When I went to Australia as the first leg of my honeymoon in August 2001, the cab fare from the Sydney Airport to my hotel was about $15 before tip. In November 2009, my brother-in-law and sister-in-law went to Sydney and stayed at the same hotel. The cost of their cab ride before tip? $48. Granted, there was some inflation in nine years. But at 4% a year (higher than the CPI over that time), that’s about 50% exponentially which would put the cab ride at $24. So, what accounted for the difference? The value of the American dollar declined sharply over that time. We hear all of that theoretical mumbo-jumbo about the decline of the dollar. Well, that gives but one human example of how the U.S. dollar has declined against say the Australian dollar. Right now, people wonder exactly how the market keeps going up when the dollar is going down. The thing is that our assets are priced cheaper relative to much of the developed world with the weak dollar (i.e. it’s much better for an Australian to take a cab upon arriving in New York than it is for a New Yorker to do so in Sydney relative to how it was 10 years ago). This makes things like oil and gold (traditionally priced in dollars) relatively cheap as well. But it especially makes American stocks look cheaper. Thus, for now, a weaker dollar is good for the markets as money flows to relatively cheap places. On Monday, I noted I was quite worried about the market (and was right for about a day) but I was more intrigued with the possibility of volatility. We sure got that over most of last week. But it was largely because of the movement of the dollar with strengthened and then weakened…conversely, the market weakened and then strengthened. So, this relationship will remain a constant for a very long time to come- know it and monitor it.
Markets overnight were down in Asia with Asian indexes down 1% in Tokyo and 0.5% in Hong Kong. Prices are slightly ahead in Europe- up about 0.3%. Oil is up slightly with gold down slightly. The dollar is flat. Futures are modestly ahead. Case-Schiller was in-line. Consumer Confidence (64.5) is due out at 10AM along with the Richmond Fed Survey (18). Two Year Treasury auction is out at 1PM. Futures are slightly ahead. The market will likely remain fairly strong with a focus on earnings plays, relative strength/weakness plays, and the rare earths.
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
AAPL- closed near a high
MCP- closed near a high
SODA- closed near a high
SOHU- closed near a high after posting good earnings
EBF- closed near a high after posting good earnings
VECO- decent earnings
MSPD- decent earnings
HXL- decent earnings
AAN- decent earnings
ALB- closed near a high
CMI- good earnings
CRDN- decent earnings
CSL- decent earnings
F- decent earnings
GRA- decent earnings
MMM- good earnings
TKR- decent earnings
UA- decent earnings
UPS- decent earnings
AGCO- decent earnings
ACI- decent earnings
USAT- announced partnership with Verizon Wireless
CE- decent earnings
DAL- decent earnings
ASH- good earnings
ROP- decent earnings
WAT- decent earnings
R- decent earnings
SIAL- decent earnings
Bad-The following stocks have bad news and/or a weak technical pattern
CYMI- closed near a low after posting poor earnings
ABX- closed near a low after announcing an acquisition
NFLX- bad earnings
ORCL- CFO resigned
ESRX- bad earnings
ELX- poor earnings
SANM- poor earnings
RCII- poor earnings
SWSH- closed near a low
AMED- poor earnings
COH- poor earnings
LXK- terrible earnings
KO- poor earnings
X- poor earnings
Earnings:
TUES APR 26 BEFORE
ACI AGCO AKS
AMED AMG AN
ASH CE CMI
COH CPO CSL
CTB DAL ECL
ENR F GRA
HSP HSY IACI
ITW KCI KO
LMT LRY LXK
MHP MMM MNI
ODP OXPS PDS
R ROP RYN
SIAL SNV TLAB
UA UPS VLO
WAT WDR X
TUES APR 26 AFTER
ALTR AMZN APKT
BDX BRCM BWLD
CBI CHRW CNI
DV DWA FTI
GGP ILMN JLL
LIFE MEE NBR
NLC PNRA PPDI
RKT RRC SIMG
STR SWK UHS
WMS WU
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
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