The Modern Stock Operator

THURS. MAY 12- Commodity Weakness And Stock Prices

2011-05-12T08:37:00.000-04:00

Last week, I wrote in length about recent commodities pressures in this space. I also briefly noted that it could widely impact stocks- particularly to the downside- but I didn’t describe in detail exactly why I said this. So, let me briefly do so here (with references to the posts from last week which I will not repeat here- the detail is in those posts). With that in mind, pretend I am a hedge fund manager with $100 million in assets. For sake of argument, I am being aggressive in an attempt to post a good return in holding a portfolio with 10% of my funds in silver, 20% in oil, 20% short dollar investments and 50% in stocks. Well, in holding silver contracts with what was the low margin requirements, I got wiped out on the silver portion of the portfolio (and a little more). In the interim, a few people get nervous with the volatility and want to redeem their monies. So, I have no choice but to begin selling some other assets..likely some of the oil because I am now afraid of the margin. While doing that, I glance up and notice that the euro is getting hit quite hard against the dollar as metals prices come in. I now start scrambling to cover my aggressively short dollar positions. In the meantime, more and more people want their money. I now have one option left to cover my burgeoning losses along with covering the redemptions- sell stocks. And that is why on days like yesterday when oil plunges $5/barrel, silver falls $3/ounce, and the dollar rallies two full euros (even if most of this is good for the consumer), it is, in fact, certainly an ephemeral negative for stock prices.

Markets were down throughout the world with Hong Kong down 0.9% and Tokyo off 1.5%; London is trading lower by 1% with Frankfurt and Paris getting hit for about 1.5% losses each. Oil is down sharply anew (about 3%) with gold down 1% and silver plunging 8%. CSCO’s earnings woes are a main trigger along with the commodity weakness in the sharply lower indication for futures. PPI came in higher than expected with jobless claims and retail sales about in-line. Business Inventory data (0.9%) is due out at 10AM. For the day, commodities will likely continue to rule the roost. With as much weakness as is out there, it’s actually slightly bullish to me anyway that stocks aren’t indicated down more so that little tell may be enough to at least keep my eye out for short covering opportunities if commodities fail to keep declining. The focus today will likely be on big cap tech, the rare earths, the Chinese ADR’s, and relative strength 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

TZOO- featured on “Mad Money” last night

SINA- decent earnings

PKT- closed near a high after posting decent earnings

SYX- closed near a high after posting decent earnings

GLBC- closed near a high

DVOX- decent earnings

VRSN- settled with Coalition for ICANN transparency

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

MCP- closed near a low after posting terrible earnings

STEC- closed near a low after posting terrible earnings

IL- closed near a low after posting terrible earnings

CYD- closed near a low after posting terrible earnings

PNSN- closed near a low amid concern of a potential write-down re its nonaccrual receivables

PANL- closed near a low on continued follow-through after posting poor earnings a couple days ago

CLF- closed near a low

WLT- closed near a low

GS- closed near a low

FSLR- closed near a low

POT- closed near a low

JOYG- closed near a low

FCX- closed near a low

CSCO- poor earnings guidance

CSIQ- poor earnings

SVM- poor earnings

ZIP- poor earnings

TCK- closed near a low

MOS- announced 100 million share secondary offering

GRS- poor earnings

IOC- poor earnings

Earnings:

THURS MAY 12 BEFORE

AMSC BCE DANG

GRS KSS PCP

TK

THURS MAY 12 AFTER

ALKS CA DAR

GA JWN LDK

NVDA SPWRA

Epiphany Trading, LLC
www.epiphanytrading.com

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

WED. MAY 11- Altering Trading Style

2011-05-11T08:49:00.000-04:00

I love chocolate. And that, without a doubt, is my favorite beginning to a blog post in all the time I’ve been typing out these pieces. But, I do. More than any other food on the planet, the pleasure of a little chocolate is one of my favorite simplest pleasures in this life. Mind you, a little bit of chocolate every so often is a wonderful thing (for me anyway). Not often and not in great size……but say, one or two squares of a Hershey Bar after a filling meal is the perfect touch for me. Now, let’s say I ate 21 Hershey bars in one sitting. I may get a stomach ache and dull my affinity for chocolate. Or I may feel no pain at all and have quite the story to tell everyone I know about the time I ate 21 Hershey bars for fun. Either way, the cholesterol I am actively watching would soar. So, basically, I’d find out exactly what would happen if I just kept eating chocolate versus potentially getting sick and hurting my health. It’s just not worth it in the long-run net-net. And so it was when I began trading higher-priced stocks so many years ago. My first trade back in 1987 was for 100 shares of an eight dollar stock in Reebok. My next trade was for 200 shares of Church’s Fried Chicken (a seven dollar stock). Almost all of my next series of trades were in stocks which traded between 5 and 15. As I began to trade more actively in 1994, I slowly ramped up my trading of higher priced equities. I did quite well even before I started trading full-time in 1996. Let me rephrase- I did quite well for a time until I eventually got destroyed. Why? Because 10,000 shares of a 2 dollar stock does not play the same as 10,000 shares of a 20 dollar stock. The sheer delta indicates that a 25 cent change in a 2 dollar stock may be the same percentage as a 2 ½ point drop in a 20 dollar stock yet the monetary loss is 10% of the damage. Furthermore, stocks of similar prices act quite differently. For instance, when Citicorp was a low priced stock, it’d typically trade in a narrow range on huge volume. Sirius Satellite (SIRI) has the same big volume but trades in a much bigger range so trading the same size of SIRI as C will inevitably result in losses as human nature is to hold losers and cover winners ergo a faster moving stock would result in a poor outcome. So, particularly for those who haven’t traded stocks with double digits in them much less those with high deltas, realize that the size of your positions should not be identical as to the positions you executed in the lower priced stocks. Also, the movement of each stock is totally unique. Furthermore, it is even more important that one be on the right side of a trending market else the potential for damage is that much greater for immediate-term players. And by the way, a funny thing eventually happens…as your comfort level and knowledge increases of a different group of stocks, so too will your confidence, expertise, confidence, gut feel, confidence, size of your trading stake, and confidence to augment trade size without taking on undue risk.

Markets were mixed throughout the world last night with Tokyo down 0.2% but Hong Kong up 0.2%. London is down fractionally but Frankfurt is up 0.5%. The externals are a bit more notable with the dollar up a bit versus the euro and yen and commodities down across the board. Futures were up most of the morning but have come in. In general, it’s quite choppy but quiet. The choppiness will likely continue in what looks to be a consolidation session unless the commodities moves become exacerbated. The focus will likely be on the earnings flow, retailers, stocks with share offerings, 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

MED- closed near a high after posting good earnings

FOSL- closed near a high after posting good earnings

SREV- closed near a high after posting good earnings

CPE- closed near a high after posting good earnings

HELE- closed near a high after posting good earnings

CIEN- closed near a high on takeover rumors

DTG- closed near a high on more speculation that it will received a raised takeover bid

WYNN- closed near a high

SODA- closed near a high after Fidelity disclosed a sizable stake

ROVI- great earnings

ASYS- good earnings

IPSU- good earnings

GRC- closed near a high

OXGN- closed near a high

FEIC- closed near a high

AU- good earnings

TISA- good earnings

M- decent earnings

ZAGG- good earnings

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

MCP- closed near a low; had poor earnings as well

CLF- closed near a low

SINA- closed near a low

BMTI- closed near a low following the release of FDA documents ahead of the May 12 panel meeting for the company’s augment bone graft

DIS- poor earnings

SGMS- poor earnings

STEC- terrible earnings

CPTS- poor earnings

PAL- closed near a low after posting poor earnings

ADES- closed near a low

AIG- to offer 300 million shares; 200 million from the gov’t and 100 million by the company

ACOM- 4.35 million share secondary at 42

Earnings:

WED MAY 11 BEFORE

AH AU CGA

CYD GIL M

SFUN TEVA

WED MAY 11 AFTER

CSCO CSIQ IAG

IOC OAS SINA

SVM SYMC

Epiphany Trading, LLC
www.epiphanytrading.com

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

TUES. MAY 10- Strong Bonds

2011-05-10T08:52:00.001-04:00

There’s been a somewhat strange occurrence in a pretty wild market environment. I’ve discussed silver and commodities in detail recently. The stock market continues to hang in there. The dollar has weakened against the yen but strengthened against the euro on the commodity weakness. But what has also been very noticeable has been an inordinate amount of strength in the bond market. The 10 year yield on the U.S. Treasury bond is now down to about 3.15% as the yield has declined in every type of market in recent weeks. What is strange about it is the buoyancy of the stock market, a jobs market that seems to be perking up if one is to believe Friday’s unemployment figures, and the Chinese have been paring back their holdings of U.S. Treasury debt. So, what gives? Well, usually a strong bond market portends a weakening economy. Is that the case? It can also indicate the U.S. Treasury going more towards “all in” in attempting to massage interest rates because even the slightest uptick in rates can cause a massive issue for the economy in terms of just paying interest on said debt. Or is it because the U.S. is being viewed more and more as the strongest economy in the world (or at least a safe haven) in the face of a weak Japan and Europe as well as Middle East turmoil? Well, gee, if I knew the answer to this, I’d take out a 2nd mortgage on my house and bet it. I simply bring it up because bonds have had quite the exaggerated move and as the 10-year heads back toward 3%, it certainly portends another reason for the stock market to remain increasingly volatile for us day traders.

Markets in Asia were mixed overnight with Tokyo up 0.3% but Sydney down 0.6%. Bourses in Europe are snapping right back from yesterday with moves of 1.3% to 1.6% to the upside prevalent. Commodities too continue to rally in general with metals up 1%-2% although oil is down a little after the margin requirement was (unsurprisingly) raised. The dollar is flattish. Import data came in notably inflationary with Wholesale Inventories (1.0%) out at 10AM. Futures are nicely higher. As long as things hold steady in commodities land, the markets should hold as well albeit on relatively low turnover. The focus will likely be on the earnings plays, momentum movers from yesterday if the market gets going, 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

NFLX- closed near a day amid rumors it is on the verge of making inroads into Latin America

ROSE- closed near a high after posting good earnings

DTG- closed near a high after receiving an increase takeover bid

JOYG- closed near a high

MCP- closed near a high

WLT- closed near a high

CLF- closed near a high

VRTX- closed near a high

PCLN- closed near a high

LULU- closed near a high

WTW- closed near a high

FEIC- closed near a high

MED- good earnings

ATVI- decent earnings

YONG- decent earnings

DF- good earnings

FOSL- good earnings

NOG- decent earnings

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

MOBI- closed near a low after posting poor earnings

HW- closed near a low after posting poor earnings

PANL- bad earnings

BID- poor earnings

CLNE- poor earnings

RAX- poor earnings

MNKD- poor earnings

NSPH- share offering

ATPG- poor earnings

Earnings:

TUES MAY 10 BEFORE

BR DEER DF

DYN EBIX EPD

FOSL IRDM JASO

JRCC MDC NOG

TM WEN

TUES MAY 10 AFTER

DIS MBI MCP

MDR NUAN ROVI

SGMS SSRI STEC

URS WX

Epiphany Trading, LLC
www.epiphanytrading.com

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

MON. MAY 9- Changing With The Times

2011-05-09T08:49:00.001-04:00

When stocks switched over from fractions to decimals several years ago, I didn't know what I was going to do but I knew I'd adapt. When the markets reopened on September 17, 2001 following the horrific terrorist attacks, I didn't know what was to happen but I knew I'd adapt. When trading volume fell through much of 2004 following the volatility of the previous few years, I was scared but knew I had to adapt. When the markets had multi percent changes on a daily basis in the tumult of the sub prime crisis, I wasn't sure what was to happen but I knew I had to adapt. When there was discourse of changing short selling rules last year, I wasn't sure what was to happen but I knew I had to adapt. Things and circumstances perpetually change in the markets. Many times from these disturbing circumstances, opportunities can be created. For instance, when the markets were so volatile a few years ago, I cut down on my size but held on for bigger moves. So, if you're faced with a potential worrisome change in your trading career, do two things. First, figure out an alternative to get around the change. There inevitably thankfully is an alternative all of the time. Second, have confidence in yourself. Period. In short, when distressing circumstances occur trading-wise, realize that you better adapt and you better have confidence in yourself...else you won't be trading for a living much longer.

Markets in Asia were generally higher overnight with Hong Kong up 0.8%, Sydney 0.3%, and Singapore 1.2% although Tokyo was off 0.6%. However, European stocks are giving back a portion of Friday’s gains as the bourses close when Wall Street was on its highs with London down 0.8%, London 1.2%, and Paris 1.3%. Oil is sharply ahead by about 3% with silver up 5%. Gold is up 1%. The dollar is quiet as are bonds. Futures are mildly higher. It’s interesting to note that both the VIX and the Dow were positive on Friday so that’s a little warning sign for the week. Look for a very choppy session with some selling pressure likely early. Commodities will likely tell the tale from there. The focus will likely be on the rental car sector, the shrinking earnings flow, 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

GMCR- closed near a high after a successful secondary share offering

WCG- closed near a high after posting good earnings

NATR- closed near a high after posting good earnings

OXGN- closed near a high

CALX- closed near a high

SQNM- closed near a high

ACHN- closed near a high

BKS- closed near a high after a brokerage upgrade

DG- received raised $72/share cash takeover bid

BSFT- good earnings

SLW- decent earnings

SYY- decent earnings

X- mentioned positively in “Barron’s” over the weekend

MOBI- decent earnings

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

NTSP- closed near a low after posting bad earnings

WBMD- closed near a low after posting bad earnings

OME- closed near a low after posting bad earnings

TPC- closed near a low after posting bad earnings

RBCN- closed near a low after posting bad earnings

RIMM- closed near a low

GGC- closed near a low

NQ- closed near a low

WBMD- closed near a low

Earnings:

MON MAY 9 BEFORE

AUXL BSFT CDE

HL HOGS KWK

LPX NAT SRE

TSN VRX

MON MAY 9 AFTER

AG AGO AONE

ATVI BID CLNE

GSM HMIN IDTI

MED MR PANL

RAX RST

Epiphany Trading, LLC
www.epiphanytrading.com

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

FRI. MAY 6- Commodities Panic

2011-05-06T08:46:00.001-04:00

The three most common comments I heard yesterday in no particular:
a) “Wow, oil is down how much?”
b) “What exactly changed between today and yesterday?”
c) Shouldn’t the stock market be up today if commodities prices are falling?”

I touched on all of these issues in yesterday’s blog (which was silver-focused) as well as discussed it all during the morning call. But clearly there was a lot of confusion so let me try to give my interpretation in a bit more detail in this space. For the first one, yes, oil was down going on $11/barrel yesterday with silver down $3.50 and gold off around $50 at one point. Those numbers are stunningly shocking for anyone who follows commodities even at a rudimentary level. Volume on the futures contracts for silver and oil smashed record levels yesterday. Indeed, the SLV instrument which tracks silver prices traded 16,000,000 shares or so on March 29. Yesterday, it traded over 18 times that amount! So what exactly changed? Nothing but for one major thing. Margin requirements were raised particularly in the silver market. Thus as silver began to precipitously decline, other entities (particularly commodities funds) began selling other commodities to make up for their losses in silver. This led to the widespread selling in instruments such as gold and oil. Fund managers were trapped. If, say, I wanted to take some money out of a fund in seeking a redemption, they’d have to raise it. The only way to do so as people raced out of commodities was to sell’ other stuff.’ This goes into question three. The selling pressure extended into equities as well as asset managers had to sell non-commodities assets to shore up books and maintain performance. As long as demand is not caving in on oil, yesterday’s decline did not signal a recession bur rather a market-induced panic due to too many humans and computers being in on the same side of a trade. Thus, in the immediate-run, this process may not end quickly as all of the forced hands out must be liquidated so expect some volatility today particularly ahead of the weekend.

Markets in Asia were down overnight with Tokyo down 1.5% and Hong Kong about 0.5%. The trend has shifted in Europe with markets up 0.5% to as much as 1% specifically in London. Gold is flat after trading lower. Oil is only down $1 after being down $3. The dollar is stronger across the board. The trigger for all of this was the 8:30AM jobs report which brought much stronger data than expected. Payrolls came in much stronger than expected. For today, the broader tape should hope up. Even with commodities down early, the futures have been up from the get-go today and with the commodities off of their lows, it gives equities even more of an impetus for stocks to go higher. The focus will likely be on the earnings plays, relative weakness plays, Chinese ADR’s off of YOKU, and commodities 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

RAH- closed near a high on rumors of a higher takeover bid

ELON- decent earnings

PCLN- good earnings

HANS- good earnings

FLR- decent earnings

KFT- decent earnings

CF- good earnings

CQB- decent earnings

NVTL- good earnings

IMMR- decent earnings

SAPE- decent earnings

RBCN- decent earnings

WCG- decent earnings

WCG- decent earnings

ZEUS- decent earnings

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

ACOR- closed near a low after posting bad earnings

VMC- closed near a low after posting bad earnings

ARO- closed near a low after posting bad earnings

SVNT- closed near a low after posting bad earnings and amid worries over the company’s gout drug

JOYG- closed near a low

UDRL- closed near a low after posting bad earnings

SCEI- closed near a low amid rumors about the company’s health

AIG- poor earnings

V- poor earnings

QLGC- poor earnings

BRE- share offering

CNQ- poor earnings

DLB- poor earnings

MDRX- poor earnings

YOKU- poor earnings and announced share offering

NILE- poor earnings

SLXP- poor earnings

SPRD- poor earnings

SUN- poor earnings

WRC- poor earnings

GSIT- poor earnings

SMTX- poor earnings

GMCR- 8.1 million share offering at 71

ALU- poor earnings

AVNW- poor earnings

OMPI- bad earnings

OCZ- closed near a low

Earnings:

FRI MAY 6 BEFORE

ALU BPL CCJ

DSX LNG MSG

SRZ UPL WCG

WTW XEC

FRI MAY 6 AFTER

BRK/A MDVN

Epiphany Trading, LLC
www.epiphanytrading.com

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

THURS. MAY 5- Silver Margining

2011-05-05T08:49:00.000-04:00

Many people falsely believe that the quickest way to halt a parabolic rise at least temporarily of a marginable asset is for a rise in broader interest rates or discount rates. However, this is absolutely not true. What does the trick is a rise in margin requirements. Maybe not the first time, but eventually it does the trick and it does it rapidly. For those not aware, margin is street talk for ‘borrowed money.’ For instance, an overnight margin requirement of “2 to 1” means that one could own twice as much assets as one has monetarily. Ergo, if one had $100,000 in a stock account, one could own $200,000 of assets. When margin requirements are raised, it forces people to put more money up which in turn shrink the amount of people able to get leverage in the market. On April 27th, the COMEX raised the margin requirement on a new contract of silver from $11,745 to $12,825. On April 29th, that number rose from $12,825 to $14,513. On Tuesday (the day after silver topped and had already reversed), the requirement was raised from $14,513 to $16,200. Thus, in less than a week, one had to have 38% more money to initialize a position in silver on the COMEX. Oh and by the way, after the bell yesterday, the CME announced it was going to boost margin requirements again! Furthermore, the margin requirement as a percentage of contract value has been around 8% (about ‘12.5 to 1“). Thus, an 8% decline in the value of silver would effectively wipe out a silver contract holder. So what happened in the last few days? The number of participants declined because more money was needed to play. And many of the current holders who bought recently lost all of their investment. This is what has caused the price of silver to decline so sharply. It’s also why it hasn’t led to widespread selling in the stock market in that it’s been generally an isolated incident. The issue will be if the other commodities take their cue from the silver market. So, the two points here are- 1)be aware of the mechanics behind a market beyond the fundamentals and b)monitor the commodities markets even closer than normal in coming days as the ghost of the May 6 flash crash from last year approaches.

Markets in Asia were mixed overnight with Taiwan up 0.8%, but the Sensex was off 1.6% and Hong Kong 0.2%. In Europe, Frankfurt is off 0.8% and London is down just over 1%. Oil is down 3%, gold 0.5%, bonds are up slightly, and the dollar is much weaker against the yen (below 80 yen) but up strongly against the euro (up a full euro). Futures are weak on weak jobless claims data as well as continued commodity weakness. Look for a choppy but downside session in all likelihood while watching the commodities for a potential exacerbation. The focus will likely be on earnings plays and relative strength 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

TMH- closed near a high after posting good earnings

MGM- closed near a high after posting good earnings

BKS- closed near a high

BMC- decent earnings

ERTS- decent earnings

JDSU- decent earnings

NUVA- decent earnings

WFMI- decent earnings

WFR- decent earnings

TSLA- decent earnings

CECO- decent earnings

ENOC- decent earnings

EXPD- decent earnings

LEAP- decent earnings

QNST- good earnings

PPO- good earnings

CI- decent earnings

EL- decent earnings

ONNN- decent earnings

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

JAZZ- closed near a low after posting poor earnings

FSLR- closed near a low after posting poor earnings

LVS- closed near a low after posting poor earnings

MOTR- closed near a low after posting poor earnings

CENX- closed near a low after posting poor earnings

WWWW- closed near a low after posting poor earnings

NXTM- closed near a low after posting poor earnings

CTCM- closed near a low after posting poor earnings

REGN- closed near a low

NOG- closed near a low

MET- poor earnings

MELI- poor earnings

SWIR- poor earnings

PRU- poor earnings

RIG- poor earnings

SWI- poor earnings

SAM- poor earnings

ATML- poor earnings

MUR- poor earnings

PAA- poor earnings

IO- poor earnings

NOG- closed near a low

ACOR- poor earnings

GM- poor earnings

TBL- poor earnings

WNR- poor earnings

Earnings:

THURS MAY 5 BEFORE

ACOR AEE ANV

ATK CBOE CEDC

CI CTL CVS

DANG DNR DTG

DTV EL EXK

FO GM HK

HOC IT MAC

MGA MINI NOG

NRG PDC PDE

PXP RGLD SFY

SHOO SLE SVNT

TBL VTR WMB

WNR

THURS MAY 5 AFTER

AIG BID CF

CFN CIM CNQ

CQB DLB EOG

FLR HANS JCOM

KFT MCHP MDRX

MHK MRX NFG

NILE NVTL PCLN

PKI PSA QLGC

RAH SD SEM

SGEN SGMS SLXP

SPRD SUN V

WRC

Epiphany Trading, LLC

www.epiphanytrading.com

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

WED. MAY. 4- Tracking Groups

2011-05-04T08:51:00.001-04:00

I’ve witnessed literally countless times over the past few years the lack of preparation/knowledge for/of many traders much less an unwillingness to acknowledge basic trends. I know. I have been guilty of all of this countless times in the past. One of the top questions I am asked is: how you do track groups of stocks, how do you differentiate news flow, and how do you trade them in the context of relative strength/weakness? I want to try to address that. In my mind, it’s astoundingly simple, but I’ve never actually written it down. Let’s say for sake of argument that four of the major Chinese ADR’s that I follow are BIDU, SINA, SOHU, and YOKU. All of them are not exactly alike- I get it, but close enough. BIDU provides Chinese and Japanese language Internet search engines. SINA provides online media services in China. SOHU provides news, information, and communication services in China. YOKU is ostensibly a Chinese Internet video website. So, I’d place them in the general category of “Chinese technology companies.” Pretend that the Shanghai stock market overnight was down 2% with S&P and NASDAQ futures both down 1%. For ease of argument, amid that weak tape, BIDU is down 3%, SINA, and SOHU 2% with YOKU down 0.2% at 9:25AM ET when I notice this. I immediately question why YOKU is so strong and BIDU so weak. At that point, I look up the news on each as well as study the profile of each company to understand their general businesses. This takes me about one minute literally to do if not less in educating myself. From here, generally three things happen. In the first scenario, let’s say there is no news. Let’s also say that the market rallies off of the open. I don’t look to buy BIDU because it’s down more than the rest of the stocks. Rather, I buy YOKU through unchanged because it’s the strongest of all four. I do that because strength tends to beget strength. If groups of people came in heavily short YOKU and it gets positive on the day with the other Chinese ADR’s down, they tend to rush to cover. Furthermore, what if there is a reason for the moves but I don’t see it? Maybe there was an article in some arcane Chinese newspaper. I don’t know. I just know that the leader leads more in a strong market while the laggard will be among the first to fall in a weak market. In the other scenario, let’s say there is news. Pretend all four of the stocks were downgraded by Goldman Sachs. My strategy for purposes of relative strength/weakness is…exactly the same (with one slight corollary)! The corollary is that the news story makes the trade much more definitive as long as it’s universal, i.e. YOKU shaking off a downgrade is phenomenally bullish from an immediate-term vantage point. I don’t ask why it’s doing it…I just know it’s doing it and I‘ll buy it even heavier than in the earlier description.. And if BIDU, SINA, and SOHU were downgraded but YOKU wasn’t? I’d look to buy YOKU in a strong tape yet short BIDU (not SINA nor SOHU) if the market wore down more than in the first two scenarios. See a pattern much? So, the bottom line is that it’s inevitably best to buy strength in an upblip and short weakness in a down blip particularly if there is a news trigger involved.

Markets in Asia were down fairly sharply overnight with Hong Kong down 1.3% and Shanghai off 2.2%. The trend is the same in Europe although a bit more modest with Frankfurt down 0.3% although London is down to the tune of 0.9%. Gold and oil are both down a little with the dollar quiet. The MBA Mortgage Index, Challenger Job Cuts, and ADP have already come out (ADP notably a little weaker than expected). ISM Services (57.3) is due out at 10AM with Crude Inventories out at 10:30AM. For today, the markets will likely be quite choppy but with no real sense of direction. The focus will likely be on the earnings plays, the casinos, and the Chinese ADR’s following yesterday’s action with the RENN IPO.

