On Thursday night, a consortium of European leaders reached yet one more deal in an attempt to alleviate if not halt the government debt crisis that is completely undermining Europe’s currency union. The joint Eurozone and IMF program actually comes with very stringent conditions. The most notable condition is that no money is being made available to Greece at the present time. In fact, the monies can only be tapped if Greece and/or other financially strapped Eurozone members such as Italy cannot raise needed funds from financial markets. Furthermore, this action would require the unanimous consent of all 16 Eurozone nations to release the loan monies. This was ostensibly the exact deal that German Chancellor Angela Merkel sought to broker as she didn’t feel that the German government should be the de facto agent to bail out the Greek government. Besides the inherent unfairness of that situation for the German people, where would it end, i.e. what if other European nations had problems? But the net of all of it is that a backstop would truly be a last resort when all other options have failed and the International Monetary Fund must be included. The French and European Central Bank were against turning to the IMF out of fear that it’d damage the euro’s name and prestige. To date, the Eurozone has never turned to the IMF…then again, there has not been a situation such as the one Greece is in. What is notable for the markets is that the European consortium sought to stabilize the euro and provided some temporary stability to the tenuous situation which is why the euro rallied on Friday. Thus, if nothing else, time has been bought for Greece to exhaust all options and the –what-will-Europe-do conversation has been taken off of the table. But this is a situation that is nowhere close to being open. Europe will not collapse or soar overnight over Greece…but it’ll take quite some time to sort out. For day traders, one must monitor any of the latest developments, but particularly in a holiday week as the one we’re about to undergo, attention will likely be focused off of the euro for the first time in awhile due to the aforementioned tentative stability constructed- artificially or otherwise- on Thursday night.
Markets in Asia were mixed overnight with Tokyo flat but Hong Kong up just shy of 1%. Markets in Europe are generally higher with Germany up about 0.7%, but London and Paris flat. The euro is slightly stronger with commodities nicely higher across the board. Futures are stronger as well as the end of the quarter approaches. The past two days have notably featured reversals so there will likely be a little selling into the strength but it looks like all systems go for this one. Focus on big cap tech and financials along with relative strength plays. Volume will likely be light as it’s a holiday week for many so be weary of illiquidity.
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
ABIO- closed near a high after receiving a patent for treating heart failure patients with Bucindolol
FINL- closed near a high after posting great earnings
CKXE- near a takeover deal with CEO Sillerman and one One Equity Partners for $6/share
ITT- mentioned in “Barron’s” over the weekend
CALM- good earnings
APOL- good earnings
SORL- good earnings
VTIV- has retained Goldman Sachs as an advisor to be potentially bought out
Bad-The following stocks have bad news and/or a weak technical pattern
ATAC- closed near a low after posting terrible earnings
MDVN- closed near yet another trend low
AIB- in talks with the Irish financial regulator in order to attempt to meet its capital requirements
Earnings:
MON MAR 29 BEFORE
APOL
MON MAR 29 AFTER
none
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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