Usually, I try to devote this space to some sort of trading parable and/or an economic discourse, but for the 2nd day in a row, I feel the need to go over what happened yesterday. I tend to write the ‘review of yesterday’s action’ type pieces when neither I nor a lot of people around me can explain in a couple of sentences what went on so let me try here at this point. The futures actually rallied into the open yesterday with the NASDAQ notably strong. As best as I can tell, there were two notable factors. The first is the topic discussed yesterday regarding buying the rumor and selling on the news. The market ran up last week at least partially in anticipation of some news out of China. The announcement regarding the yuan flexibility came out on Sunday night with little fanfare left over once the news hit the wires. Thus, the selling can be seen as an extension of that. Furthermore, there was a drop in U.S. home sales which added to nervousness that the gains of the last few days may have outweighed the true economic prospects. The interesting thing here is that neither factor comes as a huge surprise to the markets. However, with no major piece of good news out there, the markets seized upon the limited news flow (or lack thereof) late in the day. About the only major takeaway from a session like this is to realize there are likely many days like this to come in the near future. Following this week, the next two weeks tend to be fairly slow with almost no earnings out there and many people taking vacations around the 4th of July holiday. Thus, as volumes slow along with available (logical) news, trade accordingly.
Markets in Asia were generally weaker overnight with Japan down 1.9% and Australia off 1.6%. The story is the same in Europe albeit to a lesser extent with stocks down 0.1% in Germany and 0.4% in England. Oil is down modestly with gold and the currency markets little changed. Futures are bouncing a bit from the last couple of days of weakness with no major new news overnight in any hot topic such as the BP saga or the euro debt crisis. For today, the word looks to be “quiet” for the bulk of the session. With a U.S. World Cup match at 10AM ET and a Fed Statement due out at 2:15PM ET after a two-day meeting, look for much of the action to take place early and late- and probably with an upside bias at that due to the vacuum of news. Focus on big cap tech in the news such as AAPL or ADBE, the drillers, and any relative weakness play in what looks to be a decent tape.
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
JBL- great earnings
VRX- closed near a high
PM- pre-announced decent earnings guidance
KMX- good earnings and being added to the S&P 500
Bad-The following stocks have bad news and/or a weak technical pattern
ADBE- poor earnings
RHT- poor earnings
PRGS- terrible earnings
RIG- closed near a low
PCX- closed near a low after shuttering a huge coal mine
BC- closed near a low
GS- closed near a low
DNDN- closed near a low
WAG- closed near a low after posting bad earnings
V- closed near a low
CLF- closed near a low
WYNN- closed near a low
SWK- closed near a low
UFS- closed near a low
BID- closed near a low
Earnings:
WED JUN 23 BEFORE
KMX RAD
WED JUN 23 AFTER
BBBY DRI NKE
PAYX
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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