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

EXLS- closed near a high after posting good earnings

ROG- closed near a high after posting good earnings

NEOP- positive NE03-09 study

GMCR- great earnings

JAZZ- decent earnings

INT- decent earnings

CBS- decent earnings

MYGN- decent earnings

CMCSA- decent earnings

FEIC- good earnings

GRMN- good earnings

ZBRA- decent earnings

VSEA- received $63/share cash bid from AMAT

RAH- received $86/share cash bid from CAG

SPPI- decent earnings

TRW- decent earnings

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

DNDN- closed near a low after posting poor earnings

EMR- closed near a low after posting poor earnings

ADM- closed near a low after posting poor earnings

MEE- closed near a low after posting poor earnings

SHLD- closed near a low after posting poor earnings

SOHU, SINA- among the Chinese ADR’s which closed near their lows

TZOO- closed near a low

VHC- closed near a low

TRMB- closed near a low

CVI- closed near a low

CSC- closed near a low after posting poor earnings

FST- closed near a low after posting poor earnings

FSLR- bad earnings

LVS- bad earnings

OPEN- decent earnings but management shake-up

MCK- poor earnings

OCZ- poor earnings

PLT- poor earnings

QSFT- bad earnings

THQI- poor earnings

BEXP- poor earnings

MOLX- poor earnings

MOTR- bad earnings

CENX- poor earnings

CNQR- poor earnings

OPLK- bad earnings

PWR- poor earnings

K- poor earnings

Earnings:

WED MAY 4 BEFORE

AGN AGU AOL

CHTR CLH DVN

FCN GRMN HCA

HNT ICE JOE

K LAMR MGM

MMC MMP PWR

RRD SPW TRW

TWX

WED MAY 4 AFTER

ACE ATML BMC

CECO CLR CVD

ENOC ERTS EXPD

GG GGC IPI

JDSU KIM LBTYA

LEAP MELI MET

MRX MUR NUVA

NWS ONXX PAA

PL PRU RIG

SWI THG TSO

VMC WFMI WFR

Epiphany Trading, LLC
www.epiphanytrading.com

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

TUES. MAY 3- Desire

2011-05-03T08:56:00.001-04:00

“Yeah
Lover, I’m on the street
Gonna go where the bright lights
And the big city meet
With a red guitar, on fire”

Does anybody recognize the lyrics of this song? Hint, if you’re a U2 fan, you should really know it. The next word is the main theme (and name) of the song: “Desire.” Now, I’ve written of similar themes in the past- most recently a piece on “focus.” But there is a major difference between “focus” and “desire.” Obviously, one has to have “desire” to have “focus,” but there are different levels of “focus.” For instance, I typically clean the table and the floor after dinner since my wife usually makes dinner. When I “clean,” I typically sweep all the crumbs and wipe down the table. So, it’s pretty good as I focus on making sure we don’t live in total filth. Now, if we’re going to have people over, that’s a different story. The desire comes in to really clean- mopping, scrubbing, making sure every last dust crumb is off the floor. In trading, all the time, many traders focus when they need to when in trades or looking at prospective trades. But it disturbs me on many levels as I’ve written here countless times when people do things like gloat at 4:02PM at having made “$200” for the day…followed by a mass exodus routinely as a for instance. How can someone be satisfied with that paltry number…and then try not to enhance the number? During the day, when it’s quiet at times, why not concentrate on learning as much as one can about the field one is in? Thus, one may focus when trading…but it takes true underlying desire to do better- to understand one can always improve- to realize success not only in trading but in the bigger picture as well.

Markets overnight were down throughout the world with Hong Kong down 0.4% and Frankfurt and Paris each off about 0.8%. Gold is down about 1% with silver off an even more notable 4%, the dollar is down across the board, and oil is down 1%. Bonds are up again with the 10-year now at 3.25%. Futures are modestly lower. The main trigger overnight seems to have been a surprisingly bigger-than-expected interest rate hike in India along with vague terror worries. Look for a relatively quiet and choppy session pending exaggerated movement in the non-equity markets which would likely lead to a sudden exacerbated move stock-wise. The focus will likely be on the earnings plays, Indian ADR’s, and the rare earths.

Good- The following stocks have good news and/or a strong technical pattern

RAH- closed near a high amid rumors Apollo Global management on verge of bidding for company

DISH- closed near a high after posting good earnings

HIG- decent earnings

HLF- great earnings

BGC- decent earnings

FMC- decent earnings

IRF- decent earnings

VVUS- decent earnings

OXGN- closed near a high

AVP- decent earnings

FDP- decent earnings

IPGP- decent earnings

KLIC- good earnings

PCS- decent earnings

MA- decent earnings

AAPL- closed near a low, but featured on “Mad Money” last night

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

REDF- closed near a low

MOBI- closed near a low

TZOO- closed near a low

FSLR- closed near a low

LULU- closed near a low

SOHU- closed near a low

RIG- closed near a low

TDSC- closed near a low

CHK- poor earnings

DNDN- poor earnings

NETL- poor earnings

PFG- poor earnings

ANR- poor earnings

CTSH- poor earnings

FWLT- poor earnings

EMR- poor earnings

FIS- poor earnings

PFE- poor earnings

CLX- poor earnings

Earnings:

TUES MAY 3 BEFORE

ADM AMT ANR

AVP BBG BYD

BZH CLX COCO

CTSH DVA EMR

FIS HCN HCP

IPGP JOE LM

MA MLM MRO

MYL NYX OSG

PCS PFE PRGO

PWR RDC SMG

SU VNO

TUES MAY 3 AFTER

ASIA ATW AUY

BEXP BRE CBS

CENX CMCSA CNQR

CRL FSLR FWLT

GMCR GNK GNW

HRS INT JAZZ

LVS MCK MOLX

MOTR MYGN OKE

OPEN PEET PXD

THQI UNM VRTX

WFR XL

Epiphany Trading, LLC
www.epiphanytrading.com

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

MON. MAY. 2- Tempering Euphoria

2011-05-02T08:56:00.001-04:00

As I began watching the news reports last night of the death of Osama bin Laden, I remembered back to the first time I had heard of him- 1998. I read several stories about him and knew of his actions. Upon getting married in August 2001, I took a three week honeymoon to Australia and New Zealand. While there, I noted a missile attack in the Middle East. About 10 days in, I told my newlywed wife I was getting antsy. She of course thought I was crazy and we had our first true argument because she felt it was her rather than my strange vibes. But it wasn't. When the first plane hit the World Trade Center on that horrible September day in 2001, I immediately said "this is bin Laden." I started trying to get ahold of everyone in the New York area (I lived in Chicago at the time) in telling them to be careful. As time progressed, certainly bin Laden was prominent but has largely become a symbolic target with much of his effectiveness having been taken away over the years. But he has no doubt been a unifying force for the venom and hurt of countless people across the world in the War on Terror. Alas, this is a trading blog so among my thoughts is this- what really changed? With bin Laden largely a figure head these last few years, the world is still a very dangerous place- and perhaps moreso today than in 2001...much less three days ago as Gaddafi was almost killed over the weekend with bin Laden now gone. So there will be euphoria by many today as well as in the financial markets but let's not forget that this euphoria should be tempered due to many terror cell elements out there. Indeed, the rally may be quite capped as the realization sets in this is indeed the end of a horrible chapter of history but it is quite possibly the start of a new one with the true operatives of organizations such as al Qaeda still quite alive and active.

Markets were mixed in Asia overnight with Sydney down slightly but Tokyo up 1.6%. Prices are higher in Europe with Frankfurt up 0.7% and Paris 0.4%. Gold is flat along with the dollar. Oil and silver are down sharply albeit off of their lows. Construction Spending (0.0%) and the ISM Index (59.7) are due out at 10AM with auto and truck sales out at 3PM. Equity futures are nicely ahead but off of their overnight highs. For the day, the tone seems to be set with the bin Laden capture and a rash of mergers. The focus today for me will likely be in the earnings plays, the myriad of merger plays, 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

RADS- closed near a high after posting good earnings

ACOM- closed near a high after posting good earnings

SWKS- closed near a high after posting good earnings

LFT- closed near a high after holding conference call and increased stock buyback program size

WLT- closed near a high

GS- closed near a high

OXY- closed near a high amid continued gains following earnings from Thursday morning

EQT- closed near a high amid continued gains following earnings from Thursday morning

JKS- decent earnings

HUM- decent earnings

CPO- decent earnings

AWI- decent earnings

DISH- good earnings

CEPH- received takeover bid from TEVA for $81.50/ share in cash

SPPI- FDA approved Fusilev in patients with colorectal cancer

TIVO- received $500 million in patent settlement with DISH Network and EchoStar

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

REGN- closed near a low amid a downgrade and worries in the market for its eye drug

VFC- closed near a low after posting poor earnings

RIMM- closed near a low after posting poor earnings warning

DECK- closed near a low after posting poor earnings

CLF- closed near a low after posting poor earnings

PBI- closed near a low after posting poor earnings

FFIV- closed near a low

YRCW- reached definitive agreements in restructuring plan but will be dilutive for the company

SATS- poor earnings

ACI- to acquire ICO for $14.60/share in cash

Earnings:

MON MAY 2 BEFORE

AWI CPO DISH

EIX HUM JKS

JRCC L SATS

SYY

MON MAY 2 AFTER

ADP AHC APC

BGC BXP CHK

CRK DNDN EXM

FMC FN FST

HIG HLF HOLX

IRF NETL PFG

PRE RBC VVUS

Epiphany Trading, LLC
www.epiphanytrading.com

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

FRI. APR. 29- Keep It Simple

2011-04-29T08:53:00.001-04:00

Recently, I took my two kids (ages 5 and 2) to my local Pathmark grocery store. Unfortunately, I sadly learned as evidenced by the bare shelves that the store was to be shuttered. A couple of weeks ago, I remarked that we needed a few things. My older daughter told me "Well, Dad, you can't go to Pathmark because it's closing but Waldbaum's and King Kullen are open for business." After marveling at Rayna's vocabulary, intellect, and logic, it drilled home one of my favorite trading lessons. My Mom is way above average intelligence but has never traded a stock in her life. I learned a long time ago that if I am with her on a one-on-one basis and I cannot make her understand a specific trading idea, I probably shouldn't do it. In general, the more complex that something is, the higher the likelihood that the intricacy of the idea will get in the way of it working. For instance, it makes sense to me that if a stock has run up 70% in the last three months, it beats its earnings, and the stock barely trades higher, I'll short it through unchanged. Maybe the company's growth is slowing. Maybe the company beat its earnings on sketchy accounting practices. I don't know. But I do know that if a company comes out with good news on the surface and its stock prices fails to react, the likelihood that the stock accelerates to the downside in time is quite high (witness JPM and its ensuing performance post-earnings last week). So, as my daughter who has not entered kindergarten as yet reminded me, everything does not have to be complicated. Her young mind was able to soak up the difference between closed and "open for business." As we trade on a daily basis, things should generally be that easy. I spent time a couple of weeks ago with a trader who'd been in the business for many years but had not traded in awhile. I asked him to explain what it was he sought to do. He spent half an hour talking to me and patiently answering my questions. And after half an hour, I hadn't the foggiest idea of his strategy. I am not the brightest tool in the shed, but I've been trading full-time almost 15 years. That was a warning sign. The moral: don't overcomplicate. Focus on what you see and react to it rather than what you think the facts should indicate.

Markets in Asia were generally weaker overnight with Hong Kong down 0.4%. Things are quiet in Europe with eyes turned to the wedding as all indexes are not straying too far from unchanged. The dollar is once again weaker with commodities once again stronger. Personal Income and Personal Spending are due out at 8:30AM, Chicago PMI (68.0) at 9:45AM, and University of Michigan confidence data (68.7) at 9:55AM. Futures are slightly weaker. Look for a relatively quiet day with Europe not moving plus it’s the first nice sunny Friday of the year so a few people may filter out a little early. The focus will be on the earnings plays, RIMM and its competitors, and A-B-A2 strength plays in the week’s momentum movers.

Good- The following stocks have good news and/or a strong technical pattern

AFL- closed near a high after posting good earnings

NSC- closed near a high after posting good earnings

ZMH- closed near a high after posting good earnings

FTNT- closed near a high after posting good earnings

VCI- closed near a high after posting good earnings

SRDX- closed near a high after posting good earnings

SPWRA- received a $23.25/share cash buyout for 60% of the company from TOT; FSLR, STP, TSL, CSIQ may move with it

CLF- decent earnings

CSTR- good earnings

DOX- decent earnings

KLAC- decent earnings

SIMO- good earnings

EMN- good earnings

MMI- decent earnings

CERN- good earnings

QLIK- decent earnings

SWN- decent earnings

TRLG- good earnings

NTKR- great earnings

ACOM- great earnings

SWKS- good earnings

CAT- good earnings

MRK- decent earnings

WBC- good earnings

SCEI- good earnings

AXL- decent earnings

GT- decent earnings

LEA- good earnings

AGP- decent earnings

DHI- decent earnings

LPNT- decent earnings

WY- decent earnings

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

TDSC- closed near a low after posting bad earnings

HHS- closed near a low after posting bad earnings

POT- closed near a low after posting bad earnings

HP- closed near a low after posting bad earnings

FFIV- closed near a low

VRSN- poor earnings

CAVM- poor earnings

MSFT- poor earnings

DECK- bad earnings

RIMM- terrible earnings guidance

CROX- poor earnings

DRIV- poor earnings

AEM- poor earnings

LPS- poor earnings

KND- RHB had poor earnings; KND is buying out RHB

ENDP- poor earnings

IM- poor earnings

MWW- poor earnings

MTW- poor earnings

OCLR- bad earnings

RMD- poor earnings

VSEA- poor earnings

FRI APR 29 BEFORE

AGP AON AXL

CAT CPN CVH

CVX CX DHI

ETR FLIR GT

ITT LEA LPNT

MRK NVE PBI

PNW PPC RAS

SIFY SPG VFC

WBC WY

Epiphany Trading, LLC
www.epiphanytrading.com

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

WED. APR. 27- Changing Of the Fed

2011-04-27T08:47:00.001-04:00

For the duration of my trading career, there have been several constants. One of them has been the Federal Reserve meetings. These meetings are typically held several times a year and when they conclude, we find out if there is any change in interest rate policy much less guidance from the Fed. Sometimes the meetings go for one day and sometimes they go for two days. But the steady tenet is that the results have been released at or around 2:15PM on days of the policy meetings. There has historically been much talk about the policy leading up to the meeting with the market active in the morning, dull in the hours leading up to the announcement, and traditionally much more active just after 2:15 as things are digested. This all changes today. There is going to be a brand new process with a post-statement briefing for the first time in FOMC results history. Thus, the statement will be released today at 12:30 followed by a briefing at 2:15. The seven year note auction- usually occurring at 1PM- will instead take place at 11:30AM. So, we are in uncharted waters. There still be speculation as to Fedspeak. There still will be a busy morning. But the window of slowness will likely shorten from 10:30ish to 2:15ish down to 12:30. After that, there will be a reaction to the number followed by a rapid quieting as traders await the press conference. From there, nothing and anything can happen depending on the length of the conference and the type of question asked (“do you anticipate doing a QE3, et al?”). This day will have a different kind of feel to it with the first-time schematic; adjust your lunch much your trading day accordingly.

Markets in Asia were mixed overnight with Tokyo up 1.4.% but Hong Kong Down 0.5%. markets in Europe are positive across the board from 0.2% in London to 0.8% in Frankfurt. The dollar is notably stronger against the yen amid rumors of a Japanese debt downgrade. Gold and oil are both slightly ahead. Futures are mildly positive. Mortgage Application data already came out, Durable Goods (2.0%) are due out at 8:30AM and then the Fed Show takes over. Look for a very busy morning amid all of the earnings flow followed by slowness as nobody knows exactly what to expect today. There will likely be a flurry of action just after the Fed announcement at 12:30 and then be ready for anything during the initial briefing. The focus will be on all of the earnings plays, rare earths and then financials and techs during the Fed periods.

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

IIVI- closed near a high after posting great earnings

MMM- closed near a high after posting decent earnings

KND- closed near a high after posting good earnings

REDF- closed near a high after announcing a group deals service in 40 Indian cities

WTI- closed near a high after posting good earnings

CSL- closed near a high after posting good earnings

LO- closed near a high after posting good earnings

CMI- closed near a high after posting good earnings

ASH- closed near a high after posting good earnings

GRA- closed near a high after posting good earnings

AAN- closed near a high after posting good earnings

ITW- closed near a high after posting good earnings

REGN- colon cancer treatment met goal in study

BDX- decent earnings

ALTR- decent earnings

BWLD- good earnings

DV- decent earnings

PNRA- decent earnings

SIMG- decent earnings

UHS- decent earnings

FORM- decent earnings

QCOR- decent earnings

KEYN- decent earnings

VSI- decent earnings

HUSA- decent earnings

ABX- decent earnings

BP- decent earnings

MWV- decent earnings

ROC- decent earnings

ARMH- decent earnings

BA- decent earnings

BHI- decent earnings

EDU- decent earnings

GLW- decent earnings

HES- decent earnings

JNY- decent earnings

MCO- decent earnings

ROK- decent earnings

TUP- decent earnings

WHR- decent earnings

WLP- decent earnings

ARW- decent earnings

SVVS- received takeover bid from CTL for $40/share- $30/cash and $10 in CTL stocks

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

NFLX- closed near a low after posting terrible earnings

UIS- closed near a low after posting terrible earnings

X- closed near a low after posting bad earnings

UA- closed near a low after posting terrible earnings

RCII- closed near a low after posting terrible earnings

TZOO- closed near a low amid a report that Facebook will be entering the daily deals space

AAPL- closed near a low

ABX- closed near a low

VHC- closed near a low

AMZN- poor earnings

APKT- poor earnings

BRCM- terrible earnings

CBI- poor earnings

RKT- poor earnings

SWK- poor earnings

WU- poor earnings

FTI- poor earnings

LIFE- poor earnings

NBR- poor earnings

CHRW- poor earnings

PPDI- poor earnings

STM- poor earnings

SMCI- poor earnings

MIPS- bad earnings

LDK- bad earnings

SFSF- bad earnings

PFCB- poor earnings

ROK- poor earnings

YOKU- downgraded by GS

NXY- poor earnings

RGS- poor earnings

WPI- poor earnings

COP- poor earnings

Earnings:

WED APR 27 BEFORE

ABX ARMH ARW

ATI BA BHI

BP CIT COP

DPS EAT EDU

EXC GD GLW

GT HES HL

JNY LAZ MCO

MPEL MWV NOC

NOV NXY OC

OXPS PFCB PH

PX RGS ROC

ROK SEE TMO

TUP WHR WLP

WPI

WED APR 27 AFTER

AFL AKAM ALL

BIDU CCI COG

CTXS CYH EBAY

EFX EQIX EQR

EXXI FISV FLEX

FLS GMCR IDCC

ISIL LNC NSC

NVLS OII OIS

ORLY OTEX PMTC

RE RYL SBUX

SGEN SLG SPN

TER TRN VAR

WLL XLNX

Epiphany Trading, LLC
www.epiphanytrading.com

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

TUES. APR. 26- The Dollar-Equities Relationship

2011-04-26T09:06:00.000-04:00

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

MON. APR. 25- Seeking Out Opportunity

2011-04-25T08:33:00.001-04:00

There was a fascinating article I read in a local paper on a recent weekend mini-trip. The author wrote of weekends he spent with his Dad at Yankees games in the Bronx. Now that he has his own kids, he too takes them to Yankees games...in Baltimore. The author spent $12 each for the equivalent of $150ish seats at the new stadium. So he was already ahead about $550. I understand factors such as food and gas come into play but it still makes tremendous financial sense for the author to do what he did. In trading, the same principle applies. First, there are times when it is harder than others to make a trade. It could be a function of the markets, the day, or a factor such as exhaustion. But anything is possible. Second, opportunities are there for the finding...if you look hard enough. Maximum effort is a must for success in this field. Finally, for the effort, one can find fruit with the work. The reward is there but it can take some doing although it can be well well worth it. Thus, you can generally get what you want even if it is more difficult than you thought it'd be. It may be a slight tangent to get it but success in trading is certainly obtainable.

World markets were ostensibly inactive. Tokyo was net near flat for the last couple of days with Hong Kong and every major European bourse having been closed Friday and today. The dollar is quiet but mixed with oil slightly stronger and metals screaming with gold up 1% and silver up 6%. New Home Sales (280K) are due out at 10AM. Futures are modestly positive. With so many people still out for vacation, look for a very low volume session today. There will be pockets of activity amid some of the earnings flow and ahead of the crush of economic and earnings data due out starting this afternoon. The focus will likely be on the earnings plays from this morning, the metals/commodities plays, China ADR’s, and relative weakness plays particularly early.

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

SCSS- closed near a high after posting earnings

WLT- closed near a high after posting earnings

ESI- closed near a high after posting earnings

COF- closed near a high after posting earnings

TZOO- closed near a high after posting earnings

LULU- closed near a high

IBM- closed near a high

FCX- closed near a high

NFLX- closed near a high

AMZN- closed near a high

PLCM- great earnings

CB- decent earnings

EZPW- decent earnings

IGT- good earnings

BCR- decent earnings

NEPT- closed near a high

TRGL- closed near a high on a positive French shale hydrocarbons report

CYOU- decent earnings

SOHU- good earnings

NKE- featured in “Barron’s” over the weekend

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

MCP- closed near a low

OCZ- closed near a low

HNI- closed near a low after posting poor earnings

AMGN- closed near a low after posting poor earnings

SYNT- closed near a low after posting poor earnings

BIIB- near island reversal in closing near a low despite posting good earnings and drug results

VNET- near island reversal in closing near a low on the day of its IPO

YUM- near island reversal in closing near a low despite posting good earnings

SNDK- poor earnings

MXIM- poor earnings

RMBS- poor earnings

SYNA- poor earnings

MCRL- poor earnings

CYMI- poor earnings

ABFS- poor earnings

KMB- poor earnings

ABX- announced agreement to buy Equinox

RSH- poor earnings

Earnings:

MON APR 25 BEFORE

ABFS ACV BEAV

JCI KMB SIFY

SOHU

MON APR 25 AFTER

AMP EFII ELX

ESRX HLX HXL

JEC MAS MSPD

NFLX PCL RCII

RGA RSH SANM

SFG SWI UIS

VECO WCN

Epiphany Trading, LLC
www.epiphanytrading.com

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

THURS. APR. 21- Time Horizon Is Everything

2011-04-21T08:36:00.000-04:00

Sometimes, there are just times to divert a little bit from the norm. This is not usually the case, but this piece is about one of those rare 'exceptions to the rules.' Such was the case on Tuesday when Seagate Technology (STX) announced that Samsung had taken a stake in the company. Mind you, the stock had run up several points ahead of the announcement amid the thinking that maybe, just maybe, STX was going to be a takeover candidate. The thought process to the trade was this: STX was trading less than 1% higher around the time of open. It could not get any traction on the news. Ergo, it'd be a conventional short through unchanged as some longs who felt the company was an imminent buyout candidate would be disappointed with no merger announcement forthcoming. Now, usually, I am in trades for 10 seconds- 3 minutes with the entry a near science and the exit an art quite admittedly. But in this case, the thought process was quite cut and dry...if it had rallied several points on the thinking it was to be bought out and now it wasn't to be bought out, it could really really go. I shorted several thousand shares of the stock as it breached unchanged and made good money thankfully. But the theory in this one went that it was a solid 30-90 minute idea if not longer as common sense would dictate that disappointment would lead to a larger decline which sure enough occurred as it proceeded to fall almost a dollar from unchanged. So here's the point: when you have a degree of success at whatever type of trading you are doing, do it by all means. But in the rare exception that you want to divert for a very logical reason, don't fall back into your traditional mindset because if your trading parameters are different, your mindset should be different as well.

Markets were stronger throughout the world overnight with the Asian markets trading ahead just shy of about 1% with the European bourses up more moderately- about 0.2% to 0.4% across the board. Oil and gold are both up modestly with the dollar getting hit once again. Jobless claims data came in slightly better than expected, LEI is out at 10AM (0.3%) and Phily Fed (36.0) at 11:30AM. Futures are nicely higher on the generally positive earnings flow- specifically from AAPL. As the day progresses, look for the gains to likely hold on slower volume over time. It will be frantically busy yet illiquid on the bell. The focus will be on the tons of earnings out along with 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

VMW- closed near a high after posting good earnings

UTX- closed near a high after posting good earnings

STJ- closed near a high after posting good earnings

GRA- closed near a high after posting good earnings

SNDK- closed near a high

JOYG- closed near a high

FFIV- closed near a high

AMZN- closed near a high

BIIB- closed near a high

MEE- closed near a high

ALTR- closed near a high

KLAC- closed near a high

CAVM- closed near a high

CRM- closed near a high

AAPL- good earnings

PLXS- great earnings

QCOM- good earnings

YUM- good earnings

FFIV- great earnings

SCSS- great earnings

GDI- good earnings

EW- good earnings

SLM- good earnings

HON- decent earnings

ALGN- good earnings

TSCO- decent earnings

ETFC- decent earnings

CSR- received a $6.50/share takeover bid

BAX- decent earnings

BIIB- decent earnings and positive drug data

CY- decent earnings

COF- decent earnings

DD- decent earnings

DO- decent earnings

GE- decent earnings

MS- decent earnings

NEM- decent earnings

NOK- signed licensing deal with MSFT

PENN- decent earnings

PNC- decent earnings

TPX- decent earnings

TRV- decent earnings

UNH- good earnings

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

QIHU- closed near a low

SYK- closed near a low after posting poor earnings

MCP- closed near a low

THG- closed near a low

AMGN- poor earnings

AXP- poor earnings

WDC- poor earnings

CMG- poor earnings

LRCX- poor earnings

NE- poor earnings

GILD- poor earnings

CPHD- poor earnings

CAKE- poor earnings

RIG- being sued by BP for $40 billion for the Gulf oil disaster last year

SLB- poor earnings

WFT- poor earnings

WLT- poor earnings

TEVA- sudden increased competition from BIIB’s pill

SINA- cut to “sell” by Goldman Sachs

Earnings:

THURS APR 21 BEFORE

ALK ALXN APD

BAX BBT BLK

BX COL COV

CP CSH CY

DD DHR DO

DOV ESI FHN

FITB GE GMT

GR HON IR

JNS JBLU KSU

LH LLL LSTR

LTM LUV MCD

MS NEM NOK

NUE NYT PCX

PENN PNC PPG

RAI SHW SLB

SON ST STI

TCB TEL TPX

TROW TRV TZOO

UAL UNH UTEK

VZ WCC WFT

XRX

THURS APR 21 AFTER

ADS AMD AMSG

BCR BIIB CB

COF CYT EZPW

GILD IGT INFA

MCRL MXIM PLCM

RMBS SNDK SYNA

WLT

Epiphany Trading, LLC
www.epiphanytrading.com

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

WED. APR. 20- More On Hyper Fast Trading

2011-04-20T08:45:00.002-04:00

I have repeatedly mentioned the phrase “hyper fast trading” in the last few days. I wrote a few pieces about it in the past with the most notable post being this one:

http://epiphanytrading.blogspot.com/2010/02/mon-feb-8-hyper-fast-trading-and.html

This is definitely a market for that type of trading. Ostensibly, I do what it is I normally do but I do it much faster and love when news directly impacts whatever it is I am doing. After re-reading that piece, I can only add but two things. First, it is of utmost importance to realize the market type and trading environment one is working amidst. No matter your style of trading, when prices are whipping around the way they have, there are of course perilous dangers if doing asinine things like accumulating positions, being stubborn, and not cutting down on trade size. Furthermore, since I am in these for such a brief time and they happen so fast, I am terrified of having anyone join me because of the things I just said…when I am wrong, I exit expeditiously…when right, I do my best to take what I can get. It is, happily however, a major opportunity if one views it that way because the excessive movement allows one to earn very quick yet decent profits- simply by keeping one’s eyes, ears, and most importantly- one’s mind open.. The other thing I can add is to simply describe what it is I am doing a bit more and why I am doing it. With that in mind, here are the trades I did one Wednesday afternoon from 2PM to 3:30PM when the market was whipping around…every single one- with the trade and reason I did them...note the relatively low trade size and the quick movements in adapting to the conditions:
1)
14:01:12 WLT SLD SHRT 100 115.01 EPIPHANY18 NSDQSTGY D
14:01:12 WLT SLD SHRT 300 115 EPIPHANY18 NSDQSTGY X
14:02:36 WLT BOT 200 114.7 EPIPHANY18 NSDQSTGY J
14:03:23 WLT BOT 100 114.44 EPIPHANY18 NSDQSTGY X
14:04:17 WLT BOT 100 114.6 EPIPHANY18 NSDQSTGY A

The stock was in a tight range and the market began caving amid a negative story about Japan. I shorted 115 and was cued up to exit 115.10 if 115 refreshed.

