The last sentence of yesterday’s piece was this:”The truest indications of the Fed’s actions over the coming days and weeks will be the performance of the bonds, gold, and dollar…all of these indicators will likely play a very significant role on a macro much less intra-day scale for quite some time particularly if the moves in any or all of those markets becomes exaggerated- as has occurred already this morning.” Let me elaborate. There arguably has never been a time in the history of markets in which varying tradable entities have been more interconnected. If X then Y. If C then D. Furthermore, a bevy of hedge funds trade similarly so the herd mentality exists like never before. Well, yesterday, foreign equities were hit, oil suffered a 3% slashing, the dollar had its biggest one-day gain against the euro in months, and bond moves got exaggerated domestically as 10-year yields went below 2.70% while the German bund yield plunged all the while bond yields in hot spots climbed. It gets even more esoteric than this, but the point is that a wild move in any particular non-equities market can have a dramatic impact on stock prices. So, as volatility clearly has returned even on low volume, traders have just got to keep an eye on everything rather than merely the direction of the S&P 500. The correlation yesterday between oil, euro, and the S&P futures was incredibly direct thus the importance of every major indicator and what will be in play must be known early in the morning- and monitored throughout the trading session.
Markets in Asia were weaker overnight with declines of about 1% across the board. In Europe, stocks are down across the board but much more modestly with losses of around 0.2% in Frankfurt as an example. Gold is up ½%, but oil is down almost 2%. Bonds are slightly weaker. The dollar is slightly stronger against the yen but notably stronger against the euro which has helped to extend stock futures losses state-side. Futures are weak off of the CSCO earnings report but off of their overnight lows. Look for a test of those lows this morning (10254 Dow 1073.40 S&P on the futures with cash about 25 Dow points and 2.5 S&P points higher). If those lows hold and volume remains somewhat light, certainly begin to play some relative strength plays in a market bounce with a focus on big cap tech, casinos, and the retailers which reported today.
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
AAP- decent earnings
JAZZ- closed near a high after posting good earnings
CALL- closed near a high
PRGO- decent earnings
VHC- good earnings
Bad-The following stocks have bad news and/or a weak technical pattern
CSCO- awful earnings
ICOP- poor earnings
GS- closed near a low
AAPL- closed near a low
AIG- closed near a low
CREE- closed near a low after posting terrible earnings
AONE- closed near a low after posting terrible earnings
CYD- closed near a low after posting terrible earnings
WYNN- closed near a low
VECO- closed near a low
SPWRA- closed near a low after posting earnings
CSC- closed near a low after posting terrible earnings
CLF- closed near a low
MDCI- closed near a low after posting terrible earnings
ANW- poor earnings
MON- closed near a low
BCSI- closed near a low
CNW- closed near a low
WLP- closed near a low
ATI- closed near a low
URS- closed near a low after posting terrible earnings
EL- poor earnings
KSS- poor earnings
EAT- poor earnings
Earnings:
THURS AUG 12 BEFORE
BGG BR EAT
EL HEAT KSS
PRGO SLE WEN
THURS AUG 12 AFTER
ADSK BYI DV
JWN NVDA RRGB
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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