One of the most misquoted lines in American history is “What’s good for General Motors is good for America.” What was actually said occurred in a 1953 hearing. President Eisenhower nominated then-GM CEO Charles Wilson to be Secretary of Defense. During the nomination hearings, Wilson was asked if he could make a decision as a secretary of defense which would not be in GM’s interests. Wilson noted that he could not conceive of such a scenario “because for years I thought what was good for the country was good for General motors and vice versa.” In truth, therefore, the perception of arrogance was in actuality true humbleness. In any case, the General Motors name dates back to 1908 and is as iconic a name as there has ever been in American corporate history. The company *still* has over 200,000 employees and sells vehicles in over 150 countries. However, the fact of the matter is that by market capitalization, it is actually about 1/15th the size of Apple (AAPL) for perspective. In any case, investment brokers and GM executives literally did about as perfect a job as possible in re-debuting the streamlined IPO yesterday in that the stock held its IPO price, didn’t go crazy, and were able to float the stock in a market that nobody thought possible 12-18 months ago. In the long run, it has often signaled a peak in the market when people are scrambling to buy stock from the smartest people out there. For instance, when Blackstone (BX) debuted a few years ago, the S&P 500 promptly fell 10% in the course of the next four months. Visa (V), the largest offering, debuted in the late 2007/early 2008 timeframe…just before the S%P 500 fell 50% within the next 1 ¼ years. Thus, it is something to be weary of. However, in the immediate-term, there is/was a sense of euphoria that maybe- just maybe- things are gonna be OK. Many people never thought GM would sell a car every again when they went under and here we are a few months later and they are having a successful auction. This does show perception-wise if nothing else how things have changed. So, there’s this surge of adrenalin that coursed through the markets yesterday particularly combined with the chatter out of Ireland that the Irish Central Bank was willing to admit they needed help and indeed may get aid for its banks(IRE and AIB both traded over 10% higher yesterday). Now, nothing may come of any of this in the long-run. There’s a moral hazard issue in Ireland and GM flat-out noted in its prospectus that it still doesn’t have a grip on its accounting! But sometimes all a market needs is hope and the thought that things are getting a better. Ergo, yesterday was one of those rare ‘fever’ days whereby emotion truly drove stock prices.
Markets overnight were flat in Asia with Tokyo up 0.1% and Hong Kong down 0.1%. Prices are generally lower in Europe, however, as China once again boosted interest rates and there has been an on-going press conference with Bernanke and top EU officials all morning. Frankfurt is down 0.2% and London off 1.1%. The dollar is weaker across the board with oil and gold down marginally. Futures are off a little as well. There’s no economic news out today and it’s a monthly options expiration Friday. After a tumultuous week, look for a much quieter day with action focused on the open and close. Keep an eye on the news ticker in case anything unusual comes out of Europe. The focus should be on solars (things like JKS and FSLR have been thrashed the last few days), the cloud plays (CRM way up), casinos, and the biotechs in the news (MELA, AMGN).
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
CRM- good earnings
DELL- good earnings
FL- good earnings
AAPL- closed near a high
HUM- closed near a high in an island reversal after posting poor earnings guidance
POT- closed near a high
ATW- decent earnings
MHR- closed near a high
ENMD- closed near a high
JAZZ- closed near a high
SIGA- closed near a high after the U.S. government reiterated it was committed to smallpox vaccines
LVS- Moody’s lifted long-term debt ratings
AMGN- received FDA approval for XGEVA (a bone targeted therapy for cancer patients)
MELA- FDA advisory panel voted positively for MetaFind
DLM- rumored to be in talks to be acquired by KKR for 18.50/share
HIBB- decent earnings
YGE- decent earnings
ANN- decent earnings
Bad-The following stocks have bad news and/or a weak technical pattern
GPS- poor earnings
INTU- poor earnings
MRVL- poor earnings
ADSK- poor earnings
BCSI- poor earnings
SOMX- share offering
ASTM- closed near a low after issuing poor phase IIb data on one of its products
MCP- closed near a low
Earnings:
FRI NOV 19 BEFORE
ANN HIBB HNZ
MENT YGE
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
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