Happy Anniversary! No, don’t worry…nobody owes me a present (although I’d happily accept one!). Nope, Saturday was the anniversary of the bottom for the S&P 500 last year. At Friday’s close of just shy of 1139 the broadest gauge of stock market performance has risen 71% in a year…quite a 52 weeks for the stock market. Over the weekend, I asked several friends how much they thought the S&P 500 had risen in the course in the past year. The range of responses was from 15% to 43%. The response was in unison among all of them after I told them how much the index had actually increased in value was: “it can’t go up any more, can it?” My colleague, Rob Smith, over at the “In The Black Newsletter” (www.smithisintheblack.com) wrote a piece about the case for Dow 20,000 over the weekend. He cited everything from an inverted head and shoulders pattern as well as several stocks as well as the fact that if things go back to “business as normal,” the Dow will hit 20000 sooner than later. Now, you can choose to agree or disagree with Mr. Smith, but the fact that most of you will tend to disagree with him when the market tends to fool the greatest number of people at all times should automatically tell you something. Far be it from me to prognosticate such a thing because I don’t have the foresight for such long-range analysis. I do know that there is seemingly no immediate-term trigger (obvious to me anyway although I am sure many will disagree) to push the markets significantly higher or lower. Obviously, there can be an extraneous event I am not bright enough to foresee- for example, the capture of bin Laden or the collapse of the British pound- which can cause a major gyration. Everyone, however, is waiting for the next big thing- who says it has to happen anytime soon? And that, that is the major issue to understand for the day trading community. After a period of extraordinary volatility, we are now in the midst of a pocket of very low volatility (even with steadily good advance-decline breadth and anemic volume). The market just is not moving in 2% intra-day ranges right now so it is very hard to do a lot of momentum trading in particular. So, generally, don’t. Don’t. Don’t do so until/unless the volatility picks up which as long as the market continues to gently notch higher, the volatility will not pick up. No matter what your long-range opinion, it has little to no bearing in the immediate-term so don’t confuse long-run thinking with immediate-term thinking. In short, play within the confines of the market rather than trying to create something out of nothing- particularly when there is unfortunately a relatively barren landscape for momentum players right now. Don’t get me wrong; there are still opportunities out there and I for one am trading fairly aggressively when the opportunities present themselves. But much more often than not, there is not a whole lot to do so right now don’t try to force something that is not there.
Markets in Asia were lightly changed overnight following Wall Street’s slow day yesterday. In Europe, however, prices fell following Airbus’s earnings miss and scrapping of dividend as well as poor earnings at copper producer Antofagasta. The bourses are down 0.5% to 0.8% across the board. The yen is the strongest currency world-wide, putting a little pressure on the euro notably. Commodities are down across the board with oil falling 1.5%. All of these factors are providing the backdrop for weakness in equity futures. For today, look for another quiet session with muted movement unless the declines of the euro gets out of hand. The bias will likely be on the downside with notable action in the solars, techs, and selected small claps. Focus on the relative strength/weakness plays as well as some of the smaller cap movers.
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
TIVO- decent earnings
FRPT- good earnings
SYX- good earnings
IMGN- announced IMGN901 was granted Orphan Drug status
ZOOM- closed near a high after outlining its business strategy in an SEC disclosure
MET- closed near a high after announcing acquisition of a unit from AIG
X- closed near a high after being upgraded by Goldman Sachs
RIMM- closed near a high after BMO Securities upgraded the stock
NUS- closed near a high
AWI- closed near a high
HLX- closed near a high after announcing a divestiture of non-core assets
STEC- closed near a high amid vague takeover rumors
CLWR- closed near a high
CONN- closed near a high
NBL, SKX- featured on “Mad Money” last night
CSCO- planning “significant Internet networking announcement” at 11AM ET
Bad-The following stocks have bad news and/or a weak technical pattern
TXN- lukewarm earning guidance
HRB- slightly disappointing earnings
CASY- poor earnings
CMA- share offering
VOLC- share offering
COHN- closed near a low
FSLR- downgraded by JP Morgan
DKS- poor earnings
Earnings:
TUES MAR 9 BEFORE
DKS EJ KR
TUES MAR 9 AFTER
AONE JCG NAV
PSS SLXP
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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