2)
14:06:57 MEE BOT 100 60.57 EPIPHANY18 NSDQSTGY R
14:07:10 MEE SLD 100 60.48 EPIPHANY18 NSDQSTGY R

MEE had been holding near unchanged and I bought it small to see if it’d pop right back through unchanged in a test of market strength. The low had been 60.50. It breached 60.50 and I sold immediately.

3)
14:12:24 CCJ SLD SHRT 100 29.02 EPIPHANY18 NSDQSTGY A
14:13:14 CCJ SLD SHRT 400 29.01 EPIPHANY18 NSDQSTGY A
14:13:34 CCJ BOT 200 28.95 EPIPHANY18 NSDQSTGY R
14:13:34 CCJ BOT 100 28.95 EPIPHANY18 NSDQSTGY R
14:14:33 CCJ BOT 200 29.03 EPIPHANY18 NSDQSTGY A

The market was in near freefall. Uranium stocks were breaching lows so I shorted CCJ. It took out 29 with 28.93 refreshing. I took some off at 28.95. I didn’t think it’d get back above 29. When it did, I covered the rest.

4)
14:18:31 AAPL SLD SHRT 200 328.06 EPIPHANY18 NSDQSTGY X
14:19:26 AAPL BOT 10 327.03 EPIPHANY18 NSDQSTGY R
14:19:26 AAPL BOT 16 327.07 EPIPHANY18 NSDQSTGY R
14:19:26 AAPL BOT 74 327.08 EPIPHANY18 NSDQSTGY R
14:21:31 AAPL BOT 100 327.4 EPIPHANY18 NSDQSTGY R

This was a ‘technical’ trade. The market was trending toward a low and AAPL was rolling over. I shorted it through the low of the day. At the first pause (327), I took the first part off. It got down to the mid 326’s…there was then a rumor which vaporized all offers. When it poked above 327, I was cued up to cover at 327.50…and in giving up 50 cents, I covered 327.40 (and it was up 50 more cents less than a minute later).

5)
14:34:34 WLL BOT 100 64.19 EPIPHANY18 NSDQSTGY R
14:34:34 WLL BOT 100 64.19 EPIPHANY18 NSDQSTGY R
14:34:34 WLL BOT 100 64.19 EPIPHANY18 NSDQSTGY X
14:36:13 WLL SLD 100 64.52 EPIPHANY18 NSDQSTGY R
14:36:13 WLL SLD 100 64.52 EPIPHANY18 NSDQSTGY R
14:36:42 WLL SLD 100 64.46 EPIPHANY18 NSDQSTGY R

The stock was mentioned on a mid-day update by Jim Cramer as something that he was going to discuss on his show that night with the CEO to be on. It had rallied a bit already but the market was in a rally phase on a positive nuclear rumor. It got to 64.60 or so. It got stuck there so I went to sell some of it at 64.50 and got filled 64.52. When it ticked below there, I sold the rest.

6)
14:41:41 AAPL SLD SHRT 1 332.53 EPIPHANY18 NSDQSTGY R
14:41:41 AAPL SLD SHRT 100 332.51 EPIPHANY18 NSDQSTGY R
14:41:41 AAPL SLD SHRT 99 332.5 EPIPHANY18 NSDQSTGY R
14:42:03 AAPL BOT 100 332.33 EPIPHANY18 NSDQSTGY X
14:42:50 AAPL BOT 100 331.9 EPIPHANY18 NSDQSTGY A

AAPL had run up a couple of points fairly fast. There was a sell program with a quick 15 point downtick in the Dow. I figured AAPL would catch up. There was a refreshing offer at 332.60 so if wrong, I’d have exited there.

7)
14:45:56 AAPL SLD SHRT 7 332.72 EPIPHANY18 NSDQSTGY R
14:45:56 AAPL SLD SHRT 100 332.71 EPIPHANY18 NSDQSTGY R
14:45:56 AAPL SLD SHRT 13 332.7 EPIPHANY18 NSDQSTGY A
14:45:57 AAPL SLD SHRT 80 332.7 EPIPHANY18 NSDQSTGY A
14:46:16 AAPL BOT 100 332.41 EPIPHANY18 NSDQSTGY R
14:46:22 AAPL BOT 100 332 EPIPHANY18 NSDQSTGY R

The stock ran up upon a report that people would be dispersed back to the plants in Japan. As the reporter on CNBC noted this, he then said “but it could be a awhile before it happens.” I shorted it as soon as I heard the word “but.”

8)
14:49:15 AAPL SLD SHRT 100 333.34 EPIPHANY18 NSDQSTGY R
14:49:15 AAPL SLD SHRT 100 333.34 EPIPHANY18 NSDQSTGY R
14:49:38 AAPL BOT 98 332.8 EPIPHANY18 NSDQSTGY A
14:49:38 AAPL BOT 2 332.8 EPIPHANY18 NSDQSTGY A
14:50:04 AAPL BOT 100 332.7 EPIPHANY18 NSDQSTGY A

See trade 6 (except it was 10 Dow points)

9)
14:52:09 AAPL SLD SHRT 100 333.62 EPIPHANY18 NSDQSTGY R
14:52:09 AAPL SLD SHRT 100 333.62 EPIPHANY18 NSDQSTGY R
14:52:27 AAPL BOT 100 333.15 EPIPHANY18 NSDQSTGY R
14:52:33 AAPL BOT 70 332.98 EPIPHANY18 NSDQSTGY R
14:52:33 AAPL BOT 30 332.99 EPIPHANY18 NSDQSTGY R

See trade 6

10)
15:02:28 AAPL SLD SHRT 13 333.9 EPIPHANY18 NSDQSTGY A
15:02:28 AAPL SLD SHRT 88 333.9 EPIPHANY18 NSDQSTGY A
15:02:59 AAPL BOT 100 333.5 EPIPHANY18 NSDQSTGY A
15:02:59 AAPL BOT 1 333.5 EPIPHANY18 NSDQSTGY A

See trade 6 (except it was about 10 Dow points)

11)
15:12:35 AAPL SLD SHRT 100 333.8 EPIPHANY18 NSDQSTGY R
15:12:35 AAPL SLD SHRT 100 333.8 EPIPHANY18 NSDQSTGY R
15:12:54 AAPL BOT 100 333.78 EPIPHANY18 NSDQSTGY X
15:13:18 AAPL BOT 2 333.73 EPIPHANY18 NSDQSTGY R
15:13:18 AAPL BOT 98 333.73 EPIPHANY18 NSDQSTGY R

Litmus test to see how strong the market was…it immediately fell 30 cents and then came back up…when 333.70 bid held and refreshed, I took the first piece off. When 75 bid came in and held, I took the other part off.

12)
15:28:30 AAPL BOT 100 332.31 EPIPHANY18 NSDQSTGY X
15:29:21 AAPL SLD 100 332.2 EPIPHANY18 NSDQSTGY A

The market leveled out with 332.10 refreshing along with 332.30, I bought it as soon as 30 left. When it failed to go in chopping around, I sold it. I then also realized amid the choppiness that enough was enough and I stopped doing this. I cut down on my size dramatically so I could control my risk in giving myself leeway if wrong and came away going on $1,000 richer overall in the 1 ½ hour time period. I didn’t trade 1,000-2,000 shares of these things as I routinely do in trying to make $10,000 because if wrong just once, I could have wiped everything out particularly on a headline and in illiquid conditions at that. The day of the flash crash, had I been wrong on say an average 1500 shares, I could have lost upwards of $50,000. Thus, do not chase, do not over trade, exit rapidly, and do not build positions. And hopefully I made my point: this is a trader’s market if one pays attention, cuts down on size, and is super fast in executing one’s trades.

Markets were very strong overnight with Hong Kong up 1.6% and Tokyo up 1.8%. In Europe, Frankfurt is surging 2.8%, London 2.2%, and Paris 2.4%. Strong strong gains. Gold has breached the $1,500 level in trading up 2/3%, oil is up over 1%, and the dollar is stronger against the yen but getting pounded versus the euro. The risk-on trade is in full effect. The earnings overnight were terrific (excepting IBM) and it’s reignited the run. The only economic report of note today is standing home re-sales at 10AM (2.5%). The market should hold all else equal today with a lot of action. The focus will be on the dozens of earnings plays, the techs, the casinos, the Chinese ADR’s, and any relative weakness play (particularly shortly after the 9:30AM open).

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

NFLX- closed near a high

BIDU- closed near a high

DANG- closed near a high

ARCO- closed near a high

CLF- closed near a high

WLT- closed near a high

TCK- closed near a high

X- closed near a high

VHC- closed near a high

POT- closed near a high

BBBB- closed near a high after announcing it had retained Barclays Capital in response to unsolicited offers

RVBD- decent earnings

INTC- good earnings

WYNN- good earnings

VMW- great earnings

YHOO- decent earnings

JNPR- decent earnings

LLTC- decent earnings

ALB- good earnings

XG- closed near a high after announcing a new high grade gold-silver discovery at Cerro Moro

GROW- closed near a high

TKR- closed near a high

BKS- closed near a high

CROX- closed near a high

CYOU- closed near a high

ELN- decent earnings

KCG- decent earnings

EMC- decent earnings

PII- good earnings

UTX- decent earnings

STJ- decent earnings

T- decent earnings

APH- decent earnings

PLD- decent earnings

AMB- decent earnings

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

GOOG- closed near its low

CRU- closed near a low after receiving a downgrade from Walls Fargo

RIMM- closed near a low

IBM- poor earnings

CREE- bad earnings

CSX- poor earnings

SYK- poor earnings

SHZ- closed near a low after receiving a going concern qualification

TRGL- closed near a low

TRGP- share offering

URI- poor earnings

ECA- poor earnings

TXT- poor earnings

WFC- poor earnings

LUFK- poor earnings

Earnings:

WED APR 20 BEFORE

ABT AMB AMR

APH DAL DGX

ECA ELN EMC

ETN FCX HBAN

KCG LUFK MO

NDAQ PII PLD

STJ T TIN

TXT UNP USG

UTX WFC

WED APR 20 AFTER

AAPL ALGN AMGN

AXP BAS BSX

CAKE CMG CPHD

ESV ETFC EW

FFIV GDI KMP

LRCX MAR NE

NFX QCOM SLM

TCO TEX TSCO

WDC YUM

Epiphany Trading, LLC
www.epiphanytrading.com

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

TUES. APR. 19- Inflation Concerns

2011-04-19T08:51:00.000-04:00

It’s been awhile since I read the editorial page in “USA Today,” but there was something quite notable there a couple of weeks ago. There was a column in which the person of note making comments indicated that U.S. consumers face “serious” inflation in the coming months for clothing, food, and many other goods. The individual noted that he was “seeing cost increases starting to come through at a pretty rapid rate.” Furthermore, labor costs in places like China along with fuel costs for transportation are weighing heavily on his company. This was no ordinary interview. It turns out the person I am discussing is Bill Simon (aka the CEO of Wal-Mart). I did a little digging. The consumer price index rose at its fastest clip since mid-2009 in the month of February with the CPI rising 0.5%. Now, entities like WMT have access to any manufacturing facility located anywhere on the planet so some of its costs can be mitigated. But what about everyone else? We’re already seeing prices rise at the fuel pump and the grocery store. And of course this impact is found in the stock market as well as one of the effects of QE2 has been rising asset prices- including equities. As we progress, there are a few things to monitor for the next three months. First, pay extra attention to the stories during earnings season rather than earnings season to see if inflation is hitting corporate America. Second, there are a number of Fed governors out talking and the QE2 is supposed to end at some point this quarter. Finally, just look around…personal anecdotes of inflation are always the best because it’s how we learn. Certainly as time progresses, the theme of inflation will be discussed increasingly so be ready for the discourse much less the actual inflating of prices themselves.

Markets in Asia were down overnight following yesterday’s declines on Wall Street with Tokyo down 1.2% and Hong Kong off 1.3%. In Europe, prices are rebounding as the U.S. market did close off of its lows with Frankfurt ahead 0.5% and London 0.6%. Gold and oil are both down a little with the dollar and bonds flat. Housing starts and building permits data came out better than expected. Futures are ahead on the GS earnings and European strength. The day will likely be quite choppy with AAPL and GS the benchmarks for what will happen. The focus will be on the earnings plays (GS, BTU, TXN) 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

AMRN- closed near a high after positive phase III AMR101 data

SINA, QIHU, YOKU, SNDA- closed on or near their highs

REGN- closed near a high after getting a faster than expected FDA review for its eye drug

LULU- closed near its high

LVS- closed near its high

CF- closed near a high

ARCO- closed near a high

LLEN- closed near a high after announcing two contracts to supply coal to Kunming Steel

TITN- closed near a high after posting good earnings

DGSE- closed near a high after posting good earnings

ANTH- closed near a high after announcing a successful VISTS-16 study

MOH- decent earnings

CR- good earnings

STLD- decent earnings

STX- missed earnings, but expanding joint operations with Samsung

STT- decent earnings

NVS- decent earnings

OMC- decent earnings

JNJ- decent earnings

GS- decent earnings

MICC- good earnings

PKD- takeover rumors

IRM- announced it was exploring strategic alternatives to enhance shareholder value

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

VPHM- closed near its low after being downgraded at Citadel

TXN- poor earnings

PKG- poor earnings

BMI- terrible earnings

GNK- closed near a low after a downgrade by Citicorp

HOG- poor earnings

BTU- poor earnings

Earnings:

TUES APR 19 BEFORE

BK BTU CMA

FRX GS HOG

JNJ MICC NTRS

NVS OMC PCAR

RF STT USB

TUES APR 19 AFTER

CCK CREE CSX

IBM INTC ISRG

JNPR LLTC PTP

STLD STX SYK

VMW WYNN YHOO

Epiphany Trading, LLC
www.epiphanytrading.com

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

MON. APR. 18- The Pause Before The Potential Storm

2011-04-18T08:52:00.000-04:00

I am an optimist at heart. I have also been very bullish regarding the stock market for quite some time now. Thus, it pains me to spend even a few minutes typing out something negative which I voiced on Friday’s video but I am gonna have to as all I can do is call it as I see it. Simply put, I absolutely don’t like the way the market acted last week. When an army is led into a war, the soldier relies on their generals. When a bull market goes to continue being good, it particularly relies on its leaders. The major tech leader for two years has been AAPL while the major financial leader has been GS. Few realize (I know I did not until I studied it) that AAPL is down 10% plus from its high in definitive corrective mode in closing at its lowest point in a month on Friday. GS is actually down almost 10% for the year in closing at its lowest point in a month as well on Friday. Thus, what has been propping the market up has been things like mining stocks (gold and silver closed at new highs on Friday) with cyclicals like PG closing at their highest point in a month on Friday. Furthermore, the VIX closed at its low for the year while bond prices had their biggest rally last week of the entire year. It’s also worth noting that very quietly, Ireland’s debt was downgraded two notches with Greek bond spreads exploding. All of this spells trouble. It’s very uncomfortable when you look to your leaders and they’ve taken off already while you look around and see your enemies gaining ground. Am I saying the market is in imminent danger of collapse? No. But I am saying for day traders that I fully expect a pick-up in volatility and news flow imminently and that the market is likely on the verge of a fairly major move. If these factors reverse themselves (Greece settles down, AAPL/GS begin performing better, and so forth), the move will be the other way. Regardless, there is tremendous pressure building underneath the surface and I am more on guard for something than I’ve been in quite some time.

Markets in Asia were lower with Tokyo down 0.4% and Hong Kong off 0.7%. Markets are even weaker in Europe as Frankfurt and London are both down 0.9% and Paris 1.4%. Gold and oil are weaker with the dollar a bit stronger against the euro. There’s a lot of news. Saudi Arabia indicated the world had too much oil. China raised a key interest rate. Citicorp announced decent earnings. Greek defaults continued to widen. A lot going on. The NAHB Housing Market Index (17) is due out at 10AM. Look for a choppy session with more volatility than recently in what will be the slowest day of the week in all likelihood. The focus will likely be on the earnings plays, biotechs in the news, metals, and relative strength 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

HOGS- closed near a high after signing an agreement with China Construction Bank

IEC- closed near a high after issuing positive earnings guidance

ATI- closed near a high

MEE- closed near a high

MNTA- closed near a high

LLEN- closed near a high

ACOR- closed near a high after a USPTO posting suggested new IP could be issued in coming months

TITN- good earnings

HAL- decent earnings

LLY- decent earnings

AMRN- phase III Anchor trial met all primary and secondary efficacy endpoints

RIMM- positive article in “Barron’s”

GWW- good earnings

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

ALTI- contract with INE cancelled due to regulatory issues

ZOOG- poor earnings

YOKU- closed near a low

AAPL- closed near a low

FSLR- closed near a low

RIG- closed near a low

HOLI- closed near a low

CF- closed near a low

GOOG- closed near a low after issuing terrible earnings

CYH- indicated the U.S. government is probing improper claims

Earnings:

MON APR 18 BEFORE

AMLN AMTD C

GCI GWW HAL

KEY LLY MMR

MON APR 18 AFTER

CR LNCR MOH

PKG TER TXN

ZION

FRI. APR. 15- Working Your Way In

2011-04-15T08:48:00.000-04:00

I reviewed a slew of entries but realized that although I’ve discussed the topic of entering orders on fast-moving stocks many times via our chat room, I’ve never written it up here. So, let me rectify that right now. What I typically will do in the current ‘normalized’ market conditions is this: if I think that a stock like NFLX will move sharply to the upside, I will enter half of the shares I seek to obtain either at or just below the high of the day. If the stock fails to go thru the high, I will sell my shares immediately and take a loss on the ½ position. If the stock does breach the high, I will seek to buy the other ½ of the position just above the high. The exact number ‘just above’ is contingent upon time of day, whether the market is rallying quite hard, the depth of liquidity, and whether there is strong news flow behind the stock move. It works the same way when I seek to short a stock. In any case, if right, I now have the confirmation and at worst case, I have half of the position on. Let me give an example to clarify. At 11:15AM yesterday, I shorted NFLX at 235.33 (it had been in a channel 75 cent channel with a 235.30 low of channel and 235.21 low of day). I knew if a buyer refreshed, I’d exit whereas if right, I’d add more. Sure enough 235.31 came in and bought everything in sight. I covered my ½ position for a small loss. About seven minutes later, the market began down-ticking. NFLX broke 30 so I shorted some at 235.26 and then a tiny bit more at 235.20 (I missed getting the entire other ½ I wanted, but came close). This time it flopped. I ended up making good money overall. Mind you, I apply this strategy to some of the slower stocks (which still move rapidly) such as MCP, FFIV, BIIB, and VRX so it’s not an AAPL-centric thought process. Thus, as algorithms become more pervasive and as volumes continue to dwindle overall, this is but one additional strategy to take with you to the day trading battle should you see to capture immediate-term moves in bigger name stocks.

Markets in Asia were generally weaker overnight with Tokyo down 0.7%. Equities are mixed in Europe with Frankfurt up 0.1%, London flat, and Paris down 0.3%. Gold and oil are both down slightly as is the dollar. The New York Empire Manufacturing Index came in slightly stronger than expected, CPI much worse than expected, and core CPI a tinge worse. Net Long-Term TIC Flows are out at 9AM, Industrial Production (0.6%) and Capacity Utilization (77.4%) at 9:15AM, and Michigan Sentiment (66.0) at 9:55AM. Futures are off a little but the overall picture is decidedly mixed with GOOG crushed on earnings but BAC up slightly on earnings. I look for a choppy albeit muted options expiration session with a slight negative bias. The focus will likely be on selected biotechs in the news (ACOR), techs (GOOG), financials on the earnings flow and yesterday’s weakness (BAC, GS), and relative strength plays which may be quite dynamic and notable off of the open.

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

MCP- closed near a high

QIHU, SINA, YOKU- closed near a high

GGG- ITW is going to enter into an agreement to sell its finishing businesses to GGG

CBST- decent earnings

SHAW- closed near a high

TITN- closed near a high

ITMN- closed near a high
HOGS- signed strategic cooperation agreement with China Construction Bank

MRK- announced settlement with JNJ on Remicade

AME- raised earnings guidance

AEN- positive clinical study of reaZin

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

GS- closed near a low amid report of a negative Senate report regarding testimony GS executives gave about mortgages

GOOG- bad earnings

CBK- poor earnings

SFG- bad earnings

DLB- closed near a low amid a negative IDC report concerning global PC shipments

PAAS, CDE- closed near their lows amid reports that Bolivia’s Morales may look to expropriate more mines and that Bolivia’s state mining company may rescind contracts with several companies such as PAAS and CDE

PRGO- featured negatively on “Mad Money” last night

CRUS- poor earnings

INFY- terrible earnings
Earnings:

FRI APR 15 BEFORE

BAC GPC INFY

MAT WBS

FRI APR 15 AFTER

None today

Epiphany Trading, LLC
www.epiphanytrading.com

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

THURS. APR. 14- When The Weather Warms Up

2011-04-14T08:20:00.001-04:00

You ever come to work and just not feel like being there? And if you say "no," you are an absolutely terrible liar. Whether it be a beautiful day outside, a case of Fridayitis or just being distracted, there are times when all of us don't want to be in front of our screens. I have two very simple remedies for this when it happens to me. The first thing I do is attempt to remember why I am in the office in the first place. I stare at pictures of my two kids and realize that if I want to do nice things for them of a monetary nature, I better make a little money trading. That usually settles me down in doing the trick. However, there are days when I start out 0 for 5 and down a small $500 despite it all. At that point, I stare at my mortgage statement and car bills (which I always carry with me). I then realize I better earn a living if I want to pay my bills. At that point, I rapidly calm down...and bog down. And by the way, since I ultimately need to earn a living quite badly, leaving early is not the solution because all it does is make me have to catch up much less put me behind for the next trading day. So, the next time you don't feel like working, don't necessarily follow my lead but definitely have a plan for re-gaining your focus else risk losing not only time but money.

Tokyo was up 0.1% but Hong Kong was down 0.5% overnight. Prices, however, were weak in Europe with London down 1% and Frankfurt off 0.8%. Commodities are mixed with gold up slightly but oil down slightly. The dollar is weaker against the yen but slightly stronger against the euro. Futures are lower on inflation worries. Jobless claims (385K) and Continuing Claims (3700K), PPI (1.0%), and Core PPI (0.2%) are due out at 8:30AM. Ahead of the GOOG report this afternoon, the markets should remain relatively quiet today with a slight downside bias. The focus will likely be on the secondary offerings in strong stocks (VRA, SODA), earnings plays (SVU), Chinese ADRs (SINA), IPO’s (ARCO, ZIP), and relative strength 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

NFLX- closed near a high

AAPL- closed near a high

BIIB- closed near a high

LULU- closed near a high

SLGN/GRM- closed near their highs on the SLGN for GRM deal

SINA, BIDU, YOKU- closed near a high on a brokerage upgrade

SODA- closed near a high

MA- closed near a high

HK- closed near a high

DECK- closed near a high

PCOM- closed near a high after forming a business venture with H

SINA- featured on “Mad Money” last night

ZIP- pricing IPO 9.68 million shares at 18

FCS- decent earnings

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

RIG- closed near a low

UFPI- terrible earnings

CPWR- poor earnings

CSR- closed near a low

CPF- closed near a low on its 18.5 million share registration statement

FSLR- operations chief leaving

STRA- closed near a low as it appears Congress will cut Pell grants for summer school students

HAS- poor earnings

VRA- priced 6 million share offering at 43.50

BPL- will offer at least 4.8 million shares

Earnings:

THURS APR 14 BEFORE

CBSH CHKP FCS

HAS PGR SVU

THURS APR 14 AFTER

CBK CBST GOOG

JBHT

Epiphany Trading, LLC
www.epiphanytrading.com

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

WED. APR. 13- Not Gambling At Trading

2011-04-13T08:51:00.002-04:00

After a very very very busy stressful day at work and then running around with my three bosses (aka my wife and two daughters) followed by countless errands/miscellaneous tasks, well, suddenly 19-21 hours have gone by. Before I go to bed, I typically take about 10-15 minutes and either read a mindless magazine article while listening to soothing music or watch scenes of movies I’ve seen 175,487 times before. Two come to mind from recent times. The song first- “Patience” by Guns and Roses. The chorus (quite soothing although the song is subdued albeit one filled with hope) began to lull me to sleep:
[whistle]
...little patience, mm yeah, mm yeah
need a little patience, yeah
just a little patience, yeah
some more patience, yeah
need some patience, yeah
could use some patience, yeah
gotta have some patience, yeah
all it takes is patience,
just a little patience
is all you need *
I also happened to see a scene from “Coming to America,” the Eddie Murphy classic in which Murphy’s character proposes marriage to his ‘princess’ on a New York City subway. While doing this, the ‘princess-to-be’ looks around while a somewhat elderly woman watching from afar mutters in perfect New Yorkese, “Go ahead, honey. Take a chance!” Both of these pop culture references came to my mind on a recent trading session. I was staring at a set-up on Joy Global (JOYG) for almost two hours. On a day in which financials were particularly strong, stocks in other sectors were selling off; one such stock was JOYG. The stock had a distinct buyer at 99.50. It would touch that low and then bounce off of it. I wanted to short the stock only if it got below 99.50 (I was cued up for 99.45). The hypothesis went that if the buyer left, the stock should sell off at least a little because nobody was left to support it. I again note…I only wanted to do it below 99.50. Well, the theme of patience was definitely in the background because I know if I shorted the stock at 99.50, odds were quite high that I’d lose because I had no idea when or if the buyer would stop purchasing shares. I’d much rather miss the trade than take what could have been a 20-40 cent a share hit on a few thousand shares of the stock. As far as “taking a chance,” well, that certainly does work in real life. I took a shot in going into the day trading career. I took a chance when I got married. I took a chance when I decided I wanted to be a father more than anything on the planet. I take a chance every day when I get behind the wheel of a car or eat food. But in day trading, much more often than not when one takes a chance, one is better off either going to Atlantic City because the odds are better there at the casinos. When I do a trade, I have a distinct idea in mind at a distinct entry. Time and again, when I ignore my parameters, I lose. So, particularly as we head into earnings season, realize there will be plentiful opportunities to earn a living but one must have the determination and calmness to do a trade accordingly so as to earn real money rather than gamble it away.

