I try to be as stoic as possible in these pieces, but the events of the last week with regard to the budget wrangling genuinely infuriated me. I delved into it too indicating in this space a few days ago what could happen in the event of a shutdown. Well, there was a deal announced on Friday in which $38 billion or so will be cut in the next year. There were lots of self-congratulations among politicians. What is lost in all of this is that in the week alone leading up to the deal, the domestic trade deficit increased by almost $50 billion! Yes, you read that right. Put another way, at that pace, we'd put on over a trillion dollars more to the ballooning deficit in the next year so the cuts are less than 4% of the new debt being added...forget what is already there in the budget! The next date of course in this morass is around May 6 when the debt ceiling may be forced to be raised. But if the debt ceiling indeed is raised (highly likely), the reaction will be as placid as this past week for the markets. And on point, nothing is truly changing so keep an eye out but as the events of this last week have shown, there is clear reason to believe politics as usual is clearly a relative non-event for the markets in the immediate-run.
Markets in Asia were slightly lower overnight with Hong Kong and Tokyo both off about 0.5%. The trend is similar in Europe with Frankfurt down 0.3% and Paris 0.6%. Oil is down about 1% with gold down about 1/3%. Everything else is quiet. Futures are modestly higher on the budget deal as well as buzz that the Libyan crisis may be calming down along with a slew of mergers state-side. There’s no economic data out today. For the session, look for relatively quiet activity but with a lot of noise within the lines. The focus will likely be on the biotechs (BIIB), rare earths (MCP), Chinese plays (BIDU), and fertilizers.
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
GMLP- closed near a high on the day of its IPO
VRX- closed near a high
BIDU- closed near a high
SDT- closed near a high
PAAS- closed near a high
SSY- closed near a high amid a merger deal with Foundation HealthCare Affiliates
BIIB- positive top-line results for phase III trial investigating Oral BG-12 in multiple sclerosis
MCP- JP Morgan raised price target from 72 to 90
TYC- rumored to be bought out by Schneider Electric
TSTY- to be bought out by FLO for $4/share in cash
AMMD- to be ought out by ENDP for $30/share in cash
GLBC- to be bought out in a stock deal from LVLT valuing GLBC shares at $23/04/share
VVUS- positive Qnexa weight loss data
YONG- preannounced positive 1st qtr revenue guidance
EFII- preannounced positive 1st qtr revenue guidance
BIDU- reached deal for a China site with Facebook
Bad-The following stocks have bad news and/or a weak technical pattern
PUDA- continued its recent freefall amid a negative report about the company in a newsletter regarding potential improper share transactions by PUDA’s Chairman
EZPW, CSH- closed near a low amid worries about a Texas state bill that would limit the companies’ short-term lending ability passed through a committee
QIHU- closed near a low
MA- closed near a low
MON- closed near a low in a continued decline following recent poor earnings
QUIK- warned on 1st quarter revenues
SCOK- closed near a low amid a host of negative rumors about the company
BHE- cut 1st quarter earnings guidance
MDVN- disappointing results from phase III Horizon trial of Dimebon in Huntington Disease
SHAW- poor earnings
Earnings:
MON APR 11 BEFORE
SHAW
MON APR 11 AFTER
AA
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
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