TUES. JUN. 8- "Jobs" Report

Last week, I noted in this space that both President Obama and Vice President Biden made positive comments about jobs growth in the United States. The implication was that the number coming from the unemployment report last Friday was going to be strong. This speculation led to a nice intra-week really which saw the benchmark averages all rally between 2% and 3%. The initial number of 431,000 jobs created to the naked eye sure does look good and certainly (with the gift of hindsight and a little smarmy politics) seemed like a positive light last Wednesday. Yet, when put under a microscope, it just doesn’t look good. First, the Reuters forecast of economist provided an estimate of 513,000 net jobs created. More important, of the 431,000 jobs created last month, 411,000 of them were ephemeral- the government’s hiring of temporary census workers. Even the worst math students among us can rapidly see that there was actually tiny jobs growth in the private sector- and way under estimates at that! Lessons learned: a) Politicians (from every political persuasion) will say whatever sounds good. Just because Obama and Biden were so forward last week did not mean it was a cause for celebration. B) People seem to be looking for one major turning point in the jobs market. It just is not likely to happen as whatever growth is occurring in the economy is much slower and more gradual than it has been. C) Finally and most important for day traders, the reaction to the report indicates just what a treacherous yet potentially opportunistic trading environment we are in. The volatility remains quite high. Such will be the case for the next few jobs reports as the focus will continue to be on whether Lucy will finally let Charlie Brown kick the football. Make sure- particularly on days like last Friday- you have a true understanding of exactly what the numbers mean and why stock prices reacted the way they did to said numbers.

Markets in Asia defied the worldwide trend in closing higher following comments from Fed Chairman Bernanke that the economic recovery in the U.S. was still intact although it’d need to accelerate if jobs are to be created. But the key takeaway was a positive reiteration of how things were going thus Tokyo inched ahead 0.2% with Hong Kong up 0.6%. Dow futures traded ahead 110 at the height of the hope. That hope was dashed when ratings agency Fitch issued very cautionary comments on England’s debt situation in noting that England must accelerate its budget constraints. That put the fear of the contagion spreading to England back on the table which has caused the bourses to be trading down ½% to ¾% across the board. Futures completely reversed although with currencies quiet, they’ve bounced back a bit indicating a slightly stronger open. Big cap tech and financials are showing strength across the board. Thus, look for a little selling into the rally initially as, well, that is expected. But just as futures were sharply lower overnight Sunday, the strength overnight portends a likely rally later. Thus, I am playing it second-to-second, but looking for a slight grind higher as the day progresses with a focus on big caps, retailers off of some earnings and same-store-sales and relative strength plays on an A-B-A2 should the market sell off a little just after the open.

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

AONE- signed battery system supply agreement with NAV

DRRX- signed licensing pact with Hospira

DEPO- received a $10 million milestone payment from ABT for its DM-1796 medication to treat pain after shingles

ARMH- mentioned on “Mad Money” last night

DG- decent earnings

TLB- decent earnings


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

PBY- poor earnings

GS- closed near a low

RIMM- closed near a low

AMZN- closed near a low

AAPL- closed near a low after unveiling its new generation iPhone

FCX- closed near a low

RIG- closed near a low

DNDN- closed near a low after not announcing anything surprisingly new at ASCO

DCTH- closed near a low after presenting disappointing results at ASCO

WYNN, MGM- closed near a low

SLB- closed near a low

ANR- closed near a low

DVN- closed near a low

CLF- closed near a low

X- closed near a low

FSLR- closed near a low

WX- Jana Partners bought 7% of CRL; opposes WX acquisition of CRL

CLDX- closed near a low after presenting data from a phase II study at ASCO

VECO- closed near a low

ETFCD- closed near a low

CREE- closed near a low



Earnings:

TUES JUN 8 BEFORE

DG TLB

TUES JUN 8 AFTER

NAV OXM PLL

TTWO



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