Markets in Asia rebounded overnight with Tokyo up 0.9% and Hong Kong 0.7%. In Europe, Frankfurt and London are up 1.2%. Oil is up a little with gold flat and the dollar slightly stronger. Futures are stronger per last night’s video as leaders such as AAPL rebound. Retail sales came in about as expected with Business Inventories (0.8%0, Crude Inventories out at 10:30AM, and the Beige Book at 2PM. For the day, the strength will likely maintain itself as the generals such as AAPL, JPM, and GS are back at the forefront of the early core rally. My focus will be on the financials on JPM’s earnings, RVBD and all stocks in its sector after the good report last night, biotech in the news, small-cap tech in the news (ZOOM), Chinese ADR’s on the Jefferies upgrade (SINA, BIDU), and any relative weakness play which sets up early.

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

INVE- closed near a high following news that its ACiG technology was selected as a supplier for Google Places

NFLX- closed on a high

GMCR- closed near a high

IDIX- closed near a high

CYH- closed near a high as many took a second look at the validity of THC’s allegations from Monday

GIL- closed near a high after announcing acquisition of Gold Toe Moretz

RVBD- preannounced earnings to upside; FFIV, JNOR, APKT may move in sympathy

JPM- decent earnings

ADTN- good earnings

GRM- to be acquired by SLGN for .402 SLGN plus $4.75/share in cash

LFUS- decent earnings

PSTI- encouraging six-month follow up results of its Phase 1 Ischemia trials

ZOOM- formed deal with QCOM for 3G patent licenses

SINA, BIDU- positive comments from Jefferies

OSN- raised earnings guidance

MGM- entered into agreement governing proposed initial public offering of Macau joint venture and related convertible bond transaction

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

CCRT- closed near a low supposedly on preliminary results of its tender offer to buy up to 13.125 million shares at 8

WMS- closed near a low on poor earnings

FAST- closed near a low on poor earnings

ADES- closed near a low

AMZN- closed near a low

BIDU- closed near a low

OAS- closed near a low

AG- closed near a low

HCSG- poor earnings

TYC- closed near a high on takeover rumors, but now it appears the rumors weren’t true

Earnings:

WED APR 13 BEFORE

ASML JPM

WED APR 13 AFTER

None today

Epiphany Trading, LLC
www.epiphanytrading.com

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

TUES. APR. 12- 1st Quarter Earnings In Focus

2011-04-12T08:50:00.001-04:00

Each quarter, I try to do a brief entry as to what expect from earnings season so let’s get to it. When I first started doing this blog, the very knowledge that a company would be solvent the next quarter could spark a rally in a stock. In a little over two years, the perspective has widely changed. It’s not the complete opposite, but it’s getting there. According to various services, S&P 500 earnings are expected to rise by 12% this coming season (vs 1Q 2010) and then 15% next quarter, and about 16% the quarter thereafter. The energies, minerals, industrials, technology, and financial sectors are supposed to have relatively big growth whereas sectors such as consumer staples, health care, telecommunications entities, and healthcares are expected to show relative earnings weakness. But the general take is that as stock prices have risen, expectations for the prospects for Corporate America continue to go up as well. Furthermore, while this is admittedly an opinion, a lot of the expected growth has now been incorporated in stock prices as the perception that things will pick up pervade the landscape. Thus, what I’ll be watching for is that most companies will need to beat their earnings estimates and also announced growth at least slightly above if not well above estimates to keep going in the growth sectors. In the relatively weak sectors, it’ll take an earning beat and less (but some) expected expansion to keep stock prices going. And all of it may well happen. But as earnings season launched last night with AA kicking things off, be well aware that the word ‘growth’ is likely necessary for an earnings report to be successful this quarter.

Markets were weak overnight on news that the Japanese nuclear regulators upgraded the severity of the nuclear crisis there to Chernobyl levels. Tokyo and Hong Kong both declines about 1.5%. In Europe, prices are soggy as well with markets down 0.4% to 0.8%. The dollar is a little weaker with oil and gold a little stronger. Trade deficit data came in about as expected with Treasury budget numbers (-$189.0 billion) expected out at 2PM. Futures are down fairly hard with the S&P’s off 9 handles as of this writing. There’s a little nervous energy out there this morning. Not panic. But a sense of nervousness. Look for very choppy trading all day with several failed rally attempts and several failed sell-offs in all likelihood but net-net a weaker session. The focus will likely be on tech in the news (AAPL), rare earths and metals (MCP/AA), and relative strength 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

KITD- announced acquisition of ioko365 Limited and projected 1st quarter revenue

RLD- closed near a high after Avid licensed RLD’s format for media composer

CT- closed near a high

BIIB- closed near a high after positive BG-12 phase III results

MCP- closed near a high after a JP Morgan upgrade

WBMD- indicated 1st quarter results will top analysts’ views

ITMN- noted in an article in the “Daily Mail” which discussed M&A activity in the drug sector

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

AA- poor earnings

NPSP- share offering

MCRL- warned on earnings

WMS- warned on earnings

SB- share offering

DRRX- poor phase II Eladur results

EXTR- warned on guidance

WPRT- closed near a low after a ‘neutral’ rating on the stock initiated at JP Morgan

ADES- closed near a low after losing an arbitration hearing to Norit

WLT- closed near a low

VHC- closed near a low

IOC- closed near a low

Earnings:

TUES APR 12 BEFORE

FAST

TUES APR 12 AFTER

ADTN

Epiphany Trading, LLC
www.epiphanytrading.com

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

MON. APR. 11- Raw Deal

2011-04-11T08:52:00.000-04:00

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

FRI. APR. 8- When Life Gets In The Way

2011-04-08T08:20:00.001-04:00

When I am actively trading, I tend to have a searing focus. I make it my goal to blot out everything around me to the point whereby I’ve had people loudly calling my name and I don’t hear them. It’s a trait that many people can find if they look deep within. Many athletes are forced to do this when they have 57,000 people screaming as they aim to hit a 95 mph ball being thrown towards them or shoot a ball 15 feet away as 21,000 people in a compressed space scream obscenities at them. Usually, I can do it in any circumstance. I’ve traded successfully with a 104 degree fever. I’ve traded successfully after being hit head-on by another car. I’ve traded successfully after having surgery with anesthesia. I have a pretty decent pain threshold mentally and physically. But sometimes…sometimes life gets in the way. There are times when an intra-day parent-teacher conference is unavoidable. There are times when a spouse loses a job suddenly. There are times when a parent calls with bad news. These situations don’t require all day focus, but they do require an hour or two. What I do is stop trading during these rare times. Entirely. As in I shut off the trading switch in my mind. I put my focus where it should be. Then when ready to go again, I ignore the first two or three decent set-ups that I think could work when I sit back in my chair (after first studying prices for 10-20 minutes). It’s almost impossible (for me) to sit right back down and plunge back in. So, I don’t try to do so. I do what it is I need to do and then after time passes and I can concentrate ostensibly solely on trading again, I do so. The moral of the story: by all means, do 17 things in a day. We all have to do so. Just don’t try to do them all while trading and don’t let them affect you when missing a chunk of the day else you’ll find yourself much poorer- and much less equipped to deal with the truly important things in life.

Markets in Asia were generally higher overnight with Hong Kong up 0.5% and Tokyo up an even stronger 1.8%. The rally continued in Europe with Frankfurt up 0.6% and London even more with a 0.9% gain. Commodities maintained their quiet yet extraordinary rally with oil up 1.5%, gold up almost 1%, and silver now over $40/ounce. The dollar is up a little against the yen but the euro continues to rule the world right now as the dollar is down once again against that currency. Wholesale Inventories (1.0%) are due out at 10AM. Things are actually very quiet stock-wise this morning but futures are nicely higher. Look for the market to likely hold its gains today in a very narrow range with limited news flow. The focus will likely be on the stocks in the news (EXPE), the limited earnings flow (TPX), 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

MCP, REE- closed near their highs

IMGN- closed near a high after positive breast cancer treatment study results

BBBY- closed near a high after posting great earnings

VHC- closed near a high

COO- closed near a high

SINA- closed near a high

DBLE- closed near a high

IL- closed near a high after a successful share offering

EXPE- announced plan to split into two companies

TPX- raised earnings guidance; SCSS may move with it

CUTR- received FDA clearance for Onychomycosis

STX- raised earnings guidance

WY, MWW- featured on “Mad Money” last night

GMLP- IPO debuting with 12 million shares at 22.50, above expected pricing of 20-22

NXPI- rumors of an imminent buyout according to a Dutch newspaper

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

RT- closed near a low after posting awful earnings

BYI- poor earnings guidance

IDIX- share offering

NMM- share offering

SGMO- share offering

JEF- share offering

SATC- warned on earnings guidance

HERO- received a subpoena from the SEC regarding potential violations of securities laws; also been probed by the Department of Justice

PUDA- closed near a low

SCSC- poor earnings guidance

Earnings:

None today

Epiphany Trading, LLC
www.epiphanytrading.com

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

THURS. APR. 7- Attitude Adjustment

2011-04-07T08:50:00.000-04:00

I had the honor and pleasure a few weekends ago of attending the dual party for the celebrations of my brother-in-law's 40th birthday as well as the 1st birthday for my adorable twin nieces (yes, really- three birthdays in the same household on the same day!). While amongst family and friends, I had the same thought I often have at wonderful functions like that Saturday's terrific party- I want to always be able to do the same for my family and friends as I've routinely tried to do over the years. I liked throwing my wife a surprise birthday party not long ago. I like being able to donate money to people who need it more than I do such as the earthquake victims in Japan. Well, to do that, I better come here and earn a living. Period. It's not a matter of high-fiving and high-steppin’ if I make $70 by holding 1000 shares of Citicorp for a seven cent profit. It's a matter of not being satisfied at any time until one has enough money to retire. Believe you me, I am not smarter than most people...I am thankfully at least smart enough to know that. But I do know one other thing- as hard as day trading is, the number one feature to have to succeed is a good attitude along with a supreme belief in yourself to get the job done. After all, if I don't think I can do it, I probably cannot. So, while every day cannot be great, there's no reason to wake up and believe anything other than the notion that it can be great else one has no chance to succeed at day trading- much less anything else.

Movement was muted overnight through the world’s equity markets with Hong Kong and Tokyo both finishing around the unchanged line. In Europe, prices are slightly ahead as the European Central Bank raised its key interest rate from 1% to 1.25% despite Portugal asking for an international bailout. The dollar is slightly weaker against the yen and the euro. Oil and gold are up slightly. Futures are marginally stronger. Yesterday was a wilder day than we’ve seen recently with money flowing out of some of the momentum plays into the financial stocks. Look for a very choppy day today with more of the same- a lot of movement in individual stocks but not the broader tape which presents lots of opportunities for day traders. The focus will likely be in the small biotechs in the news (XNPT), retailers on all of the earnings and same-stores sales news (BBBY, M), and tech in the news (NFLX).

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

HSFT- closed near a high after posting earnings

GS- closed near a high in a strong financial sector

ANF- closed near a high on continued follow through after raising earnings guidance

VRUS- closed near a high

BBBY- good earnings

PBY- decent earnings

XNPT- received FDA approval for Horizant

CHOP- decent earnings

IMGN- positive phase II trial results for T-DM1

LTD- decent same-store sales results

IR- raising dividend and announced $2 billion share buyback

PIR- decent earnings

ZAGG- signed licensing and distribution agreement with Logitech

M- decent same-store sales data

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

VRX- closed near a low after CEPH rejected its takeover bid

TZOO- closed near a low

MCP- closed near a low

BTU- closed near a low

MEE- closed near a low

JOYG- closed near a low

MON- closed near a low after posting earnings

PWR- warned on earnings guidance

RT- poor earnings

WDFC- poor earnings

GLNG- featured negatively on “Fast Money” last night

NFLX- featured negatively on “Fast Money” last night

PUDA- closed near a low

IL- priced 7.5 million share offering at 25.50

GPS- poor same store-sales

ARRY- achieved $10 million clinical milestone in MEK 162 oncology program

Earnings:

THURS APR 7 BEFORE

GBX PIR RAD

STZ

THURS APR 7 AFTER

None today

Epiphany Trading, LLC
www.epiphanytrading.com

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

WED. APR. 6- Budget Strife

2011-04-06T08:51:00.000-04:00

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

TUES. APR. 5- Some Of These Things Are Not The Same

2011-04-05T08:54:00.001-04:00

Soda analogy time. Let’s say for sake of easy hypothetical argument that Coca-Cola (KO) and Pepsi (PEP) are going about their everyday business and bam- a story with much documentation proves that sustained drinking of soda can cause cancer. Not bloody likely, but go with me. Shares of KO and PEP would both fall dramatically in all likelihood. Now let’s do a different one. Let’s say that 100% of KO’s business was in the United States and 100% of PEP’s business was located in Japan. Which stock do you think would have performed better amid the recent horrible natural disaster in Japan? I bring this up because although these are extreme examples, many real ones occur in real trading life on a daily basis in which people simply hemorrhage money. Yesterday was a prime example. There was a story yesterday regarding the leader of the rare earths- Molycorp (MCP). MCP announced it acquired a controlling stake in AS Silmet which would allow the company to establish a presence in Europe as well as double its near-term rare earth oxide production capacity. MCP rallied all day in a steady ascending climb in which it closed ahead around 13%. Shares of its competitors notched up as well with stocks like REE up about 5% and AVL 4%. All day I heard of people wondering why the others weren’t rallying. Well, this one was a simple matter of paying attention to the story. It’s a slight positive for the group that entities such as MCP are making inroads in places such as Europe, but in the end, it’s only truly good for MCP in the immediate-term. Thus, if you’re looking to do sector plays, it’s a must to realize that every stock move is not the same nor are there necessarily reasons for an entire sector to move on any given day.

Markets overnight were generally lower throughout the world with Tokyo down 1% and the European bourses off 0.3% to 0.6% across the board. Oil is down about ¾%, gold is up slightly, and the dollar is a bit stronger. The two main cogs have been reports that radiation from the Japanese nuclear plants is leaking into the Pacific Ocean while Portugal’s debt was downgraded to near junk. This combats positive buzz from the TXN for NSM deal. Also, AAPL’s percentage of the NASDAQ 100 will go down. All of this will lead to a very choppy day albeit likely in a narrow range. The focus will likely be on the semis, the Chinese ADR’s, steels, and relative strength and 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

MCP- closed near a high after acquiring a controlling stake in an Estonian company

TCK- closed near a high after a deal was struck to end a strike at its Elkview operation

GLNG- closed near a high

VHC- closed near a high

BIDU- closed near a high

CF- closed near a high

AXU- closed near a high

AG- closed near a high

DAC- closed near a high

SOHU- closed near a high

VTUS- closed near a high

QCOR- boosted earnings estimates

CBST- formed generic Cubicin deal with TEVA

NSM- to be acquired by TXN for $25/share in cash; every major semiconductor is worth monitoring including but not limited to ADI, MU, AMD, STM, NXPI, INTC, AMAT, ALTR, BRCM, CRUS, KLAC, LLTC, LRCX, MRVL, NVDA, NVLS, SNDK, TER, XLNX

SCHN- decent earnings

DMND- merging PG’s Pringles business into the company

VHC- awarded new patent and filed papers seeking litigation against other entities that potentially infringe the patent

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

GD- closed near a low after a Gulfstream G650 (one of its planes) crashed yesterday morning during performance tests

DGW- closed near a low after a negative report from Muddy Waters; CFO resigned after the close

MED- closed near a low

GS- closed near a low

FSLR- closed near a low

AIG- closed near a low

RVSN- closed near a low after warning on its earnings outlook

KYN- share offering

LEDS- warned on earnings

LAYN- poor earnings

AAPL- weighting in NASDAQ-100 to be reduced from 20.49% to 12.33% effective May 2

KBH- terrible earnings

Earnings:

TUES APR 5 BEFORE

KBH

TUES APR 5 AFTER

None today

Epiphany Trading, LLC
www.epiphanytrading.com

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

MON. APR. 4- The Pause Before The Storm

2011-04-04T08:51:00.000-04:00

One of my favorite feelings occurs on warm summer afternoons. No, I'm not talking about laying down on a hammock reading a book...after all, I do have two young children! Instead, I am talking about how a few clouds roll in replacing the puffy white ones with the wind still albeit a few birds chirping. We all know what happens next. A few cracks of thunder followed by cooling rain. But that feeling of the inevitable storm coming...the anticipation...it's exciting. However it also brings out in me the adrenalin but a nervous energy of not being able to do anything. And that, everyone, is what this week holds barring some unforeseen circumstance. There is very little economic data and only a handful of companies are due to report their earnings. So movement becomes a bit more muted on even weaker volumes than normal. It is, however, a great shot to do some homework for the earnings season to come and truly hone skills at making selective trades as moves can and will be sharp for people craving action. Thus be ready for the relative paucity in opportunities, again, barring something out of the ordinary but also be prepared for the onslaught of activity to come later this month.

Markets were generally higher in Asia overnight with Hong Kong posting a particularly strong showing in trading up 1.5% with Tokyo up 0.1%. In Europe, prices are lightly mixed across the board. Oil is up slightly with gold up about 0.5%. The dollar is slightly stronger. Futures are up marginally with no major economic nor earnings news out. The session will likely be a quiet one with selected opportunities like in the rare earths, big cap tech, the airlines, and the exchanges.

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

CBE- closed near a high on vague takeover rumors

ALEX- closed near a high amid a story that Pershing has taken a stake in the company

VRX- closed near a high

VHC- closed near a high

INHX- closed near a high

WPRT- closed near a high

SVN- closed near a high

TDSC- closed near a high on positive comments from a brokerage house

RRR, GIII- featured on “Mad Money’ on Friday

IDRA- decent phase I IMO-2125 data

OPTR- upgraded at Bank of America Merrill Lynch

MCP- acquiring controlling stake in an Estonia facility

VVUS- positive Qnexa data presented at the American College of Cardiology Annual Meeting

DEER- reported “significant” growth momentum in first quarter

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

FFIV- closed near a low on negative comments from a brokerage house

RBN- closed near a low on negative comments from a brokerage house

CDTI- closed near a low after posting poor earnings

RECN- closed near a low after posting poor earnings

KKD- closed near a low after posting poor earnings

CPX- closed near a low

SYNA- closed near a low

RVBD- closed near a low

LUV- negative reaction to the pressurized plain problem over the weekend

OVTI- removed as a long-term idea at JP Morgan

RVSN- cut earnings guidance

Earnings:

MON APR 4 BEFORE

None today

MON APR 4 AFTER

SCHN

Epiphany Trading, LLC
www.epiphanytrading.com

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

FRI. APR. 1- Getting In One's Head

2011-04-01T08:47:00.001-04:00

Sorry for the non-basketball fans to start out with another NCAA tourney moment, but it's a great one. And you don't have to be a basketball fan to appreciate it. Last year, the Butler Bears in Indianapolis made the tournament finals. It was the first time a mid-major team (one not in a major basketball conference) made the title tilt in about 20 years. The Cinderella story almost had a storybook ending. Well, they barely got into this year's tournament. Many people (including myself) didn't think they'd get past the 1st round this year. Guess what? They are back into the final four. Not Duke. Not #1 ranked Ohio State. But, yes, Butler. Again. I cannot write this about dismissing something, because, well I admitted I just did that. What got to me was all the comments coming out of Butler and its victims. Players on the losing teams kept saying how Butler had experience so they knew what playing in big games were like. Butler players noted that they'd been here before so they knew what it was like to play in big games much less how they believed in themselves. All of this struck a cord in me because it showed not only could a team think it could win...but make its opposition believe it too. And then it'd win because winning had gotten in its own head much less the minds of the opposition. Well, it is the same with trading. One of the things I always see as a key trait in successful traders is not so much they have a chip on their shoulder so much as an air of confidence if for no other reason than they've had past success (and of course, success begets success). Furthermore, they view the comments of others as a vindication for their own self-confidence. Success tends to build success as just noted but particularly in the trading arena. And the first place the seed of this success is planted is in one's own mind.

Markets in Asia were generally higher overnight. Tokyo was down by 0.5%, but every other major Asian index closed nicely ahead with Hong Kong up 1.2%, Shanghai 1.3% and Sydney 0.5%. The good times continued in Europe with London up 1%, Frankfurt 1.2%, and Paris about 1%. The dollar is very strong with the dollar at a 2011 high against the yen. Gold is down almost 1% and oil is up ½%. Bonds are selling off. The jobs number came in slightly stronger than expected. Construction Spending (-0.7%) and ISM (60.8) are due out at 10AM. We had a 2nd Fed governor in two days (Plosser) intimating that interest rates may have to go higher sooner than later. But the tone remains strong here with futures up sharply. For the day, the gains will likely hold overall with a lot of volume coming in early. The focus will be on the exchange tie-up (NYX, ICE, NDAQ), tech in the news (NFLX), earnings plays (MED), share offerings (KRA), and relative weakness plays on the open.

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

TSLA- closed near a high after a very bullish report from Morgan Stanley

ENA- closed near a high after issuing good earnings

GOLD- closed near a high after issuing good earnings

BID- closed near a high after positive brokerage comments

UTEK- closed near a high after positive brokerage comments

VRUS- closed near a high after positive brokerage comments

MAKO- closed near a high after getting a pact for 11 makoplasty systems from HMA

DNDN- closed near a high amid reports that Provenge may be picked up by Medicare

ALEX- Pershing Square took a small stake in the company

FSLR- closed near a high

JOYG- closed near a high

RE- closed near a high

HOT- mentioned on “Mad Money” last night

EBIX- tripled size of repurchase program

NYX- received joint $42.50/share bid from NDAQ and ICE

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

MBND- closed near a low after issuing poor earnings

TBOW- closed near a low after issuing poor earnings

KMX- closed near a low after issuing poor earnings

X- closed near a low after a brokerage downgrade

YOKU- closed near a low

SCOK- closed near a low

QIHU- closed near a low

GPN- poor earnings

RECN- poor earnings

AVII- share offering

XRTX- poor earnings

OMER- phase III trial results of OMS103HP were disappointing as it didn’t meet pre-specified endpoints

LOGI- poor earnings

MED- poor earnings

CNAM- poor earnings

KRA- 9.98 million share offering at 37.75

ASTI- changing strategy and management

BIDU- downgraded at Mizuho

Earnings:

None today

Epiphany Trading, LLC
www.epiphanytrading.com

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

THURS. MAR. 31- Baseball Breeds Rebirth

2011-03-31T08:51:00.001-04:00

I love love love love love love love baseball. Love it. I could watch 10 hours of the sport on TV in a day and not get bored. My fantasy baseball league is my one diversion from life. And don’t worry for you non-baseballphiles out there. This is not a piece about the finer points of the game. Rather, this is about the feeling I get in the hours leading up to Opening Day. Many people get a little ‘spring fever’ type adrenalin earlier than now. Not me. Tax season and quarter end trading when news flow is slower tends to dampen that for me (combined with what is usually very cool weather throughout the month- today’s terrible weather in the Northeast notwithstanding). But the feeling of seeing the red, white, and blue bunting at baseball stadiums across the country, the knowledge that many sunny days are on their way, and the lengthening of the afternoons gives me a bit of an intra-year re-birth every year. It’s also right around this time of year that I tend to evaluate how I’ve done so far this year, what has changed both with me and the markets, and most relevantly- I seek to reenergize myself as we had into 2nd quarter earnings season. How have I done so far? Not bad. I had a better January and February than March (despite a pretty good day yesterday) but that was also because news flow (and volume) was much heavier in the first two months of the year. But at least as of this writing, I am on pace for a respectable year. What has changed? The algorithms have become much more noticeable on the positive delta days as well as the lower volume days because volatility is not as present. They have also become pervasive in the 11AM ET-3PM ET timeframe many calmer days. When the markets have had down days, movements have been much faster- and smoother. We’ve seen Libya, Japan, and Portugal. We’ve seen QE2 and a wildly resilient tape. And what’s to come as the weather gets warmer? A budget impasse. More trouble in the Mid East. More QE2 (and worries about it ending). A pretty good earnings season. Most important, I always have a little surge of adrenalin at the beginning of January. Well, as the baseballs begin flying today, I have that same surge of adrenalin today. Spring is a season of renewal and hope- moreso than any other. So, evaluate, study, and become even more doggedly determined on what is to come as the next month or two progress.

Markets in Asia were a bit higher overnight with Hong Kong and Tokyo ahead 0.4%. The trend is slightly weaker in Europe on worries about Ireland with Frankfurt down 0.1% but Paris off 0.5%. Gold is flat with oil notably about 1% higher. Jobless claims data came in slightly weaker than expected with PMI (69.0) due out at 9:45, Factory Orders (0.3%) at 10AM, and Feddies Lacker and Tarullo speaking today. Markets are down on the Ireland concerns. Look for a very choppy day on the last session of the quarter with some decent intra-day movement in individual stocks. The focus will likely be on the fertilizers, the automakers in the news (TSLA), the reaction to the Sokol story (BRK/B), and the casinos on LVS’s Macau issues.

