So it’s unofficially autumn. Even though we lose the beach with its warm days, at least we get football! However, although the rush of everyone coming back is still there as it has been in past years, one ingredient is not likely to return this week specifically: volume. In August, volume was down 30% year-over-year. I’ve discussed the effect that high frequency trading among other things has had to total trading volume. There’s also been a seismic shift in the mindset of the small investor who is now no longer pre-conditioned to “buy the dip.” Specifically this week, the economic data out is not vast in quantity much less quality along with a dearth of companies to report their earnings. Yesterday was Labor Day. Today is the first day of school for many kids- particularly in the New York area. Thursday and Friday happened to be the days for the two-day Rosh Hashanah holiday. Saturday is the 9th anniversary of one of the more devastating days in our nation’s history. The bottom line: for this week at least, don’t look for much of a change from August. Volatility has been there in spates; the nominal moves many days have been big but there have also been many quiet pockets. Ergo, the low volume illiquid conditions will likely continue; trade accordingly.
Markets overnight were higher across the board on Monday, but came back in overnight with Tokyo down 0.8%. In Europe, markets are down either side of 1% (after rallying the same 1% or so on Monday). Oil is sharply lower to the tune of 2.5%. Gold is up almost 1%. The dollar is down slightly against the yen but up sharply against the euro. The news du jour is the focus back on the European debt situation. 10-year spreads between the German bund and the Greek 10-year bond as an example are now almost as wide as they were as back in May. Particularly after last week’s run-up, futures are down on worries that the European debt situation will re-intensify. With no major economic news and no earnings flow, look for a quiet day with a downside bias. Focus on the deal stocks, the materials and commodities sectors, and anything with relative strength (particularly in the first half hour post 9:30AM ET open).
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
GS- closed near a high
ULTA- closed near a high
VHC- closed near a high
TBI- closed near a high
FNSR- closed near a high after posting good earnings
AAPL- closed near a high
REE- closed near a high
ESL- closed near a high after posting good earnings
OCLR- closed near a high
ORCL- Former HPQ CEO Mark Hurd joined ORCL as President
RSCR- Onex to buy outstanding shares for $13.25 share in cash
CASY- received a higher takeover bid for $40/share
Bad-The following stocks have bad news and/or a weak technical pattern
CSKI- warned on earnings guidance and CFO resigned
SEAC- closed near a low after posting poor earnings
CASC- closed near a low after posting earnings
IDIX- verbally notified by the U.S. FDA that IDIX’s drug programs used to treat the virus that causes hepatitis C are on hold
Earnings:
TUES SEP 7 BEFORE
CASY
TUES SEP 7 AFTER
NAV PBY PVH
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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