to be no real reason for things to change. Techs, financials, and commodity stocks are all nicely higher. So, look for a day similar to Friday…marginal strength with little volatility. Be very very nimble. Earnings season starts shortly, but the dearth of news flow and momentum makes day trading particularly perilous on days like Friday and 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
PALM- closed near a high
GENZ- closed near a high
X, NUE, AKS –among the stocks in the strong steel sector closing near a high
FCX- closed near a high
RIG- closed near a high
AAPL, AMZN- among big-cap tech stocks which closed near highs
JOYG, BUCY- once again, both stocks closed near their highs
LUNA- closed near a high after expanding its relationship with INTU
CLF- closed near a high
CACA- closed near a high
MEI- closed near a high
EGO, POL- featured on “Mad Money” on Friday night
RPTP-positive phase 2a clinical trial results of its DR Cysteamine
VVUS- positive phase 3 study of its Avanafil drug
ACHN- positive phase 1b data with ACH-1625
BCRX- signed two additional Peramivir partnerships
INHX- positive update in FV-100 and INX-189 staph vaccine program
VOLC- positive revenue guidance
EXXI- positive discovery at an ultra-deep well in Gulf of Mexico
Bad-The following stocks have bad news and/or a weak technical pattern
CYCC- major island reversal in closing near a low
FCN- closed near a low after being downgraded
ROG- closed near a low after issuing negative earnings guidance on Thursday afternoon
Earnings:
MON JAN 11 BEFORE
MDRX
MON JAN 11 AFTER
AA
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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