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

OXM- closed near a high after issuing great earnings

PPG- closed near a high after issuing great earnings

QIHU- closed near a high on the day of its successful IPO

RAX- closed near a high amid collaboration with DELL and EQIX

AMIE- closed near a high

WPRT- closed near a high

CRM- closed near a high

FFIV- closed near a high

BVX- closed near a high

FSYS- closed near a high amid positive buzz on the clean energy stocks after a speech from President Obama

DNDN- according to “ESJ,” Medicare proposed coverage of DNDN’s prostate cancer treatment

ENDP- closed near a high amid vague takeover rumors

IDCC- closed near a high despite announcing a senior convertible notes offering

PTIE- closed near a high after a positive brokerage mention

SURW- closed near a high after setting a CapEx plan and declaring a quarterly cash dividend

MAKO- received pact for 11 Makoplasty sites from Hospital Management Associates

AMCF- decent earnings

SYMX- announced major investment by China Energy

TSLA- upgraded to “Overweight” at Morgan Stanley

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

MOS- poor earnings

GMR- poor earnings and announced a share offering

BRK/B- Buffett’s top lieutenant resigned

ABAT- closed near a low

EPOC- closed near a low after posting poor earnings

LSE- share offering

CELM- possible discrepancies of company’s banking statements

NXPI- 30 million share offering at 30

LVS- being investigated by Hong Kong’s securities regulator for its Sands China division

Earnings:

THURS MAR 31 BEFORE

KMX LWSN

THURS MAR 31 AFTER

GPN KKD

Epiphany Trading, LLC
www.epiphanytrading.com

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

WED. MAR. 30- Time- The Most Valuable Commodity Of All

2011-03-30T08:51:00.002-04:00

Most of the time, when I get up on a typical weekday morning the first thing I do is go to the bathroom. After, um, "using the facilities" so to speak and washing my hands, I apply deodorant, get dressed, brush my hair, and then brush my teeth followed by a swig of Listerine (I tend to shower at night before going to bed as a relaxing technique). I then go downstairs, turn on Bloomberg to see the top news and the blizzard of numbers going across the screen so I can get a feel for what is going in the world. I then read a bevy of online newspaper headlines. At that point, I grab a banana, a cereal bar or yogurt, my lunch and head in to work. OK. That was as boring to type out as it was for you to read. But I do have two points. First, most successful traders tend to be creatures of habit and routine. It extends to real (albeit mundane) life as well. They tend to have a way they like to do things when it comes to preparing for the day in every way. I know, for instance, it drives me up a wall if I have to spend three minutes looking for toothpaste because my wife moved it. By the same token, I know I need to know as much as possible for the day by doing the same things each day from letting what I saw at 5 or 5:15AM subconsciously get into my system to the reading to sifting through every news story on the newswires that happened overnight once in the office to going through economic data to studying my previous day's trades to creating my watch list to writing this blog. If things were done randomly, things wouldn't be done effectively. Point two: when I need to change, I change. If I've had two poor trading days in a row, I spend a lot of extra time poring over the previous day's trades. If it's deep in earnings season, I start my day an extra hour earlier to make sure I have time to gather the extra information and trade particularly early in the morning. If there's a major unexpected news event dramatically impacting stock prices, I budget extra time to study the event to make myself ready for the unique day. So, the net of it is that if you are having a degree of success, generally stick to what you're doing. But if you need to improve yourself for whatever reason from a bout of failure to information overload, be ready to do so- but make sure you allow extra time so that you don't rush through the process to maximize every chance for earning a living.

Markets overnight were higher throughout the world with Hong Kong up 1.5% and Tokyo even more at 2.5%. The tone is very firm in Europe as well with London up 0.7% and Frankfurt 1.3%. Oil is down slightly, gold is up 1%, and the dollar is a little stronger across the board. ADP Jobs data came out in-line. Crude Inventories are due out at 10:30AM. Fed Governors Bullard (1PM), Lacker (2PM), and Hoenig (2:30PM) are due to speak today. Futures are nicely higher. For the day, I am looking for a little of the rally to give way a bit as some of the leaders look and feel tired- particularly those in the news such as AAPL on the earnings cut at Jeffries. Action will likely be in the biotechs (CEPH and AMGN), 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

NXPI- closed near a high after announcing the world’s smallest logic packages for handheld mobility

VHC- closed near a high on a bullish Seeking Alpha article

VRTX- closed near a high after issuing positive results on its medicine

PVH- closed near a high after posting good earnings

LULU- closed near a high after announcing a stock split

MCP, REE, AVL- closed near a high after MCP was upgraded by JP Morgan; this morning, announced R&D contract with the DOE

GFRE- closed near a high after being initiated with a ‘buy’ rating at Brean Murray

FFIV- closed near a high

CISG- closed near a high

AMZN- closed near a high

CLF- closed near a high

RIG- closed near a high

X- closed near a high

CNR- closed near a high

VDSI- closed near a high

RDC- closed near a high

STRI- closed near a high

OXM- good earnings

NLST- received new patents for HyperCloud memory

BLK- to be added to S&P 500 on Friday afternoon

CEPH- received proposal to be acquired for $73/share in cash

RRC, NG- featured on “Mad Money” last night

FDO- decent earnings

JOSB- decent earnings

ACHN- announced positive RVR results with ACH 1625 to treat chronic Hepatitis C

ISIG- announced special $2/share dividend

LNN- decent earnings

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

HRZ- closed near a low after warning of ‘going concern’ status in an SEC filing

AEM- closed near a low after warning of decreased production in one of its mines

TIBX- poor earnings

ZZ- poor earnings

ZOOM- poor earnings

ALGN- acquiring Cadent for $190 million; sees deal accretive to 2012 earnings but dilutive in immediate-term

VVTV- share offering

SCOK- closed near a low

UTA- postponed its earnings release

ACXM- CEO resigned and warned on earnings

AMGN- Takeda’s Motesanib missed primary goal in late-stage study

Earnings:

WED MAR 30 BEFORE

AYI FDO JOSB

WED MAR 30 AFTER

DRYS GMR MOS

Epiphany Trading, LLC
www.epiphanytrading.com

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

TUES. MAR. 29- Dealing With Reality

2011-03-29T07:49:00.000-04:00

One of the many things I like about really intelligently written comedies is that the subject of the humor is usually within the realm of possibility. In general, the more absurd that something is, the less funny something becomes. For instance, a "Seinfeld" episode which focused simply on the ritual performed to ascertain soup at a New York eatery is consistently rated among the top episodes of a sitcom in the history of American comedy. However, many TV shows or movies which have been spectacular flops- particularly in the last 20 years- failed simply because the premise was too fanciful to be believed. In trading, the latter unfortunately is a characteristic found in flawed traders. Indeed, during the early part of my career, I thought I was infallible. No setback was too big and I could keep doing what I was doing. It's why I made and lost well into the six figures three different times by the time I was 22 years old. Don't get me wrong. Having a good attitude is a must. I mean, my attitude is that if I can bowl one strike on the 1st frame, why can't I bowl a perfect game because, well, I already bowled a strike once so why not a few more times? In trading, however, having a Napoleon type complex is the worst thing possible. I'll never forget several years ago when someone in my office lost well over $10,000 in the space of three days and simply noted "Well, I just lost a week's pay. I'll get it back next week." The sad truth is that he and I both knew that he hadn't had a winning week in quite some time. Thus, know when enough is enough as well as when you need to change else you won't be around to trade for very long. Everyone is going to have losing days- the trick is to keep the losses contained so as to keep oneself from being demolished.

Markets were mixed in Asia overnight with Hong Kong flat, Tokyo down 0.2%, and Sydney up 0.4%. The trend is lower in Europe though with London down 0.3%, Paris 0.5%, and Frankfurt 0.8%. Gold and oil are both down about ½%. The dollar is slightly stronger across the board with bonds down a touch. Case-Shiller is due out at 9AM with Consumer Confidence expected (65.0) at 10AM. There’s were some mildly hawkish comments from mildly hawkish Fed governor Bullard of St. Louis this morning. Futures are weaker by a touch. Look for what will likely be another relatively placid session today with not much news out there to move things. The only wild card will be if selling pressure becomes a bit exacerbated in the commodities and/or if some aftershocks in Japan move things. The focus will likely be on select retailers in the news (PVH), oil and gad equipment service plays (HAL), 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

PVH- decent earnings

LULU- closed near a high and announced a 2 for 1 split after the close

HD- announced $1 billion accelerated stock buyback

TRCI- received $7.20/share buyout bid from CCIX

VRTX- positive data from VX-770 phase III registration program

CTFO- decent earnings

LEN- decent earnings

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

PRGS- poor earnings

AONE- share offering

HAL- warned on 1st quarter earnings

FCH- share offering

ETP- share offering

CISG- closed near a low after a JP Morgan downgrade

EBIX- closed near a low

GS- closed near a low

WAC- closed near a low after declassifying as a REIT and announcing an acquisition

CBEH- closed near a low amid rumors of material falsification of business practices

Earnings:

TUES MAR 29 BEFORE

APOL LEN

TUES MAR 29 AFTER

TIBX

Epiphany Trading, LLC
www.epiphanytrading.com

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

MON. MAR. 28- Being Aware of True Strength and Weakness

2011-03-28T08:50:00.000-04:00

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

FRI. MAR. 25- Recovering From Poor Psychology

2011-03-25T07:44:00.001-04:00

Yesterday morning was something else. I tried shorting FCX at 54.85, missed, and watched it decline 30 cents in the next 30 seconds. About 1 ½ minutes later, I tried shorting FFIV and missed only to watch it decline 75 cents in the next minute. In the interim, the three trades I did do netted me a small loss of about $500 or so. Well, that is the perfect recipe for having much much much much much bigger losses very very very very fast. There are certain mistakes that one (certainly I) can make which can be deemed as stupid. Buying more and more shares as a stock is plunging tends to be a recipe for disaster. So does buying a stock after it has rallied two points in two minutes as there is a high propensity for at least an ephemeral reversal. Ditto for trying to buy large blocks of superliquid stocks and expecting giant moves. However, when missing great moves all the while doing things which are wrong in practice albeit trades which have historically worked, this is not a time to self-destruct psychologically but to bear down. Following, this terrible cluster, I captured a lot of a NFLX move starting around 9:50AM, a nice piece of the NOG move upward, and a respectable piece of the sell-off in BBY in turning my small early loss into a four figure session. The moral: if everything is going wrong, that’s one thing. But if you’re ‘just’ missing the ‘right’ trades and not doing anything overly (and overtly) stupid, realize that discipline and studying past mistakes will inevitably win out over time.

The story was the same for the bulls this morning- Tokyo closed ahead 1% and Hong Kong 1.1% overnight with Frankfurt and London ahead about 0.3% each. Oil is up slightly, gold down slightly, and the dollar is marginally stronger across the board. There are a number of Fed speakers today with Kocherlakota having spoken at 5AM, Fisher at 7:30AM, Evan due to speak at 8:30, Lockhart at 9:15, and Plosser at 12:15. GDP (3.2%) is due out at 8:30 and the University of Michigan Confidence Index (67) due out at 9:55AM. Futures are nicely higher on the heels of good earnings by Oracle (ORCL). The market strength will likely give way a little today on simple profit taking ahead of the weekend but on light volume and in a choppy fashion. The focus will likely be on tech in the news (RIMM, ORCL, NFLX), casinos on an LVS upgrade, smaller caps which have been the subjects of rumors (EBIX), and relative weakness plays specifically off of the opening bell.

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

RHT- closed near a high after posting great earnings

TLB- closed near a high after posting great earnings

LPTH- closed near a high after signing two new distributors in China

AMZN- closed near a high

AAPL- closed near a high

WYNN, LVS- closed near a high

MEE- closed near a high

JOYG- closed near a high

VHC- closed near a high

COOL- closed near a high

CRM- closed near a high

VMW- closed near a high

PSTR- closed near a high

ORCL- decent earnings

A.CN- good earnings

BODY- good earnings

WTSLA- decent earnings

ATEA- good earnings

ENB, PKI- featured on “Mad Money” last night

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

BBY- closed near a low after posting bad earnings

SCHL- closed near a low after posting bad earnings

EBIX- closed near a low after being mentioned negatively in a newsletter

RIMM- terrible earnings

SMOD- poor earnings

DRI- poor earnings

FINL- poor earnings

ACTG- share offering

HS- share offering

HDY- share offering

NFLX- Starz is planning a 90-day window for some NFLX content

PANL- 5 million share offering priced at 46

Earnings:

None today

Epiphany Trading, LLC
www.epiphanytrading.com

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

THURS. MAR. 24- Changing With Algos In Slower Times

2011-03-24T08:47:00.001-04:00

They (whoever “they” is) say that the trading business is feast or famine. Well, conventional wisdom has certainly been fairly true for the last week or so. The last couple of days of trading were almost polar opposites of what last week was like. The range on most of the major indexes yesterday and Tuesday was a tiny fraction of what it was last week with volume sharply off of last week’s levels. There are two main things I do differently. First, it sounds so so simple- I cut back on my trading. I am actually going to give that short shrift although I could write a novella on it. But basically, if the market is not moving, why do much of anything? Save your powder for when things are going. Don’t get me wrong- I’ll still sit here all day long and wait for the opportunities that are there to spring up. I just know that I may earn in a day what it took me an hour to earn merely a week ago. But I can live with that because as we all well know, every little bit helps. In any case, when slow, most traders- and I speak from vast experience- tend to overtrade. All that tends to do is result in a lot of very small losses which of course add up to…one big loss. The other point is how I try to combat this a bit when in stocks that I think can move. I will use KV Pharmaceutical (KV/A) from yesterday as an example. The stock traded to 13.50 earlier this month before coming in sharply. Yesterday, the stock rallied sharply early in the day before consolidating a very narrow range for about half an hour in the late morning (with an overall range of 8.42 to 10). Just after 11:07AM, I noticed a few huge bids coming into the stock at 9.95 and 9.96. I bought half of what I wanted to buy at 10 and went to buy more just after 10 (at 10.01 and 10.02) but missed. By doing what I did, I would have been able to sell the position immediately if wrong in ½ the overall size at 95/96 at worst but if right, I was hoping to accumulate more yet would have something on if it ramped 20-30 cents once breaching 10. Getting to the crux of what I want to say- I knew that the thing could go 20 cents easily, but was prepared if it didn’t go. By that, I mean that it went straight to 10.12 but came in almost immediately to 10. To my detriment (or credit? I am still learning. Seriously. On the level.), I was not fast enough to get out on the way back down…but I didn’t really care. Why? Because I still felt that the stock would go. It poked its head back and thru 10 multiple times, but those huge big bids never left. With the advent of algorithms, this is common behavior in many stocks, i.e. things that have seemingly false breakouts but do go- particularly in slow ploddy markets. There was trouble in paradise, however, about eight minutes after I entered the trade. Now, mind you, I am usually out of things immediately when wrong…but the issue is that I was never wrong until the end. For the first time since entering the trade, the stock went below 10 and the offer refreshed. By that, I mean instead of it poking back above 10, that price was a ceiling. When I first entered the trade, the original thinking if you recall was “I would have been able to sell the position immediately if wrong in ½ the overall size at 95/96 at worst” in my own words. Well, now I was wrong so I sold the thing at 96 when I saw 99 offer come in and refresh on the offer. Namely, the original target where I was wrong came back into play so I held it thru all of the algorithms in thinking it still was going to go as these things have shown a propensity to really move the last few days albeit slowly (I give you CHGS or ROYL as but two examples).. So, in slower moving markets, give the things a tinge more time than in faster tapes as the computers do what they do..and we as human day traders attempt to adapt to it.

Markets in Asia were mixed overnight with Tokyo down 0.2% but Hong Kong ahead 0.4%. In Europe, stocks are sharply ahead with London up 1% and Frankfurt soaring 1.7%. The dollar is slightly weaker but oil is trading up a touch. Futures continue what has been a very good rally since late last week with the numbers indicating a strong start. The gains will likely hold in a narrowly banded range day. The focus will likely be on electronic retailers (BBY), stocks with share offerings (JRCC), techs particularly those in the news (MU), 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

WYNN- closed near a high

KV/A- closed near a high

WLT- closed near a high

CLF- closed near a high

NFLX- closed near a high

AMZN- closed near a high

BIDU- closed near a high

FFIV- closed near a high

IBM- closed near a high

LO- closed near a high

MEE- closed near a high

BTU- closed near a high

FCX- closed near a high

AUMN- closed near a high

RHT- great earnings

SCS- decent earnings

MU- good earnings

TORM- closed near a high

PFSW- closed near a high after posting good earnings

MOBI- closed near a high after inking a deal with SOHU

CSUN- decent earnings

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

CREE- closed near a low after warning on earnings

NXY- closed near a low after the UK’s budget raised taxes on oil and gas

XOMA- closed near a low after disappointing drug trial results

PAY- questions swirl about whether the company will be used in GOOG’s NFC rollout

NOG- closed near a low amid a few negative press reports

FRP- closed near a low

MNOV- share offering

ENOC- closed near a low

JRCC- share offering priced at 23.50

SCHL- poor earnings

Earnings:

THURS MAR 24 BEFORE

BBY CAG CSUN

FRED GME TLB

UTIW

THURS MAR 24 AFTER

ACN DRI FINL

ORCL PRMW RIMM

SMOD

Epiphany Trading, LLC
www.epiphanytrading.com

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

WED. MAR. 23: WTI vs Brent

2011-03-23T08:51:00.000-04:00

When we talk of oil prices, we tend to discuss West Texas Intermediate Crude. This Texas light sweet oil is a type of crude oil. It contains about 0.24% sulfur and is refined generally in the Midwest and Gulf Coast areas of the United States. The other main category of oil is North Sea Brent Crude. Petroleum production in Europe, Arica, and most of the Middle East tends to be priced within the Brent realm. It contains 0.37% sulfur meaning it’s not quite as sweet as WTI crude and is used mainly in the production of gasoline. The two oil types have historically been priced differently because of the types of oil and currency issues. The spread has historically been around $2 or so…but is now going on $15. Why is this? Many investors are getting antsy about the U.S. dollar as it continues to weaken due to such policies as QE2. The Brent Sea markets as well as those in Dubai are becoming routine conduits for Middle Eastern producers who want to sell oil. The violence in Africa and the Middle East is closer to the markets where Brent is produced. And most notably, Cushing, Oklahoma (where much domestic oil is held) actually has a fairly sharp supply surplus at this time. It’s relevant to us day traders because one oil price can be doing one thing while the other doesn’t move as sharp on any given day. Furthermore, the spread is a harbinger of all of the factors noted above which is why it costs almost twice as much to buy gas in London as it does in new York City. So, keep your eye on all of the factors causing this spread as they will continue to affect the currency and bond markets…and continue to impact stock prices as well.

Markets in Asia were mixed overnight with Sydney and Shanghai marginally positive but Hong Kong slightly negative and Tokyo down 1.6% after an increased radiation level was found in drinking water in Tokyo. Everything is mixed in Europe with Frankfurt down 0.3% but Paris up 0.2%. The external markets are all quiet. Futures are down slightly on Tokyo worries. New Home Sales (285K) are due out at 10AM, crude oil inventories at 10:30. and Bernanke is to speak at 12PM. Look for another relatively quiet day with action in the LED plays (CREE), the small cap biotechs in the news (XOMA), the rare earths, and small cap energies.

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

MCP, REE, CHGS, AVL, SHZ- closed near a high after positive CEO comments at MCP

HNR- closed near a high after announced it will sell its Utah oil and gas assets

REDF- closed near a high

PANL- closed near a high

AMT- closed near a high

MEE- closed near a high

BIDU- closed near a high

NFLX- closed near a high after an upgrade

DANG- closed near a high after an upgrade

MOTR- closed near a high and featured on “Mad Money” last night

STJ- closed near a high after an analyst raised price target

CTAS- good earnings

DFS- decent earnings

JBL- good earnings

ROYL- closed near a high

BDCO- closed near a high

ATEA- closed near a high

LNG- closed near a high

LEI- closed near a high

AXK- closed near a high

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

FFIV- closed near a low

AMZN- closed near a low

BSFT- closed near a low

NPTN- closed near a low

APKT- closed near a low

ADTN- closed near a low

VOG- closed near a low

CCL- closed near a low after posting earnings

XOMA- indicated phase 2b trial of XOMA 052 diabetes treatment did not achieve primary endpoint

DGW- poor earnings

ADBE- poor earnings

NCT- 15 million share offering

PRAN- share offering

Earnings:

WED MAR 23 BEFORE

GIS

WED MAR 23 AFTER

PAYX RHT SCS

Epiphany Trading, LLC
www.epiphanytrading.com

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

TUES. MAR. 22- The Importance Of Time

2011-03-22T08:31:00.003-04:00

I spent several hours- not an eternity- but about four hours making my picks for this year's NCAA basketball tournament. Mind you, I barely watched any basketball this season as I've been busy so it was pure empirical research. But I'm pretty good at statistical analysis. I placed as high as 2nd in one of the biggest pools in the country as recently as three years ago. Um, yeah, not so much this year. It's been my worst year ever for the tourney. Now, in the same big pool as me is my brother-in-law's beloved dog, Nessa. 'The Ness' is a beautiful and intelligent animal. But last I looked, she is not a basketball analyst. She made her picks by eating kibble on the brackets. And she's 16th out of about 500 entrants. Nice. The point that is hammered home to me from all of this is just how fruitless it often is to prognosticate what will happen -in this day and age- over an intermediate period of time (say 3 months) with much information out there regarding not necessarily specific stocks (although that's hard enough) but specifically the broader market. Just so much can happen. So, as we day traders trade with an immediate-term horizon, focus on that- the immediate-term. Don't confuse what you think may happen three years or three months or three weeks from now (the duration of the aforementioned tournament) with the goal of trying to figure out what'll happen in the next three minutes.

Markets in Asia closed higher overnight with Tokyo rising sharply to the tune of 4.3% after being closed yesterday with Hong Kong up 0.7%. In Europe, the trend is slightly negative with Frankfurt down 0.3% and London off 0.1%. All of the external markets are quiet with oil down fractionally and gold and the dollar quiet. Dallas Fed President Richard Fisher has been on the wires this morning with some rather hawkish comments hinting that he may vote to curtail QE2 before June because he feels the economy is moving along due to its own traction at this point. The Richmond Fed Index is due out at 10AM along with FHFA Home Prices (-2.0%). Things are quit as they’ve been in awhile. Stock movement will likely be more muted than it has been. The focus will likely be on tech in the news (NFLX), the rails on CP’s warning, and the limited earnings plays (WAG).

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

PRAN- closed near a high on a published study on PBT2 in Alzheimer’s Disease

LEAP- closed near a high amid speculation it may be in play in the telecom sector

NEWN- closed near a high after posting good earnings

EVR- closed near a high upon advising a slew of deals

CVX- closed near a high

AIG- closed near a high

AAPL- closed near a high

WYNN- closed near a high

BMY- positive phase III Ipilimumab clinical trial results

DG- decent earnings

NFLX- upgraded by Credit Suisse

DG- decent earnings

BJ- private equity firm Leonard Green has reached a confidentiality agreement with BJ to take the company private

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

DEER- closed near a low amid rumors of a fraudulent land deal

SBAC- closed near a low after noting it said it had separate antenna space leases with AT&T and T-Mobile

FFIV- closed near a low

IVR- share offering

JRCC- share offering

AGNC- share offering

WAG- poor earnings

CMC- poor earnings

Earnings:

TUES MAR 22 BEFORE

CCL CMC DG

JEF NEOG WAG

TUES MAR 22 AFTER

ADBE CTAS DFS

DGW IOC JBL

PRMW SONC

Epiphany Trading, LLC
www.epiphanytrading.com

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

MON. MAR. 21- Bank On It

2011-03-21T08:51:00.000-04:00

On Friday, there was a confirmation of a story that had been circulating for a few days. Namely, the next step of the TARP process began to unwind for banks. Banks became allowed to increase their dividends once again- kind of an uncloaking of the tight rope around them due to the TARP. The most popular question I received on what was a very important session on Friday was this: why did banks reform differently intra-day? It’s because there were three classifications of banks did. First, you have the Bank of Americas (BAC) of the world. These banks did not indicate they were going to pay dividends this year. When the press release came out, it barely budged. Then there were the Suntrusts (STI) of the world which did things like announced they were going to issue stock and pay off their cloaked debt to the Feds. Finally, you had the grouping including JPM and GS. Since there was a limit as to what banks could raise their dividends by according to government guidelines, they announced other tricks- such as stock buybacks. I find all of this notable because over the course of the coming weeks, we’re going to learn a lot more about the banks involved not only by their method of capital raising/deployment but also about the health of each based on stock performance. So, note Friday’s date on your calendar with a few banks and track them over the next few months. You (and I) will come away with a lot more knowledge/understanding of how banks are truly performing- and what work and what didn’t as far as the events of Friday.

Markets overnight were stronger throughout the world. Tokyo was closed but Hong Kong rallied sharply and the European bourses followed suit with Frankfurt up more than 2%. Oil is up 2%, gold 1%, the dollar mixed, and bonds off a bit. The major news is the offensive launch on Libya, the acquisition of T-Mobile by AT&T, and nothing additional devastating coming out of Japan. Futures are soaring. For the day, look for a little give-back off the top as the day progresses in all likelihood following two nice days but the rally mode is still in full-effect. The focus will likely be on the small cap biotech in the news, telecoms, and the big cap techs and financials.

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

NEXS- closed near a high after winning a contract to sell LED light bulbs at Lowe’s

GS- closed near a high after raising dividend and announcing plan to buyback Berkshire’s preferred GS shares

LO- closed near a high as uncertainty lifted after an FDA’s panel findings on menthol cigarettes

JVA- closed near a high in extending a major move from last week’s earnings

VDSI- closed near a high

FRZ- closed near a high

HTWR, TRNX- featured on “Mad Money” on Friday night

T- to acquire T-Mobile for $39 billion

CRIS- announced positive phase II clinical GDC-0449 trial results

TIF- decent earnings

OXPS- to be acquired by SCHW for 1.02 shares of SCHW for each OXPS share

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

FSLR- closed near a low

NKE- closed near a low after posting poor earnings

WYNN- closed near a low

NFLX- closed near a low

AAPL- closed near a low

AIG- closed near a low in a late-day sell-off

WLT- closed near a low

S- directly affected by the T proposed acquisition

MOS- closed near a low

FFIV- closed near a low

XNPT- disappointing phase 2b clinical trial of Arbaclofen Placarbil

PANL- filed to sell 5 million shares of common stock

Earnings:

MON MAR 21 BEFORE

TIF

MON MAR 21 AFTER

None today

Epiphany Trading, LLC
www.epiphanytrading.com

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

FRI. MAR. 18- Same Story...Different Day

2011-03-18T08:23:00.000-04:00

Every so often, I write about a variation of a theme simply because what I am about to denote is one of the most important things to understand in trading. Yesterday, I wrote this on our chat room: “I'm in-between errands/deskwork but just want to make sure to reiterate what I've said several times today- the bulk of activity for the day volume-wise is likely over now. And reiterating what I say continuously- if you cannot get at least 20 cents in something easily and you have an immediate-term time horizon, particularly now, expect to lose net-net. If you're trading things like CSCO or MSFT or YHOO, expect to lose net-net. It's mind boggling to me how people can have good mornings on days like this yet lose because they try to scalp as the day progresses- despite me sayin non-stop to not scalp. I learned the hard way. I don't want anyone repeating my past mistakes. If something springs up (like NFLX maybe perhaps in time), sure...but to trade stuff like MSFT or CSCO or YHOO- in size- you are looking for trouble.” There are several tenets I want to expand upon. First, Wednesday was a very active day. Well, as I warned in Thursday’s blog post, trading activity slowed dramatically as Thursday progressed due to the parade and the basketball games. It was a different market. I guarantee there were traders out there who lost their otherwise good morning by trying to create something out of nothing. It is of utmost importance to let the action come to you- particularly on days like Thursday when it slows dramatically. I alluded to a NFLX trade in the above passage. That was the first trade (NFLX) I eventually did…in 1 ½ hours. Second, I consistently and repetitively note the utmost importance of trading things that can move rapidly if your time horizon is for the immediate-term. In a ploddy market, if you try to scalp things, you will lose time and again simply because there is slippage and the stocks don’t move fast. Finally, one must adapt to conditions by, say, not doing many of the same things done one day previous. Every day is different. This is a good thing. But the bottom line remains the same: maintain your basic trading tenets but adapt to the changing circumstances of the market on an intra-day basis with those rules.

