I was listening to a discourse on the radio regarding the BYU-Florida basketball game on Friday. Apparently, with about 10 seconds left in what was a tie game, a time-out was called. With a slew of commercials having just been on, commentators Gus Johnson and Reggie Miller were left to discuss ‘what happens next” in the deadlocked contest. Mr. Johnson asked the following question: “Do you foul?” Reggie Miller incredulously reacted in questioning why in the world anybody would put somebody on the free throw line in giving a team a chance to win the game. I’m paraphrasing slightly but the quote was something to the effect of “No. No. No. Why would you do *that?*” Followed of course by dead silence. Now, we could debate whether Johnson’s argument held any merit (which it theoretically may if it involved two lopsided teams on paper or something glaringly obvious). But when two teams of equal strength are doing battle, the concept of ostensibly giving a team a chance to get in the lad (and win the game) for an opportunity to take the last shot doesn’t make a lot of sense to me anyway. What did pop into my head later in the day on Friday was how this was relevant to a potential set-up. Early in the morning, Accenture (A.CN) traded sharply higher (about 9% on the open) on great earnings and gradually came in. It consolidated in a relatively tight range of about up 6% on the day. In the interim, I focused upon stocks like which have run up in recent days such as Amazon (AMZN) which opened barely higher (AAPL traded ahead over 1% while AMZN opened up 0.25%) and shorted those through unchanged. It’s a matter of situational trading. I don’t want to short one of the stronger stocks on the board “just because it has more room to fall.” There’s a reason it is up. And the same is (inversely) true in down markets. So, as you trade, you need to be aware of the state of the market much less how your stock is acting on the given day. It’s much easier to trade things that are not acting in accordance with the market particularly off of the open for a sharp move than to attempt to trade things that are actually helping the lead market from a macro standpoint. Basically, you know the old saying “Don’t get lost in the forest among the trees?” Well, a stock like Accenture on Friday particularly as the day wore on was the ‘forest’ in the analogy helping to lend support to the whole system whereas a stock like AMZN was a tree.
Markets overnight were generally a little weaker overnight with Kong Kong down 0.4% and Tokyo off 0.6%. In Europe, prices are lightly mixed with Paris, Frankfurt, and London all within 0.1% of unchanged. Commodities are notably weak with gold and oil both down more than 1%. The dollar is flat. Personal Income came out at 0.3% vs 0.4% expected with Personal Spending at 0.7% vs 0.6% expected and the PCE-Core at 0.2% vs 0.2% expected. Pending Home Sales (0.3%) are due out at 10AM. Futures are quiet but resilient. For the day, I think the quietness/low volume/illiquidity maintains itself on a paucity of news, but the commodity weakness is quite noticeable. Big cap tech is strong but it’ll be a war between those stocks and the materials as to what eventually happens today. The focus will likely be on those aforementioned big cap techs (i.e. AAPL and NFLX), the oils/coals (BTU), and relative strength/weakness plays.
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
BODY- closed near a high after posting earnings
PANL- closed near a high after announcing the pricing of its share offering
HOC- closed near a high after receiving an upgrade
EBIX- closed near a high after denying recent allegations leveled against the company
AAPL- closed near a high
YOKU- closed near a high
PPO- closed near a high and featured on “Mad Money” on Friday
MCOX- closed near a high after announcing the closing of the acquisition of 16.78 million ADS’s by SINA and DongXiang
EK- won the first round in an imaging patent lawsuit against AAPL and RIMM
FCX- positive comments from Morgan Stanley
OBCI- great earnings
CALM- decent earnings
WLT- upgraded at Goldman Sachs
WAB- good earnings
Bad-The following stocks have bad news and/or a weak technical pattern
SWM- closed near a low after the U.S. patent office issued a re-examination of patent
RIG- closed near a low amid rumors that one of its rigs continues to have a leaking blow-out converter
RIMM- closed near a low after posting abysmal earnings
FUQI- expects to receive a delisting notice from the NASDAQ due to noncompliance of regulatory filings
BTU- downgraded by Goldman Sachs
Earnings:
MON MAR 28 BEFORE
CALM KBH
MON MAR 28 AFTER
PRGS PVH
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
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