For seemingly day after day in this space, I have made reference to the dollar declining to a multi-year low against the yen. Well that certainly changed dramatically yesterday. The Japanese government made a huge (solo) attempt to halt the advance of the yen which has impaired the earnings of exporters. They did this in promptly smashing a six-year plus time spate of not intervening in the currency market as the yen traded to its highest relative point in 15 years on Tuesday. It is very hard to imagine that a singular (rather bold) move by the Japanese government will work. If someone drops a ball from 20 feet high, when the ball hits the ground, it’s going to bounce (just not as high as the 20 foot level from which it was dropped) but the force of gravity will force it to settle on the ground over time. The only way the bounce can be sustained is if say, there was someone on the ground to catch it and throw it back up. It’s the same thing here. It is up to Prime Minister Kan to do things like nag at the Japanese Central Bank (JCB) to the central bank to increase bond purchases, grow an in-place bank-loan package, and/or put pressure on the JCB to lower interest rates. The Bank of Japan seemed to be on the same page in releasing complimentary statements about the move as they want clearly to do what they can to stimulate economic growth so as to offset risking a long period of deflation. I do not know nearly enough about the situation to even hazard a guess as to what will happen nor is this the place to pontificate on the intelligence of government intervention in such a tough situation. I just bring all of this up because it had a dramatic impact on the yen in the world’s currency exchange yesterday. Furthermore, all of this may well affect equities in time as many hedge funds were caught short the yen while on a macro level, it’s a very good immediate-term test to see exactly how strong the yen (and the markets) really are- and with it potentially the strength of the global economy.
Markets overnight were generally slightly lower overnight with prices ranging from unchanged to down about 0.3% on the Asian markets and European bourses. Oil is down 1%, gold up another 0.5% with currencies and bonds flat. Futures are down slightly on the heels of a weak UK jobless claims number with PPI and jobless claims domestically in-line with estimates. Phily Fed is out at 10AM with an estimate of 0.0. Ahead of options expiration tomorrow, it looks like another quiet and choppy day. The bias right now is to the downside, but there are many things in the green so look for a truly stock trader’s day with lots of individual moves. Focus on the companies with earnings such as FDX, the myriad of stocks in the news (share offerings, acquisitions, et al), and any A-B-A2 to the upside in any stock with positive news in this short covering environment.
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
DBRN- decent earnings
AIR- decent earnings
GME- stock and debt buyback
SVNT- closed near a high after the FDA approved its gout drug
AAPL- closed near a high
SPN, DVR- closed near a high after the Interior Department intimated that several oil wells in the Gulf of Mexico must be plugged
TNDM- closed near a high
HOG- closed near a high amid vague takeover rumors
MCK- closed near a high amid takeover rumors
AUMN- closed near a high
CO- closed near a high after announcing a stock buyback
GOK- closed near a high
LPNT- closed near a high on takeover speculation
OPNT- closed near a high
FUQI- closed near a high after a showing at a Chinese jewelry fair
PIR- decent earnings
BCRX- positive phase 2 results from BCX4208
Bad-The following stocks have bad news and/or a weak technical pattern
NPSP- share offering
AEL- notes offering
MSB- closed near a low
PWER- closed near a low after rival SMA Solar warned of margin pressure
FDX- poor earnings guidance
CFN- 30 million share block sold by CAH at 23.47
Earnings:
THURS SEP 16 BEFORE
FDX PIR
THURS SEP 16 AFTER
ORCL RIMM
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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