Markets were strong throughout the world last night as news seeped in that the G-7 is staging an intervention on the yen. Combined with no major headlines coming out of Libya or Japan, the stage was set for some continued short covering. Tokyo rallied 2% with Hong Kong up fractionally. In Europe, the bourses are all up about 0.5%. Oil is up 1% again with gold up ½%. The dollar is up 2 full yen…but notably getting hit to a multi-month low versus the euro which is a bit out of the ordinary. Current Account (-$110 billion) is due out at 8:30 and the recession risk index (19%) at 9:45. Futures are about 150 Dow points off of their low as of this writing indicating an up 85 open. Today is a quadruple expiration day with many S&P 100 index changes on the close. Volume/activity will be very heavy in the first hour. It’ll rapidly slow down on a 70 degree Friday with more basketball on. But it’s folly to leave before the close as a dearth of participants may well set up quite an opportunity on the bell…there’s a 98% shot nothing will happen but a 2% shot that one’s month can be made due to all of the noise with the illiquidity. Expect a strong open with some likely give back as the morning progresses. My focus will be on selected earnings plays (NKE), big cap tech (AAPL), and relative weakness plays particularly off the open especially if in the news (NFLX).

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

INTU- decent earnings guidance

JVA- closed near a high after posting good earnings

FTK- closed near a high after posting good earnings

CVS- featured on “Fast Money” last night

GLNG- closed near a high

MNTX- closed near a high

FEIM- closed near a high

CNX- closed near a high

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

NKE- bad earnings

AFFY- share offering

PLX- share offering

LDK- poor earnings

CCJ- closed near a low

DANG- closed near a low

AMZN- closed near a low

GES- closed near a low after posting awful earnings

SANM- closed near a low after posting awful earnings estimates

CPWM- poor earnings

PPO- share offering

HOGS- 5 million share offering at $14.10/share

Earnings:

None today

Epiphany Trading, LLC
www.epiphanytrading.com

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

THURS. MAR. 17- Basketball And Parades

2011-03-17T08:49:00.001-04:00

If one child was born, there would be two possible outcomes of its gender- boy or girl (2 to the first power). If two children were born, there'd be four combinations- boy boy, boy girl, girl boy, girl, girl (2 to the 2nd power). Well, if there were 68 children born, there'd be 2 to the 68th power of combinations- a number that is ostensibly hundreds of billions of hundreds of billions. Why do I bring this up? Today is the first day of arguably the greatest spectacle in American sports- the NCAA tournament. There are 68 teams in this year's edition. Now, we all know that not all combinations of bracket-filling are equal. I mean, the likelihood of the four 16 seeded teams going to the Final Four is much less than the four 1 seeds making it. But still, the odds of a perfect bracket are quite low (i.e. if everyone on the planet did a bracket, the odds of someone having a perfect bracket are almost infinitesimal). Yet it doesn't keep most of us from trying to have one! I note all of this because combined with tracking one's bracket, there are many New York area teams in the tournament this year so interest is particularly high. So much so that TV's will be tuned into the games rather than CNBC for the next two days. Thus, after 12:30 PM for the next couple of days, expect much more illiquid trading particularly today what with the St. Patrick’s Day parade occurring. Price movement may be muted or it may be exaggerated (particularly with options expiration tomorrow) but it will likely be done with many fewer participants than normal on much lower activity than normal so be sure to adjust your strategies to the lack of volume. And good luck with your bracket!

Well, we had a full week’s worth of action since the 4PM ET close of NYSE trading yesterday. Last night about 5:15PM, there was a flash crash of sorts in the currency markets with the dollar declining three yen plus. Tokyo finished down only 2% though with Hong Kong down similarly. The trend shifted in Europe though as the ‘worst” did not happen overnight in Asia. European bourses are all up over 1%. Oil is up over 2% with gold up almost 1%. The dollar remains weak. Futures. Futures. Dow futures were down well over 100 points last night but are now indicated ahead 100 points. For the day, the headlines will once again tell the tale but it looks like short covering and the holiday spirit of the day will rule the roost. Most of the volume should take place by 11:30AM with action shifting to the parade and St. Patty’s day activities. The focus will likely be on earnings plays (LULU and FDX), solars, energies and coals, and relative weakness plays particularly at the open.

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

FTK- decent earnings

GRRF- decent earnings

CLF- featured on “Mad Money” last night

AXK- closed near a high

ADES- closed near a high after the EPA a released air toxics rule expect to create growth for the company

PANL- closed near a high after posting earnings

VRA- closed near a high after posting earnings

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

GES- poor earnings

PEGA- poor earnings

FUQI- in a government filing, it indicated that its accounting statements are unreliable

NRP- unit offering

GMR- warned on its earnings and indicated it was in discussions with lenders to increase liquidity

LGL- closed near a low after posting earnings

HNR- closed near a low after posting earnings

GAME- closed near a low

SANM- bad earnings guidance and CEO resigned

LULU- poor earnings

Earnings:

THURS MAR 17 BEFORE

ATU FDX LULU

ROST SOLF WGO

THURS MAR 17 AFTER

IHS NKE

Epiphany Trading, LLC
www.epiphanytrading.com

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

WED. MAR. 16- Looking it Up

2011-03-16T08:18:00.002-04:00

Recently, I was visited by a very dear friend of mine. She is a librarian at a fairly prominent university. She is always good for a little lesson if I keep my ears open and she did not disappoint this time either. She told me that in the last few weeks she had several grad students sigh and become visibly perturbed when she tried to help them with a topic but could not find any information on it. Each student was frustrated but she told them to treat it as a major opportunity. If there is no substantive research done on a particular topic, it is highly likely that if you are the one to do the homework, you can make a name for yourself in something arcane by becoming the world's leader on knowledge of the topic. Oh, and you can make it your dissertation topic as well. I couldn't help but mentally note how true that is in day trading. Whether it is the person who brought candlestick trading to the United States or the person who pushed for electronic trading in the first place, there are countless opportunities in day trading to do the same thing. On a daily basis, I try to seek out answers to questions about general and specific things that anybody I ask doesn't know the answer to...particularly when I haven't a clue. So whether it's what is going on in Bahrain to seeking an answer to something like what is behind a major share imbalance in a stock at the end of the day to merely turning the television on in the morning to see what happened overnight, realize that opportunity may not be exactly there for the taking but it can be grabbed merely by doing a little legwork.

It was much more placid overnight following a reflex rally in Tokyo with stocks there recouping 5.6%. Movement is muted but down in Europe with prices down 0.2% in Frankfurt but off 0.7% in London. Oil is having a nice 2% plus rebound with gold up going on 1%. The dollar is flat against the yen but up slightly against the euro. Futures are modestly weaker state-side with techs relatively weak. Prices were lower after-hours, rallied sharply overnight, came in, and are off their lows anew. Mortgage apps came in slightly weaker than expected. PPI (0.7 with 0.3% core), housing starts (575K), and building starts (-0.2%) are due out at 8:30 with crude inventories out at 10:30. Look for a much more muted session today with action very choppy. Keep an eye on the news ticker. The focus will likely be on small caps in the news (ONP, ORCC), solars, casinos, fertilizers, and big cap tech.

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

FCX- closed near a high

FSLR, TSL- closed near a high amid the thought process that solar plants may go into Japan

NFLX- closed near a high after a Goldman Sachs upgrade

POT- closed near a high

STRI- closed near a high

CCJ- closed near a high in a major reversal

PANL- decent earnings

ONP- decent earnings

QKLS- closed near a high after posting good earnings

WSM- closed near a high after posting good earnings

MDSO- island reversal in closing near a high after posting earnings

IPXL- closed near a high after issuing positive Parkinson’s drug guidance

VRA- decent earnings

UHS- decent earnings guidance

BTU- featured positively on “Mad Money” last night

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

PSUN- bad earnings

NVDA- CFO resigned

ORCC- bad earnings and announced it’s no longer seeking a merger

ZA- closed near a low

THQI- closed near a low

APT- bad earnings

LVS- a judge found sufficient evidence to hear Macau case in Las Vegas

WFT- chief accounting officer resigned; lowered guidance as well

AMLN- suspended clinical studies in ongoing phase II study

Earnings:

WED MAR 16 BEFORE

FSS HRBN

WED MAR 16 AFTER

FTK GES GMR

MDVN MLHR

Epiphany Trading, LLC
www.epiphanytrading.com

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

TUES. MAR. 15- Praying For Japan

2011-03-15T08:50:00.001-04:00

This is one of those pieces whereby I've sought the right way to start much less formulate the correct words. Let me give it a try. The obvious topic dominating the news recently has been the horrific earthquake in Japan. The key question of course is: what happens next? And I speak of all of this from a cold economic vantage point in which day trading is concerned rather than the infinitely more important human aspect. There have been numerous experts pontificating about this very topic for several days. But here's the truth: nobody knows. Nobody knows. Nobody. And that is very scary. I remember even 25 years ago that hurricane science much less the prediction of snow storms was more of an art than anything...and it still is. But at least once the storm has passed, it's a matter of knowing things like which local rivers will likely flood. In this case though- the best thing- again financially- is that the disaster occurred fairly north of Tokyo in a region that accounts for a small fraction of Japan's GDP. Thus economically, it can be a blessing in disguise as money is spent rebuilding better than before with the Japanese economy taking an immediate-term hit but benefiting in the long-run. And do I really need to mention the worst case? Nuclear meltdowns setting the nuclear power industry back decades if not longer. Destruction so bad that it is deemed unworthy for rebuilding. Pervasive fear of more earthquakes. The reality is likely somewhere in the middle...but again nobody knows with any degree of certainty. The other notable aspect will be the performance of the yen. Many people incorrectly think this is an immediate-term negative for the yen. But it's the opposite. With trade surpluses abounding albeit with a very high level of public debt, there is a very high level of repatriation of yen for rebuilding the Japanese economy. The wild card of course is if the Bank of Japan decides to do a quantitative easing of its own in printing yen. So again, the 2nd best thing we as day traders can do is to monitor the situation on a daily basis as the headlines will be fluid for some time to come with uncertainty ruling the day(s). The best thing of course that we can do, by the way, is to make a donation to the Red Cross or some other organization to help the many people running short of food and other necessities from what is one of the worst natural disasters to affect the world in many many years.

Markets overnight were drilled. Tokyo finished off its low…and was still down 10.7% for its worst back-to-back days since World War II. Hong Kong followed suit in finishing down 4%. The European bourses are down from 3%-4% across the board. Oil is down 4%. Gold is down almost 2%. The 10-year bond is up a point. The dollar is down a full yen but up a full euro. Futures are indicating a 300 point Dow drop. The story has been one of an increasing nervousness over the possibility of a nuclear meltdown in Japan. Indeed, if the wind blows the right (or wrong) way, Tokyo is in danger. Suddenly, the entire nation is at risk. I cannot begin to guess that the market will do today. Keep your eyes to the headline with trading horizons shortened to seconds from minutes. The focus will likely be on the solars, the uranium stocks, and big cap techs and financials with an eye toward relative strength plays in any market pop. Be EXTREMELY nimble and quick with NO big positions size-wise or time-wise.

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

BTU- closed near a high

FSLR- closed near a high in a strong solar group

MED- closed near a high

CCJ- reversed to close near a high in a weak uranium group

SHAW- reversed as worries eased later in the day about the Japanese nuclear plant crisis

IPXL- positive phase III Advance-PD results for treatment of Parkinson’s Disease

CCRT- announced tender offer to purchase up to 13.125 million shares at 8

HEK- decent earnings

NFLX- upgraded from Neutral to Buy at Goldman Sachs

CBLI- it’s a radiation drug maker…

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

ILMN- $800 million convertible notes offering

GVP- closed near a low and issued earnings last night

SPRD- closed near a low

DOLE- poor earnings

ZAGG- poor earnings

ATPG- poor earnings

BWS- poor earnings

CRZO- poor earnings

Earnings:

TUES MAR 15 BEFORE

ATPG BWS CRZO

DSW FDS

TUES MAR 15 AFTER

PANL PSUN

Epiphany Trading, LLC
www.epiphanytrading.com

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

MON. MAR. 14- The Supermoon

2011-03-14T08:46:00.000-04:00

On Thursday, I wrote a blog post about the recent Arkansas earthquake as well as the potential implications if a more serious one were to occur. What I neglected to mention is that I had wanted to do it for a week but was embarrassed to mention in the context of this space what made me write that piece on that day. I read an article about the Supermoon. Yes. There is such a thing. A Supermoon for those who don’t know is either a new or full moon that occurs when the moon happens to be 90% ore more of its closest approach to Earth. Basically, the moon is normally about 251,000 miles away from Earth, but will only be about 221,500 miles away. This means there could well be more lunar gravity on the planet. Because of this, there can be storms which are abnormal as the tides are stirred up and yes, tectonic plates can be affected which theoretically increases the chances for earthquakes by augment pressure on weak spots. It occurs approximately once every 18 years. Now, scientific evidence over time has indicated that there is not a higher likelihood of a natural disasters…but of course the closer the position to Earth, the more that astrologers out there who are freaking many people out right now will be right- as evidenced by the devastating earthquake in Japan on Friday. Thus, if this whole Supermoon concept catches on, it could be a very interesting next few days if anything else happens anywhere as people begin to pay more and more attention to this phenomenon. Because of that (and the fact it’s an options expiration week) with options expiration Friday occurring one day ahead of the Supermoon due to occur on Saturday (the 19th), there could well be more volatility this week than normal due to a combination of reacting to the disaster but also because of pure “what happens next” fear.

The Nikkei fell very hard overnight with prices down over 6%. It’s actually a bit worse than that because the broader tape was down more and many stocks didn’t even open. The likes of Hitachi and Toshiba plunged over 15%. The story is more muted in the rest of the world with Hong Kong up fractionally and prices down only 0.1% in London and about 0.5% in Frankfurt. Also, notably, markets in places like Abu Dhabi had their sharpest one day gains in over a year on Sunday after the Day of Rage failed to materialize in Saudi Arabia. Bonds are down slightly, oil down 2% (under $100/barrel), and gold up slightly. There’s no economic data today. Futures are down in wiping out Friday’s gains amid concerns about nuclear issues in Japan. There’s a lot to take in today so look for a very choppy session with prices not straying too far from up or down as softening oil fights off the Japan issue. The focus will be on the solars, uranium stocks, small bio techs, big cap tech in the news, materials, and commodities. Also, obviously, keep an eye on the news ticker for anything coming out of Japan or the Middle East.

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

CIGX- closed near a high as six patent claims were confirmed

AIRM- closed near a high after posting earnings

PRMW- closed near a high after posting earnings

BIDU- closed near a high

AAPL- closed near a high

NFLX- closed near a high

YOKU- closed on a high

CLF- closed near a high

X- closed near a high

JOYG- closed near a high

CBG- closed near a high

STP, YGE, FSLR, LDK, JASO, SPWRA- thought of as viable alternatives to nuclear power for possible rebuild in Japan

EBIX- decent earnings

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

MED- closed near a low after delaying quarterly results

FSR- closed near a low amid worries of triggering of a significant amount of catastrophe bonds

FSIN- warned on earnings outlook

POWR- closed near a low after issuing poor earnings

CHBT- closed near a low

DNN, URRE, UEC, CCJ, URG- uranium names hit hard this morning on worries of a slackening in demand

TNDM- poor earnings

Earnings:

MON MAR 14 BEFORE

EBIX TNDM

MON MAR 14 AFTER

ZAGG

Epiphany Trading, LLC
www.epiphanytrading.com

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

FRI. MAR. 11 - Never Give Up. Never Ever Give Up.

2011-03-11T08:45:00.000-05:00

For those who have not seen this speech, do yourself a favor and see it:
http://www.youtube.com/watch?v=HuoVM9nm42E

The speech was given by the former basketball coach at N.C.State- Jim Valvano. Valvano gave this speech on March 3, 1993 and sadly died less than seven weeks later in losing his battle with terminal bone cancer. I literally tear up every time I see this speech as it is one of the most inspirational monologues that has been given in the history of humankind. And by the way, that is an indisputable fact- not an opinion. Hopefully, everyone has indeed seen it, but if not, the entire theme of the speech is “Never Give Up. Never Ever Give Up.” This of course is a life lesson and should be taken that way. But it applies to trading without question. It never ceases to amaze me- particularly on days like yesterday- when someone loses a little money and just…stops trading. Not a lot. A little. Or worse yet, they keep trading, but they do things like add to losing positions or get away from their discipline and methodology. Environments such as the one we are in are indeed ripe with peril- but for the optimistic like me- they are ripe with opportunity. There are certainly going to be some days that no matter what you do, it won’t work. I know it sadly from experience and have written a recent blog post about it. But much more often than not (thankfully), that is not the case. Thus if you dig yourself a hole early particularly when the markets are frantically active, follow Valvano’s advice in getting right back on the horse and attempting to fight with everything you have.

Markets overnight in Asia were lower (Tokyo by 1.7%) but futures there indicated a decline of as much as 5% when their markets reopen on Monday (although futures are off of their lows). European bourses are down across the board as well from 0.3% to 0.8% across the continent. Oil is getting crushed to the tune of 3% with old down marginally. The dollar is a little weaker. Futures are down a little but well off of their late night lows. Retail sales came in ostensibly in-line, Michigan Sentiment (76.5) is due out at 9:55AM, and Business Inventories (0.8%) are due out at 10AM. Stocks today will likely be very choppy with eyes toward the earthquake situation and Saudi Arabia. There will likely be a little selling pressure just after the open…if it is not fierce (low volume), look for a little short covering on the weakness in oil. But again, it’s going to be extraordinarily headline driven today. The focus will likely be on earthquake plays (such as TAYD), financials in the news (AIG), earnings particularly in the retail sector (ANN), and commodities/materials particularly from a relative strength basis (CLF).

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

CLNE- decent earnings

CMTL- decent earnings

HEV- good earnings

EBS- decent earnings

PLL- good earnings

AIG- offered $15.7 billion to buy large subprime portfolio from NY Fed

BLTI- closed near a high after posting earnings

PRMW- closed near a high after posting earnings

GMCR- closed near a high after forming a deal with SBUX

HGSI- closed near a high after the FDA OK’ed its lupus treatment

SAFM- closed near a high

AUTC- closed near a high

RCRC- received acquisition offer from Tomy for $27.90/share in cash

VLO- purchasing CVX’s Pembroke refinery along with some assets in the UK and Ireland

ANN- decent earnings

TAYD- likely reacting to Japanese earthquake as it produces shock absorption, rate control, and energy storage devices used in machinery and structures

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

ARO- poor earnings

ZUMZ- poor earnings

REGN- poor phase III Vital trial results

THO- poor earnings

ENER- indicated that changes to solar incentives in France and Italy have impacted its business

SWHC- poor earnings

CSIQ- closed near a low after posting bad earnings

FXEN- closed near a low after announcing a share offering

GS- closed near a low

CLF- closed near a low

MEE- closed near a low

BTU- closed near a low

ANR- closed near a low

HES- closed near a low

NAK- closed near a low

NOG- closed near a low

MOS- closed near a low

WLT- closed near a low

RIG- closed near a low

LVS, WYNN- closed near a low

Earnings:

FRI MAR 11 BEFORE

ANN CTRN HIBB

Epiphany Trading, LLC
www.epiphanytrading.com

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

THURS MAR. 10- Earthquaaaaaaaaaake

2011-03-10T08:54:00.000-05:00

So, anybody been to or heard of Faulkner County? Nope, it’s not named after the famous author, William Faulkner. It was actually formed from parts of Conway and Pulaski counties in 1873 and named after Colonel Sanford Faulkner. It does have about 100,000 people. How about the fact that Faulkner was the composer of the fiddle tune “The Arkansas Traveler?” In any case, Faulkner County is included in the Little Rock metropolitan area. And I bring it up because of a story that has gotten stunningly little press. The strongest earthquake in several decades rocked the county last week when a 4.7 temblor hit the area followed by several aftershocks in the 3.5 range. There is actually a major fault line- the New Madrid Fault- found in the region. In fact, the worst earthquake in the history of the continental U.S. (well, since records were kept) took place along this line in the early 19th Century. It was so powerful that it literally reversed the flow of the biggest river in the country- the mighty Mississippi. Today, there are untold millions of people along the river…and untold billions of dollars in real estate dollars much less industry. Here’s another possibility- what if the British Petroleum type action such as the hydraulic drilling to procure natural gas in particular from shale depositaries far below the Earth’s surface is causing this? It’s not highly likely quite admittedly but it could make for political (much less economic) fodder for traders in the future. So, in between the inundation of Charlie Sheen stories, join me in monitoring the seismic activity in Arkansas along with the areas along the Mississippi River as there could well be an impact on stock prices should the activity augment in frequency and particularly intensity.

Markets in Asia were down overnight with Tokyo off 1.5%. The trend ain’t much better in Europe with markets well off by about 1% on average. Interestingly, oil and gold are both down just under 1%. The dollar is slightly stronger. There are five issues this morning. Jobless claims and trade data came in worse than expected. China posted an unexpected deficit. Spain’s debt was downgraded one step closer to junk. There are image of burning oil plumes on TV coming out of Libya. And the “Day of Rage” starts in Saudi Arabia tonight. Fun times. Look for the weakness to stick today in a choppy and volatile session. If some of the bigger caps become exacerbated, the market could really move today…not likely but worth monitoring. The focus will be on the coffees, biotechs in the news (such as HGSI), the rare earths, and big cap techs and financials.

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

CRDN- closed near a high after posting great earnings

PLCE- closed near a high after posting great earnings

AMZN- closed near a high

CSKI- closed near a high

CHSI- closed near a high after announcing it will acquire Walgreen’s health initatives unit

MCP- decent earnings

MW- decent earnings

SMTC- good earnings

HRB- good earnings

FRPT- decent earnings

HGSI- FDA approved the company’s and GSK’s Benlysta used for treating lupus

HF- closed near a high

XRS- closed near a high

SFD- decent earnings

GIVN- received FDA clearance for expanded PillCam indications

GMCR, SBUX- GMCR agreed to sell Starbucks for Keurig system

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

SSN- closed near a low

SHZ- closed near a low

MEE- closed near a low

NVLS- closed near a low

LRCX- closed near a low

ATRN- closed near a low

FXEN- closed near a low and announced a stock offering

POT, MOS, MON- closed near their lows

FCX- closed near a low

X- closed near a low

CLF- closed near a low

DANG- closed near a low after issuing earnings

NPTN, FNSR, JDSU, OCLR, AVGO- closed near their lows after FNSR issued a terrible earnings outlook

CWTR- bad earnings

FXEN- share offering

YOKU- closed near a low

CSIQ- poor earnings

EJ- poor earnings

PEET- business may be affected by the GMCR/SBUX deal

Earnings:

THURS MAR 10 BEFORE

CSIQ EJ MTN

SFD

THURS MAR 10 AFTER

ARO CLNE CMTL

NSM OPTR PLL

SHFL STRI ZQK

ZUMZ

Epiphany Trading, LLC
www.epiphanytrading.com

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

WED. MAR. 9- Trading on Steve Jobs

2011-03-09T08:47:00.000-05:00

I wrote a piece the other day about the power of creative thinking. I want to discuss a unique trade which I very admittedly did not capitalize nearly as much as I should have simply because of my irrational fear of the broader tape at the time. There was a debate as to whether Steve Jobs was going to show up much less discuss the newest Apple (AAPL) product on last Wednesday. I discussed this happening in some detail on our morning call that day in telling everyone that AAPL would likely be a ‘tell’ for the market for the first part of the day anyway. I originally thought that there was no real easy trade with the thing until I heard comment after comment about Steve Jobs with regard to him showing up and looking weak. Universally among the people I spoke with, each and every person thought if he came and looked weak that the stock would go down. When everyone is on one side of the fence, it always gets my radar alerted. It’s another blog entry for another time, but basically if everyone has already sold a stock, it means there’s nobody else left to sell. In English, everybody with an opinion one side will ultimately be forced to be wrong because the action will already be done so who’s left to sell? Anyway, again, another time for that entry. On point, to me, it was actually quite simple: if he didn’t show up, people would worry that he was doing badly. If, however, he did show up, enough people were already short in being convinced Jobs wouldn’t be there that they’d cover…with nobody around left to sell. This is what accounted for the vacuum higher once the presentation commenced. Thus always try to seize upon the fear and greed of the positions of other people rather than your own.

Markets in Asia were generally higher overnight with Hong Kong up 0.4% and Tokyo up 0.6%. The trend, however, is a bit lower in Europe amid worries about sovereign debt with Frankfurt off 0.2% and London 0.4%. Oil and gold are both ahead modestly with the dollar and bonds quiet. Futures have been mixed to slightly lower. For the day, it’ll likely be more benign than yesterday with a downside bias overall due to the weakness in stocks such as FNSR. The focus will likely be on the small caps with earnings, the optic al markets plays, and relative/strength weakness plays off of the direction of the market.

