Wed. May 5- British Elections

I’ve written in immense detail in this space about the problems facing Europe specifically in Greece, Spain, and Portugal, most recently warning of a pick-up of volatility in Monday’s piece. The European problems in turn led the euro to a breach of the crucial 1.30 to the dollar yesterday and put immense pressure on American stocks. I am sure there will be more to write on this topic as the situation deteriorates on the other side of the pond, but I want to briefly discuss a new European topic that few traders are paying attention to at this point. Namely, there are elections in Britain on Thursday. There are numerous topics on the table there which can have a substantial impact on the worldwide trading community such as continued talk there of a transaction tax on stock transactions. Most notably, what we may well see is the most divided parliament in over 100 years with the general end of two-party rule. As of this morning, most polls put the election results around the following numbers: Conservatives 35%, Labour 30%, Liberal Democrats 25% with the other 10% split among even smaller parties. With scandals such as British taxpayers footing bills for duck ponds and pornography (British politics is actually amazingly interesting), there looks to be a major shake-up of parliament with Labour losing its majority…but no one party taking control! It is likely that David Cameron- the Conservative leader- will have the first shot at forming a government but he’ll need major alliances to get anything done. Now, while it can be good to have divided government, it is not good to have such a paralyzed government that it’ll be ostensibly impossible to get anything done without major compromise- something very worrisome when many market experts worry about the British pound much less economy. So, keep a weary eye to the election results coming out of Britain as the week progresses as there may well be some impact come Friday morning particularly if the euro continues to plunge.

Markets were lower overnight throughout the world with Hong Kong down 2.1%, Germany down 0.5%, and London almost 1%. Oil is down 2% more although gold is slightly ahead. The dollar is flat against the yen but strengthening once again against the euro with the 1.29 level rapidly approaching. With the declining euro and pictures of Greek riots being flashed on TV, futures are falling again as well. Look for a weaker open with the euro leading the way today. Barring a freefall, there will likely be a slight bounce in the markets mid-day as the U.S. is seen as a bit of a safe haven right about now plus there will inevitably be rumors about Greece being released from the euro currency. Focus on the big caps, the relative strength/weakness plays, and the earnings plays once again.

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

OSIR- received FDA orphan drug status for Prochymal

XL- decent earnings

CHK- decent earnings

SLXP- closed near high

NTRI- closed near high after posting earnings

IPXL- closed near high

DVN- decent earnings

RRD- decent earnings

TWX- decent earnings



Bad-The following stocks have bad news and/or a weak technical pattern

ITMN- FDA did not approve lung-drug Esbriet; CLDX, DNDN may move with it

MYGN- terrible earnings

TRLG- terrible earnings

SBAC- poor earnings

NWS- poor earnings

ONXX- poor earnings

BHI- poor earnings

CMA- Fed issuing warrants

CRAY- poor earnings

CAGC- closed near low significantly under stock offering price

WLK- closed near low after posting earnings

CLH- poor earnings

FWLT- poor earnings

SPW- poor earnings

GRMN- terrible earnings

PWR- poor earnings


Earnings:

WED MAY 5 BEFORE

AGU ANR AYE

CTB CTL DVN

FWLT GRMN HK

ICE ID IT

MED PHM PKD

PWR RRD SIRO

SPW TRW TWX

UPL VSH WCG

WMB XTO

WED MAY 5 AFTER

ADCT BMC CBS

CECO CELL CLR

CNW CXW ESS

EXM EXPD FLS

JAZZ KIM LVS

MUR OEH PL

PRU RIG SLXP

VALE



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