There is truly something new every day in this day trading game. Oftentimes, the 'new' stuff is a reenactment of 'old' stuff, but packaged in a way we've never seen before. Last week, Washington, DC rather than the corner of Wall and Broad set the stage for what was to come in the stock market. On Wednesday, worries about the State of the Union speech content along with immediate-term rumors out of the Beltway sent the market down. On Thursday, it was a speech by President Obama centering upon the dismembering of big financial firms. Friday was a new one- the Fed Chairman (aka "Time" Magazine's 2009 Man Of The Year). Now, I am not going to turn this into an economic or political piece because this needs to be a fact blog- not an opinion blog. You can like or hate the job that Chairman Ben Bernanke has done. You can think the rise of the stock market is ephemeral or here to stay. You can think that Bernanke's policies are creating another asset bubble or merely keeping the economy afloat. You can believe that Bernanke is working to kill the dollar or merely weaken it enough to make American goods cheaper. But the one fact that cannot be disputed is that before last Tuesday, the stock's market ascent was steady and while there is still a palpable air of nervousness in the financial community, things have stabilized with Bernanke at the helm. Merely 10 months ago, many of us didn't know if a banking system would be in place by Memorial Day. By New Year's, many of us wondered if the benchmark market averages would make a run toward record high levels this year. Well, that was deterred as two top senators declared they'd vote against a nomination of Bernanke on Friday; in turn, the selling pressure increased on Friday in culminating the worst three day string for the stock market since March of last year. Over the weekend, the situation improved with Senate Republican Leader Mitch McConnell stating on "Meet The Press" that Bernanke would get approval and on-line Web exchange (Intrade) for futures contracts based on political outcomes indicating a 93% chance as of this morning that McConnell will be proven correct. The Senate must vote by Sunday to allow Bernanke him to stay on or exit as his term expires on Sunday the 31st. This sets the stage for a pretty important day today. The market should rebound as a major source of uncertainty lessens. The entire situation bears watching- keep an eye on the political winds and particularly watch to see the stock market's reaction today; if we cannot hold early gains and other issues come into play whether economic or political as the week rolls along (State Of The Union Speech on Wednesday night for instance), watch out for something much nastier as the week progresses. Yet, if the market can absorb the events forthcoming this week, the stage could be set for a pretty major resumption of the rally. With earnings season at its peak this week combined with the heavy newsflow, this is certainly a time to be quite focused as a trader.
Markets in Asia continued to decline overnight in a bit of a catch-up to Wall Street with the average decline around 2/3% in Hong Kong and Toyo. Prices in Europe have been trading either side of unchanged with most of the bourses down very slightly. Oil is marginally higher despite the Texas oil spill over the weekend, bonds are slightly weaker, and the dollar is marginally stronger against the yen. Equity futures are sharply higher after the Bernanke discourse over the weekend. Tricky day. Everyone is going to be waiting for a sell-off off of the open. I don’t see it. If the market fell a lot on Friday because of worries over the Fed chief being ousted and now he’s not, shouldn’t the markets theoretically go right back to where they were on Thursday’s close, all else equal? That said, everything is not equal of course. Look for a little selling pressure in the “duh” trade off of the open, but be very careful; after that, the markets likely hold and trade in a choppy range all day. Focus on the earnings flow and when the market is moving- sectors like the financials and techs, and relative strength plays.
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
ACOR- closed in the upper band of its range after getting FDA marketing approval for Ampyra
CCOI- mentioned on “Mad Money” on Friday
PARD- announced phase II trial of picoplatin in metastatic colorectal cancer met primary endpoint and study objectives
ET- decent earnings
HAL- decent earnings
MED- guided 4th quarter earnings higher
AKS- good earnings
KERX- good phase 2 results of its KRX-0401
Bad-The following stocks have bad news and/or a weak technical pattern
WDC- closed near a low despite posting fantastic earnings
SLM- closed near a low despite posting good earnings
SLB- closed near a low after posting earnings
AXP- closed near a low after posting earnings
COF- closed near a low after posting earnings
GS- continued its awful decline from Thursday amid worries about DC politics
AAPL, IBM- closed near a low
GOOG- closed near a low after posting bad revenue numbers; then on Friday afternoon, founders announced they were selling some of their stock
BIDU- closed near a low
CLF- closed near a low
APWR- closed near a low after the private placement news of Thursday morning…stunning decline for the stock in last few days
MELA- closed near a low
HUM, UNH, RHB- mentioned negatively on “Mad Money” on Friday
JPM, STT. BK, WFC, PNC- closed near lows
CSIQ, STP, TSL- closed near lows of day
Earnings:
MON JAN 25 BEFORE
AKS DGX ETN
HAL PVTB SEE
MON JAN 25 AFTER
AAPL AMGN ATHR
CR JDAS OLN
PKG SLG TXN
VMW WAT ZION
ZRAN
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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