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

WDC- closed near a high

GS- closed near a high

UAL- closed near a high

X- closed near a high

DKS- closed near a high after posting earnings

KV/A- closed near a high following the release of details surrounding its patient assistance program for Makena

STP- decent earnings

AVAV- good earnings

FMCN- decent earnings

MDC- closed near a high

SINA- closed after a brokerage upgrade

LWSN- closed near a high after hiring an investment advisor to put itself up for sale

RBCN- closed near a high

CKEC- good earnings

MY- decent earnings

CRDN- great earnings

HERO- decent earnings

COOL- great earnings

DANG- decent earnings

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

NFLX- closed near a low amid competition worries

URBN- closed near a low after posting horrible earnings

GEDU- closed near a low after posting horrible earnings

SGMA- closed near a low after posting horrible earnings

CNIT- closed near a low after posting horrible earnings

LNG- closed near a low after revealing it’s been charged with a debt default

AMZN- closed near a low

VRTX- closed near a low after a downgrade

FNSR- abominable earnings; JNPR, OCLR, GLW, CIEN, FN, OPLK, CIEN, IPGP, AVGO, ALU among others could move with it

SAM- terrible earnings

SOLF- convertible notes offering

DMND- bad earnings

EPB- share offering

DYN- story in “WSJ” implying the company may declare Chapter 11 bankruptcy

Earnings:

WED MAR 9 BEFORE

AEO DANG HERO

NAV PLCE

WED MAR 9 AFTER

CWTR FRPT HRB

MCP MW SMTC

Epiphany Trading, LLC
www.epiphanytrading.com

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

TUES. MAR. 8- Normal Is No Fun

2011-03-08T08:49:00.000-05:00

As I sat down to write this, I spent a little mulling over anybody who I'd consider normal. I know I am certainly not normal as I have way too many quirks among other things to be considered "normal" by anyone's standards. So I thought about everyone I know who I feel somewhat close to...and I could not think of anyone who was normal. My best friend from childhood studied languages for 10 years and has been all over the world. Among the three guys I stood for as the best man for in their weddings- the first is a political science professor who managed a winning Senate campaign for a current Senator, one is literally an expert regarding the organ, and the other knows more about such varied things as technology... and office politics... than anyone I know. And don't get me started on the characters in my office! Normal and average lead to uninteresting. Well, there's an old saying which goes something like "May we always live in interesting times." As the bull market approaches its 2nd anniversary, it has certainly been interesting. The fear at the bottom of the market was palpable but what most traders forget is the dearth of movement and volume at that time. In the first phase of the rally, price swings were enormous. It has settled down since but the stories that appear daily remain incredible (some good and some bad). So let's hope that things remain shaken up intra-day in perpetuity because the more 'abnormal' things remain, the higher the likelihood numerous opportunities will present themselves for some time to come.

Markets in Asia were generally slightly higher overnight with Tokyo up 0.2%. Prices are notably down in Europe, however, with London down 0.5% and Frankfurt off 1% as of this writing. Oil is quiet for once, gold is a tinge weaker, bonds are ahead a little bit, and the dollar is stronger across the board. There’s no economic data of note due out today. Futures were up most of the morning but have also turned negative. There is notable unease and chop today; there are also a lot of things moving around. The day has the feel of a coil about to spring; it is likely that stocks will remain trapped in a range…but if anything even slightly out of the norm happens, there could be quite an exacerbated move. Be very very very nimble today. The focus will likely be on the earnings plays, big cap tech in the news, and the energies and commodities.

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

VRUS- closed near a high amid positive buzz about an abstract presented at a European association with a conference presentation due today

EDAP- closed near a high

JAZZ- decent earnings

BSFT- great earnings

LMLP- closed near a high

OCZ- closed near a high after posting good earnings

DKS- decent earnings

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

CIEN- closed near a low after posting poor earnings

RIMM- closed near a low

POT- closed near a low

NPTN- closed near a low

GDOT- closed near a low

MCP- reversed in closing near a low

WMS- closed near a low after being downgraded by Goldman Sachs

URBN- bad earnings

CASY- poor earnings

PAA- share offering

EXEL- share offering

MWA- share offering

PWRD- poor earnings

BYI- closed near a low after a downgrade

Earnings:

TUES MAR 8 BEFORE

DKS SSI

TUES MAR 8 AFTER

FMCN FNSR STP

Epiphany Trading, LLC
www.epiphanytrading.com

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

MON. MAR. 7- Then...And Now

2011-03-07T08:51:00.001-05:00

Recently, one of the cable networks started showing re-runs of "All In The Family." I caught about five minutes of an episode a few nights ago. I couldn't help notice that the episode- made in 1972- featured several notable themes. A battle over secondhand smoke. Commentary about the political mores of the time. And most relevantly, there was a lot of discourse about rising inflation- most notably in things like food and fuel as well as arguments over the Vietnam War. For the first time in a long time, the theme of "the more things change, the more they stay the same" really rang through my mind. What are the themes affecting the markets today? Rising fuel prices. Rising food prices. War. It provides a lot of perspective as we day trade to realize that the major factors affecting markets were present many years ago and will be many years after my trading career is long over. We don't so much get lost in the forest among the trees so much as guessing which leaves are gonna fall and when- but sometimes it's good to realize that a lot of what we do in day trading is simply a game- and that's all it'll ever be.

Markets overnight were generally weaker in Asia with Tokyo down about 1.3% and Hong Kong off just under 0.5%. In Europe, markets are a bit more mixed with the major bourses trading between down 0.3% and up 0.1%. The dollar is slightly weaker across the board, gold is up 1%, and oil is notably up 2%. The news flow isn’t great either with Greek debt downgraded and Oman’s debt being placed on watch. Consumer credit ($3.3 billion) will come out at 3PM. Futures traded sharply lower overnight but came right back up…fell back…and then rallied anew. It is very impressive and admittedly a bit puzzling that stocks are utterly shaking off oil. But we gotta trade what we see. Off-hand, since logic is not present, it’d seem that stocks would should hold their gains today in a choppy stock-centric session. The focus will likely be on the rare earths, small cap biotech in the news, energies, metals, 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

ITMN- closed near a high on more follow through following European approval of the company’s lung disease drug

ISS- closed near a high after posting earnings

COO- closed near a high after posting earnings

UDRL- closed near a high after posting earnings

MNOV- closed near a high after partnering with Zhejiang Medicine in China

NFLX- closed near a high

LEI- closed near a high

VRTX- closed near a high

A- closed near a high

PKT- closed near a high

HDY- closed near a high

SINA- closed near a high

NDAQ- rumored to be bought out by the LSE

MCP, REE, AVL-China’s commerce minister noted over the weekend that curtailing exports are necessary

TOMO- to be acquired by ARAY for $3.15 in cash plus .1648 ARAY valuing TOMO at 4.80 as of Friday

JRCC- decent earnings and announced acquisition

DQ- decent earnings

MBND- exceeding 2010 revenue and EBITDA guidance

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

CF- closed near a low

RIMM- closed near a low

KNDL- closed near a low again after posting bad earnings on Wednesday afternoon

CIEN- poor earnings

Earnings:

MON MAR 7 BEFORE

CIEN DQ

MON MAR 7 AFTER

CASY HMIN JAZZ

PWRD THO URBN

Epiphany Trading, LLC
www.epiphanytrading.com

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

FRI. MAR. 4- Some Light Reading

2011-03-04T08:41:00.001-05:00

One of the most common questions I receive is this: what books should a trader read and familiarize himself/herself with? First, there is a wide variety of daily reading such as the Wall Street Journal and the stories on the Bloomberg website to get a broad business overview. I also daily review news stations and websites for a broader world view along with some specialty items such as the science section of the New York Times for a feel for the current trends in that field. Book-wise, there are three. Any day trader should read Reminiscences of a Stock Operator. It is the original book on short-term trading and provides the insights on things like instinct and the dangers of building positions. For a more fundamental outlook, One Up On Wall Street remains the premier book out there. One learns such basic things like buying stocks of companies you like. Sounds simple...yet so many of us...don't do it. Finally, Market Wizards provides perspective from renowned traders. Some use charts. Some just rely on tape reading. Some use esoteric tools such as astrology. But you'll learn all about what makes fine traders' minds tick. So, whether you're just starting out or you're trying to figure out the trading style or investing style that works best for you or if you're an old guy like me who can always use help and gain insight whenever reading any of the aforementioned books, they are all good educational and interesting reads.

Markets overnight were higher throughout Asia with Tokyo up 1% and Hong Kong ahead 1.2%. Markets in Europe are ahead as well with the bourses ahead about 0.2% across the board. The dollar is mixed; it’s up a little against the yen, but now approaching 1.40 on the euro. Bonds are up slightly, oil up over 1%, and gold is up ½%. Unemployment data came in about as expected with factory orders (2.1%) expected out at 10AM. Futures are flat. Look for a little giveback today with the likes of GS quite weak…the corollary is that stocks are shaking off rising oil right now so if oil steadies or sells off, equities will likely inch higher. The focus will be on the small energies, the techs and financials in the news (GS and AAPL), and the share offerings (CLR).

Good- The following stocks have good news and/or a strong technical pattern

WLT- closed near a high

CLF- closed near a high

GS- closed near a high

AAPL- closed near a high

DANG- closed near a high

WYNN- closed near a high

IBM- closed near a high

MEE- closed near a high

JOYG- closed near a high

OVTI- closed near a high

ARUN- closed near a high

USAT- closed near a high on positive February transaction volume

CMFO- closed near a high after posting earnings

KNDL- closed near a high after posting earnings

DUSA- closed near a high after posting earnings

SHS- closed near a high after posting earnings

MET- closed near a high after a successful share offering

COO- good earnings

SPRD- good earnings

CRM- featured on “Mad Money” last night

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

AMLN- closed near a low after Byudreon failed to meet its primary endpoint in study

MRVL- bad earnings

CLR- announced 10 million share offering priced at 68

QPSA- closed near a low

MMI- closed near a low after being downgraded

GS- CEO to testify at Rajaratnam trial; also was downgraded at Bank of America

Earnings:

FRI MAR 4 BEFORE

BRNC CIS MSG

Epiphany Trading, LLC
www.epiphanytrading.com

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

THURS. MAR. 3- The Fallback

2011-03-03T08:46:00.001-05:00

There have been a few times over the years in which I had to change a major aspect of my trading. One of the major instances occurred when stocks began to be priced in decimals rather than fractions. I had a set of strategies I'd use when a stock was priced at say, 10 1/4 to 10 7/16 rather than say 10.25 to 10.28. When the old Instinet terminals went out of vogue, I was forced to adapt to the new set of ECNs over the comfortable monochrome numbered machine I'd utilize particularly at 6AM in the glory days of the late 1990's. Arguably the most stark change for me occurred when my favorite trading vehicle- QQQQ- had a stock split. Oh how I loved trading the QQQQ early in the mornings. Oftentimes, as QQQQ was based off of the NASDAQ 100 while futures would move faster than the cash market, I could find arbitrage opportunities in the delta of multiple points. That one was the hardest to get over because so much of my trading was based on one particular stock/trading instrument. Thankfully, I prepared ahead of time by utilizing my strategies in exploring a variety of stocks and trading patterns so I did have a fallback and soon was doing even better than before. I bring this up because many people to this day tend to focus their trading activities on 1-3 stocks. Anything can happen to them at any time from a change in an industry to a stock split which changes the entire way they trade. So please- if you are one of those people who trades a handful of stocks, don't be stunned if the stocks you trade change in some fashion and have a solid back-up plan for trading other equities at all times.

Markets overnight traded higher throughout the world with Hong Kong up 0.3%, Tokyo 0.9%, London 1.3%, and Frankfurt 1.4%. Bonds are down a bit, the dollar is a tinge stronger against the yen but notably weaker against the euro, oil is down 1% (although well off of its low), and gold is down 1%. Initial Claims data came out much better than expected as did productivity. ISM Services (59.0) is due out at 10AM. Futures are sharply higher as positive economic data and the QE2 is trumping the oil story for the day (plus it helps that oil is down as well..albeit still over $100/barrel). For the day, look for a very active morning in a strong tape; much of the gains will likely hold and things will slow as the day progresses ahead of tomorrow’s unemployment report. The focus will likely be on the small cap energies, the earnings plays, biotechs in the news, notable relative strength/weakness plays particularly early, and the myriad of retailers with same-store sales data out this morning.

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

SIMG- closed near a high on news that the iPad 2 will have an HDMI accessory

MDR- closed near a high after posting earnings

BGS- closed near a high after posting earnings

EDGW- closed near a high after posting earnings

CCME- closed near a high despite a negative Muddy Waters report

LEI- closed near a high on the completion of a well

ROYL- closed near a high

RIG- closed near a high

WLT- closed near a high

AMZN- closed near a high

ZN- closed near a high

LMLP- closed near a high

SHS- good earnings

ZUMZ- decent same-store sales

ITMN- received European Commission marketing approved for Esbriet

BIG- decent earnings

HNZ- decent earnings

BPAX- positive data from a phase II pancreas cancer vaccine study

AMLN, ALKS- poor Duration-6 results

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

ZAGG- closed near a low after AAPL unveiled a new iPad cover

MET- closed near a low after announcing a share offering

CPF- closed near a low

CCSC- closed near a low after posting poor earnings

WTI- closed near a low after posting poor earnings

CQB- poor earnings

FL- poor earnings

SIGM- bad earnings

OPK- share offering

GEF- terrible earnings

HITK- closed near a low after it was indicated that the FDA seeks to pull Lodrane

MET- 146.8 million share offering at 43.25

CNQ- poor earnings

Earnings:

THURS MAR 3 BEFORE

BIG CNQ HNZ

KR ORN UNFI

WNR

THURS MAR 3 AFTER

COO MRVL SLW

SPRD ZGNX

Epiphany Trading, LLC
www.epiphanytrading.com

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

WED. MAR. 2- Eye On Saudi Arabia

2011-03-02T08:49:00.000-05:00

Very quietly, the value of the Saudi Arabia stock market declined almost 10% in a recent three day stretch. No, I’m not talking about two weeks ago. I’m talking about Sunday-Tuesday. While the markets had a pretty nasty decline last week, most of the Middle Eastern markets declined even sharper. The burgeoning belief that the crisis will be contained to Libya led to a decline in oil prices (although still elevated from levels from three weeks ago) and a subsequent sharp rebound in domestic stocks. But the decline in the Saudi Arabia stock market cast a shadow over the rally. So what exactly is going on? Simply put, there remains widespread fear in the region that the unrest that has been chaotic throughout the Middle East shows little sign of abating and may even spread. In Saudi Arabia, the protests are peaceful but are in fact growing in frequency and breadth. Also, protests have now spread to another neighboring nation in Oman. In fact, following a 7% decline in prices last night, many called for the government to temporarily shutter the Saudi markets! Rumors of Saudi Arabian troop movement caused a 2% pop in oil yesterday and led to widespread selling in the U.S. As time goes on, I cannot emphasize enough- Saudi Arabia and everything connected to it particularly geographically such as Bahrain truly holds the key to the oil market for the foreseeable future…and will obviously be a major factor for stocks as well.

Markets overnight were down throughout the world with prices declining more than 2% in Tokyo and down just shy of 1% throughout Europe. Oil is sharply higher again to the tune of 1.5%. Bonds are down a little, the dollar is slightly weaker, and gold is a tinge off also. Futures are a bit lower. ADP data came in much better than expected this market…and the futures sold off. Odd. Crude Inventories are out at 10:30AM and the Beige Book at 2PM. The day will likely be once again dependent on oil…if oil prices hover here around 101, equities will likely chop around violently…the inverse of oil is likely where stocks will go in any other scenario. The focus will be on the earnings plays, energies (big and small), big cap tech in the news (such as AAPL), and relative strength plays particularly post-open.

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

ARGN- closed near a high

EXK- closed near a high

WYNN- closed near a high

SONS- closed near a high after posting earnings

PAY- decent earnings

GAME- decent earnings

RPRX- closed near a high

MCOX- SINA to purchase 19$ of MCOX for $6/share

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

SODA- closed near a low after posting earnings

BID- closed near a low after posting earnings

CEDC- closed near a low after posting earnings

HSFT- closed near a low after posting earnings

TNS- closed near a low after posting earnings

FOE- closed near a low after posting earnings

RRC- closed near a low after posting earnings

X- closed near a low

BRK/B- closed near a low

RIG- closed near a low

WLT- closed near a low

AMZN- closed near a low

GOOG- closed near a low

JOE- closed near a low

CCME- closed near a low

MDR- poor earnings

QLIK- poor earnings

CLR- share offering

MET- share offering

DTLK- share offering

SINA- bad earnings

MBI- poor earnings

QPSA- closed near a low

WFT- restating four years of earnings by $500 million

Earnings:

WED MAR 2 BEFORE

COST CTB JOYG

SPLS WRES WTI

WED MAR 2 AFTER

ANW CPRT CQB

CVI DAR EXM

FL PETM PSS

Epiphany Trading, LLC
www.epiphanytrading.com

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

TUES. MAR. 1 - Being Creative

2011-03-01T08:51:00.000-05:00

My wife loves the excitement of gambling. Whether it's playing the slot machines or heading over to the craps table, the thrill of it gives her great joy. I am the opposite. I hate hate hate hate hate hate to lose so the thought of throwing coins into a machine and pushing buttons for hours on end (with the odds of me losing money quite high) just does not pass for my kind of entertainment. But on point, I do like making plays that can be quite lucrative when the odds are pretty good. For instance, there was actually an Oscars exotic bet the other night that one could make as to whether the leading actress winner would cry during her acceptance speech. I reasoned that if there was a surprise winner, there was a decent shot the winner would cry. So rather than betting the field against the favored Natalie Portman (a $100 bet on Natalie Portman would have yielded $6 based on Oscar odds), if I thought someone else would win it, the bet that the winning actress would have cried out of joy and shock would have been a decent way to play it. I bring this up because it is this type of thinking that I try to bring to my trading and encourage everyone else to do as well. It's not just a matter of looking at numbers or charts and trying to make sense of it. As I've mentioned repeatedly in this space, a high knowledge base is key which requires time before and after normal market hours to prepare and study past trades. Well, what I do is try to utilize the information in a creative manner in a way I feel can be profitable. For instance, if a stock like AAPL splits 10 for 1, although it shouldn't matter, the stock usually opens higher the day after the split particularly if the tone of the overall market is good. However, if the stock breaches unchanged, it almost just as nonsensically has an immediate-term sell-off as the new smaller holders quickly unload their shares. So my only intra- day trade (after learning how big the split is, studying the market, and knowing the effective date of the split) is to not guess as to where it'll open but to short it thru unchanged if a stock which split opened higher. Harking back to my original idea, the thought is as such: know your stuff...but try to use the information in a manner which most people don't think about (yet one that is very simplistic in nature) and you'll have an amazingly high chance of garnering a living at day trading.

Markets overnight were higher throughout Asia with Tokyo up 1.2%. Movement is a bit more muted and mixed in Europe with Frankfurt up 0.4% but London down 0.1%. Gold and oil are both higher (almost 1% each) with bonds down a bit and the dollar muted. Futures are up once again in continuing the recent immediate-term rally in shaking off oil gains. Construction Spending (-0.6%) and the ISM Index (60.5) are due out at 10AM with auto and truck sales to be reported throughout the day. Bernanke also delivers testimony at 10AM today. For the day, prices are likely to be more muted than yesterday with an eye peeled toward what Bernanke is saying and another toward commodities. The commodities should have next to no correlation as has been the case the last couple of days unless the gains become exacerbated. The focus will be on the casinos, earnings plays, biotechs in the news such as FRX, and the banks on the FITB subpoena.

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

SONS- great earnings

NVAX- received flu-vaccine contract with US government

LO- a U.S. advisory study indicated menthol cigarettes haven’t been proven to put smokers more at risk for tobacco-related diseases than unflavored cigarettes

GSM, LLNW- featured on “Mad Money” last night

BCOND- closed near a high after signing a contract with Northwestern Energy for flywheel energy storage program

TGIS- closed near a high

VRTX- closed near a high

NBL- closed near a high after receiving a Gulf of Mexico drilling permit

BRK/B- closed near a high after posting earnings

MRX- closed near a high after settling a lawsuit with TEVA

JOYG- closed near a high

ARGN- closed near a high after announcing an agreement to purchase the majority of W.E.T. Automotive Systems

FRX- announced FDA approval of Daliresp as a treatment to reduce the risk of COPD exacerbations in patients with severe COPD

AZO- decent earnings

BPI- decent earnings

FIG- decent earnings

SODA- decent earnings

TECD- good earnings

PSTI- reported positive pre-clinical data from muscle injury study

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

RXII- share offering

YOKU- terrible earnings

EXM- poor earnings

URS- poor earnings

DGI- poor earnings

VVUS- poor earnings

WRC- poor earnings

BID- poor earnings

RST- poor earnings

EOG- share offering

HCN- share offering

QPSA- closed near a low

AIG- closed on a low

AMZN- closed near a low on a brokerage downgrade

FSLR- closed near a low

SFY- closed near a low

RBCN- closed near a low

MCOX- closed near a low

YRCW- closed near a low after announcing a restructuring which will involve share dilution

LVS- received a subpoena related to foreign corrupt practices and announced it’d be suspending several projects in its 10-K

SOL- bad earnings

LINE- share offering priced at 38.80

Earnings:

TUES MAR 1 BEFORE

AZO BPI BYD

FIG SODA SOL

TECD

TUES MAR 1 AFTER

DNDN GAME JOE

MBI MDR NKTR

PAY QLIK SGMS

SINA SNDA TIVO

Epiphany Trading, LLC
www.epiphanytrading.com

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

MON. FEB. 28- Changes To Short Selling

2011-02-28T08:54:00.000-05:00

So is everyone ready for changes to Regulation SHO? Yeah, that’s one of the more fascinating opens to a piece, isn’t it? But getting very serious very fast, there are several amendments to this piece of regulation due to take place with a compliance date of February 28, 2011 (that’s today). The major issue that should concern most day traders is the rollout of Rule 201 (Alternative Uptick Rule). This will allow for a short sale-related circuit breaker that upon being hit would impose a condition for the pricing of equities short sold. All exchanges will not allow for the execution or show of short sale orders at a price that is less than or equal to the current national best bid should the stock’s price decline by 10% or more from the previous day’s closing price at the end of regular trading hours on the previous day it traded. Thus if a stock is 11.35 bid to 11.40 offer and one wishes to short, one would only be able to do so at 11.36 if the stock was down 10% or more that day. The duration of the restriction will be through the close of trading on the next trading day thus if a stock declined 10% or more on a Monday morning, the restriction would be in effect until Tuesday’s close. Furthermore, if a stock is halted intra-day, any short sale orders would be executed only one price tick above the open. It’s also worth noting that it is very ambiguous and vague if one sifts through the paperwork that there is no guidance given to extended-hours trading thus it is unclear if the restrictions would not go into place until 9:30AM ET and/or if they’d be valid outside of the traditional 9:30AM-4PM hours. So, just let this primer serve as a heads-up that if you were to day trade stocks ahead or down 10% or more on a day, the rules are changing and you need to be aware of what’s happening.

Markets over the weekend started off trading well lower with Saudi Arabia getting hit quite hard on Saturday night. But the trend shifted in Asia with Hong Kong up over 1%. In Europe, prices are generally slightly higher across the board. Oil is slightly lower with gold slightly higher. The dollar index is nearing a four month low with it weaker against the yen and euro. Futures are continuing their bounce from Friday. Personal Income came in better than expected with spending basically in-line. PMI (67.5) is due out at 9:45AM and Pending Home Sales (-3.2%) will be out at 10AM. Look for a calmer day than we’ve had recently with a bid underneath the surface. The focus will be on the healthcare/drugs, earnings plays, solars, earnings plays, energies, and relative strength/weakness plays particularly as the day progresses.

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

MRX- poor earnings, but putting its LipoSonix business up for sale and settled with TEVA

OVTI- closed near a high after posting earnings

IPGP- closed near a high after posting earnings

ACTG- closed near a high after posting earnings

DRC- closed near a high after posting earnings

INT- closed near a high after posting earnings

TRLG- closed near a high after posting earnings

RIG- closed near a high

CF, MON, MOS- closed near their highs

MCP- closed near a high

SODA- closed near a high

YOKU- closed near a high

AAPL- closed near a high

FXEN- closed near a high

MFN- closed near a high

LNG- closed near a high

IOT- closed near a high

SFE- closed near a high

CIS- closed near a high

PGI- closed near a high

XUE- closed near a high

TZOO, HES, CLR, WLL, BEXP, OAS, SWN- featured on “Mad Money” on Friday night

HUM- raised earnings guidance for the year

JOBS- decent earnings

BRK/B- decent earnings

SOLR- decent earnings

JKS- great earnings

NHP- to be acquired for .7866 VTR shares for each NHP share

DSCI- received FDA clearance for Medihoney gel

ENDP- good earnings

RNN- granted European patent for new Quinoxalinyl-piperazine

MSA- decent earnings

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

PBR- lukewarm earnings

DECK- closed near a low after posting earnings

JCP- closed near a low after posting earnings

FSLR- closed near a low after posting earnings

MDAS- closed near a low after posting earnings

NTRI- closed near a low after posting earnings

CLGX- closed near a low after posting earnings

NOAH- closed near a low after posting earnings

NFLX- closed near a low

DRQ- poor earnings

VIT- poor earnings

AMZN- downgraded by UBS Securities

Earnings:

MON FEB 28 BEFORE

ANV AWI JKS

MSA NHP OSG

TIE VIT

MON FEB 28 AFTER

AONE EXM MR

PDLI RRC RST

SLXP UHS URS

VVUS WRC YOKU

Epiphany Trading, LLC
www.epiphanytrading.com

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

FRI. FEB. 25- Peace And Quiet

2011-02-25T08:41:00.002-05:00

Back in college, I tried to do it all. I'd routinely take 5-6 classes a semester. I was an officer in several organizations. I participated actively in intramural sports. I was actively trading stocks on the side. I had an extremely vibrant social life. But among my favorite memories include the solitude of walking across the central meadow of my alma mater's beautiful campus in simply thinking about what needed to be done and how I'd do it. That feature was something that has become a cornerstone of my daily routine. I love the peaceful quiet while I try to get my thoughts in order for the trading day starting around 5am most mornings. I love the ride to work where I'll listen to a combo of sports and business radio to keep me educated but loose while I subconsciously think about the overseas markets and last night's earnings. I disturbingly enjoy going over my previous day's trades to find what I can glean. I know I need to gather all of the information I need to truly prepare. But most importantly I love the solitude of being in the office early enough that I can pause and oftentimes take that five minutes to let it all filter through. To me, that deep breath particularly after my first flurry of major morning activity helps me become ready for trading more than anything. Just as good, I do the same in the afternoons. After going through earnings and news as well as a couple of hundred charts, I enjoy letting it all seep in and intrinsically trying to get a jump for the next day much less that afternoon's action via after-hours trades by mulling over what I've taken in. My main point is to pass on something magical that has worked well for me business-wise and in my personal life- do everything you can to prep for everything important you do. But take that few minutes of solitary bliss each day whereby you let your instincts combine with all information absorbed- the conclusions that you come up during that time are what you can use to earn a living. Again, it's not a matter of just playing the game...there's a lot of groundwork and thinking involved to earn a true living so that you know what you need to know to make that solitary moment so important. But I can honestly say that the wonderful quiet I have in the early mornings and late evenings when I am doing my groundwork which leads to me letting my gut give me an idea of what to do has been a cornerstone of any success in this business I have ever had.

