Sometimes, in the dreariness of January chill and clouds, there are
sudden bursts of warmth. Expectations are for cold, cold, cold
particularly in the northern half of the United States. So when the
temperature in a place like Chicago warms to a balmy 38 degrees
Fahrenheit after a string of days whereby the temperatures ranged from 0 to 25 degrees for two weeks, the temperature feels pretty good even if it is still very cold. Such an analogy is what is apt when discussing Friday's market. First, the GDP data came in at a revised 1.6% growth rate, above estimates of 1.3%. This is like lowering the limbo bar to make a number easier to beat when realizes that the growth rate is notably slowing. Second, Fed Chair Bernanke noted that the Fed stood ready to take action if necessary to fight whatever ails the economy. Because the perception was there that the Fed was acting in a hapless manner, traders zoned in on definitive chatter rather than the fact the Fed is still very worried about the economic outlook. Finally, Intel (INTC) warned on their revenue outlook. Yet there had been rumblings that this would happen thus when the estimates weren't as bad ad what could have been, another sigh of relief was exhaled. Realize that in trading, perception matters more than almost anything on an intra-day basis. A trading session such as Friday’s is one of the finest example of this core truism.
Markets in Asia were pummeled overnight as the effect of the Japanese intervention was extraordinarily short-lived as many experts feel not enough was done. The Nikkei was down 3.6% with Hong Kong off 1%. The story is the same in Europe with all of the bourses down around 1%. The dollar is quiet, bonds are slightly ahead, gold is up slightly, and oil is down slightly. Futures continued their descent from yesterday. It’s the end of the month so trading tends to be unusually volatile if not a bit more random particularly in such a lightly-staffed week as this one. Look for a chop all day long with an eye on the relationship between the dollar-yen and the 10-year bond. Chicago PMI is out at 9:45AM with 57.5 expected and consumer confidence at 10Am with a 51.3 expected reading. Focus on the relative strength plays very early on, the myriad of stocks in the news due to mergers or merger rumors, and all big cap techs/financials as a tell for any trade particularly as the day progresses.
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
REE- closed near a high
COGT- closed near a high, above its 10.50 target acquisition price
ENER- decent earnings
BNVID- FDA OK’ed BNVID’s plan for phase III clinical testing of Menerba
SKS- an article from U.K.’s “Daily Mail” implied a consortium of private equity companies is considering an $11/share bid for SKS
MON- lowered earnings guidance for the year; sees $2.40-$2.45/share vs estimate of $2.49
Bad-The following stocks have bad news and/or a weak technical pattern
CHBT- closed near a low
DGIT- closed near a low after warning on earnings
LULU- closed near a low
AMZN- closed near a low
CRM- closed near a low
WYNN- closed near a low
X- closed near a low
BIDU- closed near a low
GS- closed near a low
OSK- closed near a low
SEED- poor earnings
Earnings:
TUES AUG 31 BEFORE
DG DSW ENER
ISLE
TUES AUG 31 AFTER
APSG
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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