WED. APR. 6- Budget Strife

Earlier this year, I wrote this piece about the debt ceiling:

http://www.capitalmarketforum.org/entry.php?232-FRI.-JAN.-7-Pushing-Against-The-CeilinG

Well, the rhetoric and game of chicken has not stopped. Yesterday, President Obama rejected a Republican proposal in which government operations would be extended for a week as people on both sides of the political aisle attempt to figure out how to cut spending for the duration of the year. This Friday, both the White House and the legislative bodies face a deadline to complete some sort of compromise which would avert spending limits through the end of September and keep a shutdown from occurring as soon as, oh, Saturday. Obama, in his own words feels that “there is no excuse to extend this further.” The Republicans for their part led by House Speaker John Boehner obviously want to avoid a government shutdown as well but seek as much in spending cuts as is feasible (well, based on Boehner’s words). He proposed an ephemeral compromise which would keep the government running for a week while cutting some spending whereas Obama indicated he’d agree only if the framework for a long-term agreement is in place. In the interim, this is all done within the vein of the debt ceiling due to be hit by May 16 according to Treasury Secretary Tim Geithner. The debt ceiling has never been reached (because Congress keeps voting to raise it). There can be some short-term measures to push back the date to early July. But if the ceiling is not raised, “a broad range of government payments would have to be stopped, limited or delayed, including military salaries and retirement benefits, Social Security and Medicare payments, interest on the debt, unemployment benefits and tax refunds ,” according to Geithner. The Congressional Research Service estimates the government will need to borrow going on $750 billion between now and the end of the fiscal year to keep things going thus that amount will have to be raised thru a lifting of the debt ceiling, tax increases, or spending cuts else risk default. I am not politically nor economically savvy enough to prognosticate what’ll happen with certainty (although I feel that some sort of immediate-term compromise will be reached and the debt ceiling raised to stave off immediate-term problems for the United States). But as a day trader, I know that this is one situation we all need to monitor over the coming days and weeks.

Markets were mixed in Asia with Tokyo down 0.3% and Hong Kong up 0.6%. In Europe, the markets are up across the board with Frankfurt ahead 0.7% and London up 0.8%. Oil is down slightly, but gold is at another new high with the dollar up against the yen but down against the euro. Crude Inventories are due out at 10:30AM. The tape remains very strong with futures up nicely as the situation in Japan appears to have stabilized for the moment along with a dearth of news out from Europe. The gains will likely maintain themselves today on continued slow volume with a focus on fertilizers, big cap tech, and relative 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

VHC- closed near a high after announcing a new patent

OLN- closed near a high after being upgraded

QCOR- closed near a high after raising earnings guidance

ANF- closed near a high after raising earnings guidance

VRUS- closed near a high

AAU- closed near a high

LULU- closed near a high

ANV- closed near a high

RLOG- closed near a high

GROW- closed near a high

TZOO- closed near a high

GOLD- closed near a high

OPTR- the FDA’s anti-infective drugs advisory committee voted unanimously to recommend approval of novel antibiotic Dificid for treatment of patients with CDI

MSM- decent earnings

NUS- decent earnings

Bad-The following stocks have bad news and/or a weak technical pattern

FSLR- closed near a low

SEMG- closed near a low

LAMR- closed near a low

OCLR- poor earnings

AMSC- atrocious earnings

DLLR- share offering

KRC- share offering


Earnings:

WED APR 6 BEFORE

MON MSM

WED APR 6 AFTER

BBBY BLUD PBY

RT SMSC


Epiphany Trading, LLC
www.epiphanytrading.com

Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President