MONDAY's WRAP-UP VIDEO:
http://www.youtube.com/watch?v=WcM6OkoH0l8
On Thursday night, a deal struck by members of a House and Senate conference reached a tentative agreement on legislation to overhaul financial regulation. After reading through the details (fascinating reading on a Friday morning before the sun was up, let me tell ya), the conclusion I came to was that the regulation (if approved by both legislative bodies) will cut down on overly excessive procuring of risk while at least somewhat bolstering available capital. However, it certainly won’t force big financial institutions to restructure their entire business nor does it seem to go far enough to prevent another financial maelstrom. What it will do is things like limit FDIC-protected institutions from pouring money into trading derivatives much less investing in hedge funds. The original uncompromised version of the legislation was much tougher. Thus, for day trading purposes, what occurred Friday was very very bullish. The market clearly priced in something worse than what happened. The average headline reader would simply note that financial reform was about to take place and would be loathe to buy the financials. Alas, if the true thought process here was that companies like Goldman Sachs (GS) will allow to operate much less encumbered than what could have been. With it having been beaten down in recent weeks, it set the stage for some short covering which in turn provided a floor for the market. Thus, as we prepare for a very slow stretch in the news in these next 2-3 weeks ahead of earnings season, the things to watch for aside from geopolitics are any major earnings warnings and of course any major modifications to the Friday morning compromise to what is actually signed by President Obama in the next few days particularly in light of the passing of Senator Robert Byrd which may cause the final vote for the bill to fall short of passage.
Markets were mixed in Asia overnight with Tokyo down 0.5% but Hong Kong up 0.2%. In Europe, the bourses are a bit stronger from as little as 0.2% in London to 1% in Paris and Frankfurt. Currencies and gold are flat with oil down about 1%. Futures are generally flat in losing almost all of their overnight gains. For today, look for a relatively quiet session with big cap tech and financials leading the way. The bias will likely be to the upside following the strong financial gains on Friday combined with the overnight move. Focus on AAPL after it announced sales data, the anti-Russell moves, and the small biotechs in the news.
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
BRK/B- closed on a high due to the Russell rebalance
GS- closed slightly off of a high on the financial regulation passage
ACN- closed near a high after posting good earnings
MA- closed on a high
FSLR- closed near a high
CLF- closed near a high
BUCY- closed near a high
WYNN- closed near a high
BMRC- closed near a high with a big move at the end of the day
OPEN- closed near a high with a big move at the end of the day
OMER- closed near a high with a big move at the end of the day
FTWR- closed near a high with a big move at the end of the day
UMH- closed near a high with a big move at the end of the day
AEL- closed near a high
OVTI- mentioned on “Mad Money” on Friday
ARNA- positive phase III data from Lorcaserin
CRME- Brinavess recommended for approval in the EU
OREX- positive Contrave study results
FSLR- initiated with a “Buy” rating at Goldman Sachs
NE –buying privately held FDR Holdings
Bad-The following stocks have bad news and/or a weak technical pattern
BP- closed near a low
RIMM- closed near a low after posting terrible earnings
GFC- closed on a low
APOL- closed near a low amid worries about regulation in Washington, DC for its industry
SHBI- closed near a low with a big move at the end of the day
CNVO- closed near a low with a big move at the end of the day
FNLC- closed near a low with a big move at the end of the day
CDXS- closed near a low
HNRG- closed near a low
GGS- closed near a low
HKN- closed near a low
WLB- closed near a low
AMZN- downgraded by Susquehanna
Earnings:
MON JUN 28 BEFORE
None today
MON JUNE 28 AFTER
BKS MU
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
Joseph R. McCandless- Managing Partner
D. Timothy Seaquist- Managing Partner
www.epiphanytrading.com
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