FRI. JUL. 30- Chatter

Yesterday was a day of talk, talk, talk, talk, talk. The markets open nicely higher but a Goldman Sachs economist and two regional Federal Reserve presidents played havoc with the markets. First, the chief U.S. economist at Goldman Sachs (Jan Hatzius) noted to clients that the diminishing of stimulus spending by federal and state governments would likely reduce gross domestic product by about 1.7% after having a positive effect of 1.3% between early 2009 and early 2010. Later, the head of the St. Louis Fed (James Bullard) scared the markets by saying that the central bank should resume Treasury securities if the economy slows with prices falling. As the day progressed, Dallas Fed president Richard Fisher noted that the U.S. economy is in for a “slow slog” with growth likely to remain below 3% for a “prolonged period.” He went on to note that American businesses “are increasingly distressed by the lack of consistent direction coming from Washington,” and “confused and dispirited by random refereeing.” In contrast with Bullard’s statement, Fisher said that it is plausible that “further monetary accommodation might make the situation worse” if the central bank can be viewed as “prone to substituting such accommodation for fiscal discipline.” Well, now the worry became that not only were markets being set up for a slower growth scenario, the Fed presidents were bickering amongst each other as to exactly what should be done with the implication that nobody was totally sure as to what to do. So, logistically, prices fell sharply for awhile. Not so logistically, things snapped back. Why? It’s not so much the context of all of these statements by these three gentlemen as the fact that the statements were said which was the problem. But there was absolutely nothing new about the views of any of these people nor is any of it new news. It’d be like a weatherman in Florida saying that the weather tomorrow is going to be “hot and muggy.” Yeah, it’s not good unless you’re into 120 heat index temperatures but everyone knows it and knows ahead of time that’s what the weather forecaster is going to ay. Thus, what occurred yesterday is a fine example of shooting first and asking questions later. It’s always urgently important to pay attention to the headlines, but it’s just as important to be aware of who or what makes the headlines.

Markets were down worldwide overnight with prices in Tokyo off 1.6%, 0.3% in Hong Kong and about 0.6-0.8% for most of the bourses. The dollar is getting hit notably against the yen with oil weaker and gold up a few dollars. Bonds are also rallying with the 10-year yield approaching the 2.90% level. Futures are sharply lower after some disappointing earnings data and a major revision lower for 1st quarter GDP. Don’t look for a recovery or significant pressure post-open either as it’s a summer Friday ergo the trading range will likely be much tighter than yesterday’s range but biased to the downside. Focus once again on the earnings plays, monitor the BIDU/GOOG situation, and keep an eye on the ‘oil spiller’s such as BP and EEP.

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

BIDU- GOOG’s websites partially blocked suddenly in China; BIDU is main beneficiary if GOOG is having problems there

MET- decent earnings

MFE- decent earnings

PWER- good earnings

EMN- decent earnings

ROVI- good earnings

RSG- decent earnings

EXPE- decent earnings

CQB- good earnings

MXIM- decent earnings

SUN- decent earnings

SYNA- decent earnings

GS- closed near a high

POT- closed near a high after posting earnings

CTXS- closed near a high after posting earnings

AMP- closed near a high after posting earnings

FVE- closed near a high

HS- closed near a high after posting earnings

HRC- closed near a high after posting earnings

OII- closed near a high after posting earnings

QCOR- closed near a high after posting earnings

TTEK- closed near a high after posting earnings

AXL- decent earnings

NWL- decent earnings

UFS- decent earnings

CRL- cancelled acquisition of WX and announced a big share buyback

GERN- FDA lifted clinical hold on GRNOPC1 allowing for a phase I clinical trial to commence

NFLX- upgraded by Morgan Stanley

ACI- decent earnings

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

GOOG- websites partially blocked suddenly in China

FSLR- poor earnings

WYNN- poor earnings

WFR- poor earnings

CSTR- terrible earnings

NTRI- poor earnings

APKT- terrible earnings

CAVM- poor earnings

THOR- terrible earnings

PTV- poor earnings

GNW- poor earnings

VPRT- closed near a low after posting earnings

AKAM- closed near a low after posting earnings

OI- closed near a low after posting earnings

V- closed near a low after posting earnings

TNAV- poor earnings

NETL- closed near a low after posting earnings

EEP- closed near a low amid worries over the il spill in Michigan

MRK- poor earnings

Earnings:

FRI JUL 30 BEFORE

ACI AIV AXL

BWA CVH CVX

FO ITT LPX

MCK MRK NWL

SPG UFS UPL

WY

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