Today is the first day of the 2nd quarter. April’s Fool Day typically plays out in one of two ways. First, the market can move very dramatically. The reason is that mutual fund managers and funds based on 401k’s become flushed with cash. At the beginning of each quarter, many factors come into play (calendar, computers, et al) which set aside monies into various people’s accounts and fund managers become flush with this money wanting to put it to work in some fashion. Furthermore, the flush of capital inflow may be a bit more exaggerated because of the fact that more Americans are on track to get a refund than in any year in history. What the average person does with that money- save the money, invest it, buy a big screen TV…that I am not bright enough to begin to guess. Thus, in bull market environments like the one we are in, the market can have a particularly big move on April 1 because of all of that tax money. Thus, I’ve seen exaggerated gains on this particular day in the past as well as exaggerated moves lower because if things don’t go immediately, the hedge fund managers start dumping stock due to failed expectations. Conversely, the day can be one of the most muted days of the year. It can come before Good Friday (as it does this year) during a holiday week in which people take off. There can be a sense of non-urgency…a pause before the spring earnings season on the first day of the 2nd quarter. So, which will it be today? If I knew answers like that with certainty, I’d have retired long ago! I do know that typically it is never an in-between…either it is very slow or very busy. Based on the recent trend and the fact that jobs data will be out early Friday as well as the upcoming four day closure of most European bourses for Easter,, my guess is that things (unfortunately) will be quite illiquid and slow. That is my loose notion heading into the session…but more than most days, things can become quite exaggerated so be ready.
Markets overnight rose sharply throughout the world with Tokyo and Hong Kong both ahead 1.4% and the bourses up about 3/4% in Europe. The dollar is quiet with commodities generally higher across the board. The main trigger for the pre-Easter rally seems to be positive economic reports out of China and Europe. State-side, futures are higher as well with tech relatively weak due to the RIMM numbers. As noted above, look for a somewhat slow pre-holiday session, but one in which the upside bias should be maintained. Focus definitely on relative weakness in techs as well as the myriad of smaller companies in the news as well as those which reported earnings.
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
RDEA- positive phase IIb study data of treatment of hyperuricemia in gout patients
LIHR- received takeover bid from Newcrest Mining of Australia
BGP- good earnings and was able to receive a new term loan
LNG- announced joint partnership with JPM to boost their business
GPN- good earnings
RMBS- received a renewal of partnership with AMD
MU- decent earnings
XRTX- good earnings
CNAM- good earnings
ATSG- closed near a high after announcing a new long-term agreement with DHL
PRI- announced pricing of 21.36 million share IPO at 15, above expected 12-14 range
AMAG- announced collaboration with Takeda Pharma for Feraheme in various European nations
KMX- good earnings
Bad-The following stocks have bad news and/or a weak technical pattern
RIMM- poor earnings
ARQL- island reversal after reporting positive phase II data
RINO- poor earnings
GRRF- terrible earnings
Earnings:
THURS APR 1 BEFORE
KMX
THURS APR 1 AFTER
None today
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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