There are two types of trading markets. Anyone want to guess what they are? Well, if you said "bull market and bear market," no silver dollar for you! The key phrase here is "trading market..." not "stock market." The first major type of trading market as I see it is a trending market. From a macro guise, we are coming off a couple of years of great trending markets. In a trending market, prices tend to go generally higher or generally lower steadily and on good volume at that. From a micro basis, bad news is shaken off in a bull market and vice versa with prices inevitably moving in one direction. There are of course inevitable hiccups along the way, but they are relatively few as the trend quickly reasserts itself. Intra-day, one tends to have a comfort level in knowing to do certain things like short downtrending financial stocks whenever a new piece of bad news came out or to latch on to shares of big caps like AAPL or GS last year whenever there was a positive backdrop. Furthermore, prices tend to close at or near the extreme point of a day in a strongly trending market. What we have seen for the last few months is what I not so scientifically refer to as a "chop-chop" market. The last few days are clear evidence of this. The market fell fairly hard on negative jobs report news. Then it rallied because Fed Chairman Bernanke indicated interest rates would stay low for awhile. The next morning, rumors abounded that Standard & Poors was about to cut the debt rating for Greece which set off a sell-off. Then prices rebounded on a rumor that AAPL is going to have a stock split. In this type of environment, everything I noted above is ostensibly the opposite. Prices move up or down on the latest rumor on relatively paltry volume with no real trend in essence making it much more difficult to prognosticate stock market movement. Usually, such a consolidation is eventually broken- as this one will be by a piece of definitive news. Maybe it'll be that the housing market had a violent rebound. Maybe it'll be rumors leading to an eventual devaluation of the British pound. I dunno. But in the interim, day trading no matter your style is a bit more treacherous so capital preservation is key over the longer run while entering and exiting positions relatively rapidly is a must to capture whatever gains one can attain in any given move.
Markets in Asia were mixed overnight with Tokyo ahead 0.5%, but Hong Kong down 0.7%. Prices are ahead more uniformly in Europe with markets up ¾% to 1% across the board. Everything else is steady; currencies, bonds, and commodities are all remarkably quiet. Equity futures state-side are nicely ahead. With merger mania creeping back into the markets as the CF-TRA saga has another chapter today, look for the bid underneath the market to hold. Trading will remain somewhat quiet but likely with an upside bias. As has so often been the case recently, avoid momentum trading for the most part as long as the market is muted; focus on the stocks in the news with a particular focus on the fertilizer sector, the commodities, and the techs.
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
QCOR- good earnings
QCOM- raised dividend and planned buy-back of stock
BRK/B- closed on a high after posting good earnings
SNDK- closed on a high after an upgrade
DDS- closed near a high after posting good earnings
SLXP- closed near a high
ASTC- closed near a high
NFLX- closed at a new 52-week high
MDVN- closed near a high
ACOR –closed near a high
ASIA- closed near a high
HALO – closed near a high
CRZO, HOT- mentioned on “Mad Money” last night
AMZN- closed near a high
MA- closed near a high
LIWA- good earnings
AZO- decent earnings
TRA- being re-targeted by CF for 47.40 in cash/stock a share (37.15 cash plus .0953 CF) for each TRA share
DPZ- decent earnings
SNDK- upgraded by UBS
DEER- decent earnings
CTB- decent earnings
Bad-The following stocks have bad news and/or a weak technical pattern
NTRI- poor earnings
SYKE- poor earnings
MDR- poor earnings
NUVA- reversed in closing on a low after confirming Friday’s rumors about insurance positivity on Friday afternoon
TSTC- closed near a low after announcing a mixed securities shelf offering
AIG- closed on a low after announcing a sale of one of its units to Prudential, LLC out of London for $35.5 billion
AMAG- closed near a low after posting poor earnings
SYKE- poor earnings
SPLS- poor earnings
CF- the acquirer in the fertilizer game which would dilute its shares should its TRA acquisition attempt be successful
TRW- share offering
DNDN- negative comments from a small boutique firm about an upcoming panel meeting
TECD- poor earnings
Earnings:
TUES MAR 2 BEFORE
AZO BYD CTB
DPZ RIGL SPLS
TECD
TUES MAR 2 AFTER
CPRT HOV MATK
PAY URS
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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