Markets rebounded overnight with Tokyo up 0.7% and Hong Kong a strong 1.8%. The tone was good in Europe as well with Frankfurt up 0.6% and London 1%. Oil had a major reversal yesterday in closing negative and is down a tinge more as of this writing. Gold is down 1% with bonds down slightly and the dollar quiet. Futures are nicely ahead. The GDP revision came in a little weaker than expected which sparked a small burst of selling but came right back- that’s a bullish intra-day sign. Final Michigan Sentiment (75.1) is due out at 9:55AM. The market will likely take its cue from oil as the day goes on but the correlation will likely not be quite as good as people speculate what will occur over the weekend…but worries certainly seem to have eased in the last 24 hours. Off-hand, I’d be looking for a bit of a rebound in much quieter trade today. The focus will likely be on the stocks which have major news (BA), the myriad of earnings out, big cap tech and financials to see if they can bounce, relative weakness plays (particularly in the 9:30-11:30 time frame), and the small-cap energies.

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

SATS- closed near a high after posting earnings

MGRC- closed near a high after posting earnings

BIDU- closed near a high

AIG- decent earnings

BCRX- awarded additional $55 million contract by the U.S. Department of Health to develop Permivir phase III program

CRM- great earnings

DECK- good earnings

GPS- decent earnings

OVTI- great earnings

SD- decent earnings

SMSI- decent earnings

TRLG- decent earnings

CROX- decent earnings

GG- decent earnings

MENT- decent earnings

ACOM- good earnings

ALAN- signed agreement to sell Startrak Systems to Orbcomm

BA- won the Department of Defense Airborne Tanker Contract

GGC- closed near a high

IL- closed near a high

YOKU- closed near a high after raising advertising rates and obtaining some new licenses

CRFN- closed near a high after it entered into a definitive agreement in which it will receive a $75 million investment in the company from Piedmont Community Bank which would mean Piedmont would acquire a majority stake in the company

IPG- decent earnings

SVNT- decent earnings

JCP- decent earnings

IPGP- decent earnings

RDC- decent earnings

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

NEM- closed near a low after posting earnings

SLXP- closed near a low after warning of the non-approval of an NDA for one of its prospective products

SHLD- closed near a low after posting earnings

FCN- closed near a low after posting earnings

SPN- closed near a low after posting earnings

FSLR- bad earnings

HANS- poor earnings

NTRI- terrible earnings

NVTL- terrible earnings

SWA- poor earnings

BEXP- poor earnings

ACTG- poor earnings

PLX- FDA requested more information on company’s Gaucher’s drug

Earnings:

FRI FEB 25 BEFORE

AMAG DRQ DRYS

IAG IPG IPGP

JCP JRCC LNG

RDC SUG SVNT

TTI WCRX

FRI FEB 25 AFTER

MRX PSA

Epiphany Trading, LLC
www.epiphanytrading.com

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

THURS. FEB. 24- Ba-Ba-Bahrain

2011-02-24T08:44:00.001-05:00

I want to follow up on the urgently important pieces of the last two days (Tuesday’s re a changing market and yesterday’s all about Libya). If you’ve failed to adjust your trading style this week much less taken the time to understand what is going on in the Middle East, you are very likely not having a good trading week. But there’s much more to it over and above what has already been described. An integral piece of the puzzle likes in Bahrain. In images eerily similar to those from Cairo, protesters have swarmed Manama’s Pearl Square in the heart of the island. Saudi Arabia and Bahrain have historically had fairly close ties with the king of Bahrain traveling to Saudi Arabia in the face of the protests with the Saudis ready to announce a massive aid package for the citizenry of Bahrain. All of that seemingly positively buzz on the surface is masking the true story. Namely, serious discontent in Bahrain (particularly in light of the Libyan uprisings) may well continue to play a key part in the fate of the energy markets because of the possibility of sucking in other nations. As it turns out, the Sunni minority has been ruling the nation for quite some time and is facing the Shiite majority. Sunni and Shia Islam, for those who do not know, are the two major denominations of Islam. The major difference in the split of the two sects centers around what occurred when the Islamic prophet Muhammad died in 632 regarding a dispute over Muhammad’s successor. In any case, Bahrain is also the current home of the U.S. Navy’s 5th fleet. If a new government was not as friendly to the presence of the United States, the 5th fleet would be homeless and raise viable concerns about the U.S. being able to patrol the Persian Gulf. Furthermore, Bahrain sits adjacent to Saudi Arabia and there are major worries about the spillover effect of the unrest to Saudi Arabia. So, while Libya has grabbed a lot of the recent headlines, the demonstrations in Bahrain actually started first…and will likely be an even more important variable regarding the stability of oil prices, the stock market, and the world economy.

Markets overnight were down throughout the world with Tokyo and Hong Kong both down over 1% with most of the bourses down a bit more moderately in Europe with London as an example down 0.3%. The dollar continues weak with the 82 yen level having given way. Gold is down slightly with bonds up slightly. Oil is soaring again but well off of its high (having touched $103/barrel overnight). Futures are down but also significantly off of their lows. Rumors are rampant from what is going on in Saudi Arabia to an upcoming press conference to be given by Libya’s leadership. Jobless claims were slightly better than expected with durable orders in-line. The FHFA Housing Index is due out at 10AM along with new home sales data (310K). Crude Inventories are due out at 11AM; the data will likely be a bit more important than normal today. For today, look for a very choppy session which will be highly oil-dependent. The tone is better than in recent days and it seems like there is a floor- and a ceiling- to equity prices in the immediate-term. The focus will be on the tremendous earnings flow, the fertilizers, the oils, the big cap techs on the myriad of news there, retailers on the TGT and KSS earnings, and small cap energies which have skyrocketed the last few days.

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

FARO- good earnings

MELI- decent earnings

FLS- decent earnings

PCLN- good earnings

NTES- good earnings

PPO- great earnings

KAI- good earnings

WBMD- good earnings

ROYL- closed near a high after getting regulatory approval for a second Goddard well

BDCO- closed near a high

PDO- closed near a high

COG- closed near a high after posting earnings

CNX- closed near a high

CHK- closed near a high after posting earnings

SA- closed near a high

HES- closed near a high

DBLE- closed near a high

VRTX- closed near a high after issuing positive phase III cystic fibrosis results

CF- closed near a high

IPI- good earnings

IMAX- decent earnings

NEM- decent earnings

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

NUVA- poor earnings

QCOR- poor earnings

WLL- poor earnings

AXTI- poor earnings

ILMN- closed near a low

ADSK- closed near a low

DLTR- closed near a low after posting earnings

ARTW- closed near a low after posting earnings

VICR- closed near a low after posting earnings

SLXP- company indicated FDA may deem Xifaxan sNDA not ready for approval

ETFC- poor daily average revenue trade data

SAFM- poor earnings

MYL- poor earnings

GT- poor earnings

DISH- poor earnings

Earnings:

THURS FEB 24 BEFORE

CMS CSE DISH

DTG EP ESV

FIG FTO FWLT

GM GTI HERO

HOC IPXL IRM

JOE KBR KSS

MGLN MYL NEM

NIHD OCR PCS

PDCO PXP SAFM

SATS SHLD SWY

TGT TK

THURS FEB 24 AFTER

AGO AIG AMAT

BEXP CRM CROX

CYH DECK DRC

DWA FSLR GERN

GG GPS HANS

HGSI INT MRX

NTRI NVTL OVTI

SBAC SD SM

SMSI SWN TIE

TRLG

Epiphany Trading, LLC
www.epiphanytrading.com

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

WED. FEB. 23- Crisis in Libya

2011-02-23T08:42:00.001-05:00

A few weeks ago, just after the riots took place in Tunisia and as there was trouble brewing in Egypt, I wrote a fairly long piece about the simmering tensions in the region. I noted that the importance of taking some time to understand the situation and stressed that it was very plausible that a repeat of the fall of communism from 1989 may be happening in that powder keg of an area. The main reasons are economic and human right-related. Many people live in untold squalor amid autocratic leadership. Based upon history (in most nations but not just the Mideast), it was a situation that could last for many years...but never permanently and what we are seeing is the beginning of whatever major evolutionary change is going to occur whether it be to a democracy or to something much more sinister. The next domino to fall in this process appears to be Libya. Almost as soon as the army seized control in Europe, the crowds began to grow exponentially in the streets of places like Tripoli where the likes of Moammar Gadhafi has been in power for decades. Most notably for trading purposes, Libya is the initial oil exporting nation wrapped up in the political chaos throughout North Africa and the Middle East. Traders are quite concerned that even more chaos in the unstable region may cause a major sustained spike in crude oil prices. Libya is actually the 3rd largest oil producer in Africa. Furthermore, the nation supposedly sits on gigantic reserves of undeveloped oil and gas- believed by many oil experts to be the largest in Africa according to several major publications. Libya has had U.N. sanctions there since the early 1990's after members of Libya's intelligence service were found to be involved with the 1988 bombing of a PanAm flight. The sanctions were lifted in 2004 but most of the fields remain undeveloped and renewed investment in the oil sector commenced shortly thereafter by most of the rest of the world. In any case, Libya is no Egypt. The leader (Gadhafi) has already said he will crack down on the protesters and there are worries that the oil supply could become disrupted thus disenfranchising the already poor populace even more. Furthermore, at this point, there is genuine fear that the Libya's crisis can spread to other major oil exporting nations in the region much less strikes which are already occurring at places such as the Nafoora oil field.. Now, in principle, let's not delude ourselves- Libya is a bit player in OPEC with a nation like Saudi Arabia ready to step in with additional production if need be. But, already, the situation in Bahrain- precariously close to Saudi Arabia- continues to intensify with protests taking place around the clock. So, the fears of this spreading to a nation like a Saudi Arabia are quite palpable. A spike in oil prices would certainly stint whatever nascent economic recovery/stabilization that much of the world has seen these last two years so it is urgently important that every day trader become well aware of what is going on in the area as even a rumor of anything happening there can and will sway the market wildly in the coming days, weeks, and months.

Markets throughout the world were generally lower overnight with Asian markets down 0.3%-0.5% with European bourses down a little more than that with the likes of Frankfurt down 0.7%. Oil is up 1% again on Libyan fears, gold is ahead slightly, the dollar is weaker against the euro, and bonds are flat. Futures are slightly higher. Existing Home Sales (5.23 million units) are due out at 10AM ET. The day today looks to be quieter than yesterday, but there will be tremendous noise in individual stocks underneath the surface. Gains for the broader tape will likely be capped on Libyan fears but with oil and equities higher, there does seem to be a floor so the market appears to be trapped for the session. The focus will likely be on drug stocks in the news (VRTX), big cap tech (HPQ, AAPL), the earnings plays, materials/commodities/oils, and relative strength and weakness plays particularly in the early part of the session.

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

BDCO- closed near a high

GBR- closed near a high

HLF- good earnings

HTZ- decent earnings

CHK- decent earnings

DDS- decent earnings

OCLR- featured on “Mad Money” last night

TOL- decent earnings

DTV- decent earnings

VRTX- positive phase III study of VX-770 cystic fibrosis drug results

HSNI- decent earnings

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

DAKT- closed near a low after posting earnings

EXPD- closed near a low after posting earnings

MEE- closed near a low

WLT- closed near a low

CF- closed near a low

POT- closed near a low

MOS- closed near a low

X- closed near a low

NFLX- closed near a low

AAPL- closed near a low

AMZN- closed near a low

SNDK- closed near a low

GS- closed near a low

UAL- closed near a low

FCX- closed near a low

CLF- closed near a low

RIMM- closed near a low

WYNN, LVS- closed near a low

FWLT- closed near a low

FDX- closed near a low

HPQ- terrible earnings

EXEL- poor earnings

LEAP- poor earnings

MHK- poor earnings

TXRH- poor earnings

LOPE- bad earnings

SATC- bad earnings

GRMN- bad earnings

LOW- poor earnings

PWR- poor earnings

TJX- poor earnings

Earnings:

WED FEB 23 BEFORE

AMT BBG CLH

DNR DTV EV

FLR GRMN LOW

PWR SGY SKS

TJX TOL VNO

WED FEB 23 AFTER

AVGO AXTI CLR

CXO FARO FIRE

FLS GNK HLX

IDCC IPI LTD

MELI MGA NTES

NUVA ONXX PCLN

QCOR RIG RRC

WLL XCO

Epiphany Trading, LLC
www.epiphanytrading.com

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

TUES. FEB. 22- Right Or Wrong, I'm Nervous

2011-02-21T16:29:00.004-05:00

Sunday, February 20, 2011 10:36 AM
From: This sender is DomainKeys verified"ekolodny2@yahoo.com"

I used to love love love love love Saturday morning cartoons and really good sitcoms when I was younger. One of the frequent comedic guises used on the cartoons (as well as in countless sitcoms) occurs when the protagonist gathers his/her friends (aka "troops") in leading some in some hair-brained scheme. They are all in it together. And the next scene shows the one or two leaders...with nobody behind them as they talk to themselves all gung-ho about whatever it is they were gonna do. That's what Friday's tape in particular (although it's happened a couple other times as well in recent days) felt like. The Dow marched ahead 75 points but the NASDAQ and S&P 500 struggled to close positive. Apple (AAPL) was weak for a 2nd day and many other sectors performed badly (anyone notice Freeport McMoran - FCX- closed near its 2011 low?). When the generals are there but the troops don't follow in a bull market, that historically portends some sort of change whether it be sector rotation or a pullback. I discussed this on Friday afternoon on our video in indicating I was looking for an immediate-term pullback and I write this now on a Sunday morning as I watch scenes of unrest in Libya- an oil producing nation. Libya is not Egypt. So, definitely keep your eyes peeled for what it is almost certain to be a different kind of market for the next few weeks particularly in individualized names and sectors with a definitive pick-up in volatility.

Markets have been hit very hard the last couple of days throughout the world with 2-4% declines commonplace throughout the world. The dollar has been amazingly placid but gold prices have rallied along with bonds and light sweet crude has soared several dollars a barrel. Case-Shiller (-2.4%) is due out at 9AM with Consumer Confidence (67.0) due out at 10AM. The main culprit the last few days has been a major uprising in Libya (more on this in tomorrow’s blog). There is now wholesale worry that the crisis is going to spread throughout the Middle East. Futures are sharply lower (although a bit off of their lows). For today, with some traders out, look for a volatile session on slightly lower than normal levels of activity with a focus on energies, earnings plays, small cap biotechs in the news, big cap tech in the news, and relative strength 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

RRGB- closed near a high after posting earnings

INTU- closed near a high after posting earnings

ARUN- closed near a high after posting earnings

APEI- closed near a high after posting earnings

ASGN- closed near a high after posting earnings

ALNY- closed near a high after posting earnings

MMSI- closed near a high after posting earnings

IT- closed near a high after doing a secondary offering

PDCO- closed near a high after posting earnings in an island reversal

SGI, IRDM- featured on “Mad Money” on Friday night

ATHN- announced alliance with MSFT

CHK- selling $4.75 billion n shale assets to BHP

HD- decent earnings

TSL- decent earnings

VFC- decent earnings

M- decent earnings

SIGA- commenced new smallpox antiviral procurement

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

AAPL- closed near a low amid iPhone margin pressures and worries over the health of Steve Jobs

RST- closed near a low after posting earnings

CF- closed near a low after posting earnings

CKH- closed near a low after posting earnings

TA- closed near a low after posting earnings

BCSI- closed near a low after posting earnings

GHL- closed near a low after a brokerage cut

POT, MOS, MON- closed near their lows

FCX- closed near a low

MEE- closed near a low

AMZN- closed near a low

BIDU- closed near a low

MCP- closed near a low

HOC- closed near a low

PANL- closed near a low

SVVS- closed near a low

VECO- closed near a low

HOLI- closed near a low

FTO- to be acquired for .4811 shares of HOC

DYN- announced termination of merger agreement with Icahn Enterprises; top officers and directors to resign

DCTH- received refusal to file letter from FDA

JASO- poor earnings

MDT- poor earnings

WMT- poor earnings

FRX- to buy CLDA for $30/cash plus contingent consideration of up to $6/share

BKS- poor earnings

AMED- poor earnings

NFLX- AMZN quietly rolled out instant video streaming service according to SAI

Earnings:

TUES FEB 22 BEFORE

AMED BKS EXPD

FST GPC HD

HK JASO M

MDT MHS ODP

RRD TSL TX

VFC WMT

TUES FEB 22 AFTER

CBI CHK EXEL

HLF HPQ HTZ

LEAP MHK ONXX

RSH STR TXRH

Epiphany Trading, LLC
www.epiphanytrading.com

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

FRI. FEB. 18- Selectivity Is Key

2011-02-18T08:46:00.002-05:00

I am by no means a wine expert. I like wines (red more so than white). But I certainly am no sommelier; I admire anyone who is. I just know what I like and what I don’t. But the study of what is truly a good wine is certainly left to people who know far more about it- I just trust them (particularly when they are friends of mine!). I would certainly imagine that as time progresses, a sommelier doesn’t exactly become a wine snob per se but would become much more discerning about what he/she likes. And that’ll be true now as compared to a year ago compared to a year from now compared to 10 years now…with time comes more selectivity. As I seemingly age two days for every one that passes (at least it feels that way sometimes!), I find that I too become increasingly selective when it comes to my trades. I am fairly certain it has something to do with the market we’re in, i.e. one that is not very volatile. But there’s more to it than that. When I started, I’d do about anything. I was eager and how else was I going to learn if I didn’t at least try to do everything I saw? Several years ago, I would pare down that activity to doing the ones I really liked with big size and the ones that were blasé’ with smaller size. But now? I increasingly possess patience when I see a prospective trade in stocks that have moved in a 15 cent range for an hour (with the market not moving) or something that has rapidly moved already in avoiding those plays. I also tend to avoid momentum trades in things that have already moved. For instance, it is much easier for me to buy a stock like Apache (APA) when they miss their earnings estimate through unchanged in an effort to capture a short covering stampede than it is for me to buy it after it rallied 75 cents in four minutes, consolidates, and looks primed to go more. I find that the raw emotion of the first trade is often not present on a momentum play when the market is not whipping around intra-day. So, this is why I stress the importance of understanding news and what it can to a stock (particularly early on) as well as in trying to do only the great plays. I find that as I become more discerning, I may make fewer plays, but the gains from doing the ones I love in even bigger size actually has had a very notable impact on my quality of trading- and overall trading performance.

Markets in Asia generally higher overnight with Tokyo up fractionally but Hong Kong up 1.2%. Everything else though is very quiet. London is down 0.4% but Frankfurt and Paris are near unchanged. Gold, oil, bonds, and the dollar are straddling the unchanged level. Shocker- futures are basically…unchanged. There is no economic news today. It’s an options expiration day as well on a Friday before a holiday so I expect it to remain much quieter than normal. All of the action will likely take place in the early part of the day with a handful of news plays moving in the middle of the day and potentially some volume on the close because of the expiry. The focus will be on the earnings plays, solars off of SPWRA news, fertilizers with CF having reported, big cap techs in the news, and the earnings play from yesterday with extraordinary performance (WTW, et al) for continued movement.

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

CSTR- closed near a high amid rumors it could partner with AMZN for movie streaming

IO- closed near a high after posting good earnings

TYPE- closed near a high after posting good earnings

FICO- closed near a high after posting good earnings

NVDA- closed near a high after posting good earnings

HDNG- closed near a high after posting good earnings

WTW- soared in closing near a high after posting amazing earnings

TBL- soared in closing near a high after posting amazing earnings

TDSC- soared in closing near a high after posting amazing earnings

INPH- closed near a high

NANO- closed near a high

CPY- closed near a high

RIG- closed near a high

MSB- closed near a high

RIMM- closed near a high

INTU- decent earnings

MOH- decent earnings

BRCD- decent earnings

SPWRA- decent earnings

RRGB- decent earnings

NR- decent earnings

DNDN- positive Provenge study presented at a cancer symposium

ARUN- good earnings

GSM- closed near a high

DECK- closed near a high

XPL- closed near a high

AGN- featured on “Mad Money” last night

YGE- decent earnings

AGP- decent earnings

YTEC- good earnings

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

GMCR- closed near a low amid rumors it will not form a partnership deal with SBUX

ORLY- closed near a low after posting earnings

AEM- closed near a low after posting earnings

BCSI- poor earnings

BMRN- poor earnings

CHTP- share offering

ATHN- poor earnings

CF- poor earnings

CPB- poor earnings

ST- 20 million share offering at 33.15

PDCO- poor earnings

Earnings:

FRI FEB 18 BEFORE

AGP CPB CPN

EGO PNW TA

UPL YGE

Epiphany Trading, LLC
www.epiphanytrading.com

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

THURS. FEB. 17- Karma Karma Karma Karma Karma Chameleon

2011-02-17T08:49:00.002-05:00

Whenever I visited the Bronx Zoo way back in the day (although with two kids, I am sure more visits are coming!), I was always fascinated by chameleons. The lions, the tigers, the zebras, the elephants...meh...I liked looking at them, but those chameleons I could have stared at for hours. The way they could subtly change colors to blend in with their surroundings...I guess I am a pretty simple kid but I still think that's neat. I could not but help but think of that a few Friday mornings ago. The market had been churning listlessly higher as it had been for a couple or three days (particularly many of the momentum plays) with little change in the first hour. Suddenly, the floor caved in with the character of the market changing markedly. I'd been trading almost exclusively on news flow that morning since Ford (F) reported earnings at 7AM and by 9:45AM, I had my best day of the young year going. But as the tenor of the markets changed, so did what I was doing. Why? Because I had seven losses (all small) in a row. I had to undergo a sudden metamorphosis of my own into more of a momentum and hyper-speed mode rather than shorting F down 9 cents on the day when they missed their earnings at 7AM. There are three takeaways. First, things constantly change. Specifically, economic and political events change. After taking by seven small hits (which amounted to 20% of what I'd earned on the day), I stopped and educated myself that much more on what was going on and what may happen the rest of the session. Second, on a dime, the market changed. It was akin to being at the beach on a beautiful warm afternoon but an afternoon thunderstorm kicked in and drummed up waves. The smooth market had rapidly become volatile. Finally, If I didn't compress my time horizon and adapt rapidly in trading in terms moreso of momentum rather than news as well as in seconds rather than minutes, I was gonna lose all of my good work. So rather than trading the F's of the world, I started doing things like shorting the weakest stocks (MWW) when they went through lows and buying relative strength (NFLX) when they ticked through highs in market up pockets. Bottom line: when fear rules rather than greed, the exacerbated moves are to be embraced and adapted to rather than causing a frozen fright. I noted seven times on the chat room on that Friday not to build positions. Most of those individuals who ignored that warning went on to lose significant money on Friday while those who modified what they were doing in line with the speed of the market came out OK. From fear comes opportunity...I still struggle to live by that credo in every facet of life, but it cannot be truer- particularly if one accepts fear as a part of life and has a rational understanding of what is causing that fear.

Markets overnight were up in Asia with Tokyo up 0.2% and Hong Kong up 0.5%. But everything else- everything- is quiet. European bourses are barely straying from unchanged, oil is exactly unchanged as I type, gold is up slightly, bonds are flat, and the dollar isn’t budging. Futures are down slightly on some negative tech news along with worries over the health of Steve Jobs. The CPI indicated slightly more inflation than expected at the consumer level with jobless claims worse than expected as well. The LEI (0.2%) and Phily Fed (21.9) are both due out at 10AM. As the temperatures warm and news flow slows ahead of options expiration tomorrow, the market should be fairly quiet today with a very modest downside bias. The focus will once again be on the rampant earnings flow, big cap techs in the news such as AAPL, and small caps which have shown seemingly excessive moment the last few days (KV/A, GFC).

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

AAN- closed near a high after posting earnings

LZB- closed near a high after posting earnings

RIMM- closed near a high after an upgrade by Citigroup

ANF- closed near a high after posting earnings

ROC- closed near a high after posting earnings

XEC- closed near a high after posting earnings

CENX- closed near a high after posting earnings

TSLA- closed near a high after posting earnings

APD- closed near a high after withdrawing its bid for ARG

KV/A- closed near a high

LNG- closed near a high

INUV- closed near a high

AHD- closed near a high after the ATLS/CVX merger was finalized

AVEO- announced agreement with Astellas to develop Tivozanib

WMB- boosted dividend by 60% and announced split of itself into two entities

CLF- great earnings

RBCN- great earnings

ITMN- decent earnings

IO- good earnings

JAH- decent earnings

CBS- decent earnings

JOYG- will be added to S&P 500 index

TBL- decent earnings

TRW- decent earnings

WTW- good earnings

ABX- decent earnings

CPO- decent earnings

ONP- good earnings

TDSC- good earnings

CXDC- mentioned on “Squawk Box” this morning

DPS- decent earnings

CPO- decent earnings

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

GFC- closed near a low after the person named president and chairman withdrew his name from consideration for the positions

NFLX- closed near a low

CAGC- closed near a low

ROVI- closed near a low after posting bad earnings

TNGN- closed near a low after calling off discussions for a possible stock-for stock merger

NVDA- poor earnings

NTAP- poor earnings

ECL- poor earnings

ESRX- poor earnings

ITRI- bad earnings

AEM- poor earnings

SKX- poor earnings

NFX- poor earnings

OII- poor earnings

EHTH- poor earnings

SNPS- poor earnings

ST- share offering

AAPL- rumors abounding on health of Steve Jobs after new pictures emerged

ORLY- poor earnings

Earnings:

THURS FEB 17 BEFORE

ABX ACOR APA

CAB CPO DPS

DUK ECL HOS

HUN LIZ LTM

NNN PDC PDE

RS SJM SPW

STRA TBL TRW

VCI VTR WM

WMB WTW

THURS FEB 17 AFTER

ARUN ATHN BCSI

BMRN BRCD BUCY

CECO CF EOG

INTU JWN MOH

OIS SPWRA

Epiphany Trading, LLC
www.epiphanytrading.com

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

WED. FEB. 16- This Bird's Somehow Flying

2011-02-16T08:47:00.001-05:00

On Friday afternoon (February 11), Seahawk Drilling (HAWK) announced a ‘sale of assets to Hercules Offshore (HERO)’ according to PR Newswire and Dow Jones. At 5:43PM ET on a Friday, it was a seemingly innocuous press release…until one read the story. The first line was this: “Seahawk Drilling, Inc. ("Seahawk") (Nasdaq: HAWK) announced today that Hercules Offshore,Inc. ("Hercules") (Nasdaq: HERO) is acquiring substantially all of Seahawk's assets in a transaction valued at approximately $105 million.” Hmmm. “All” assets? I then looked and noted that HAWK had a market cap of $90 million or so at its 7.75ish price so that should have theoretically been a good thing. The next two lines were this: “Seahawk's Chief Executive Officer, Randy Stilley, stated, "After a thorough and disciplined process, an independent committee of Seahawk's directors and its full Board of Directors determined that an asset sale to Hercules provides the highest level of value to Seahawk's stakeholders" followed by “The transaction with Hercules creates a company with a larger, more diverse fleet, broader customer relationships and greater operational flexibility. In addition to increased economies of scale, combining the fleets will provide for substantial cost savings through the elimination of overhead and duplicative public company expenses." Still seems fine. But as one peruses the rest of the release, there is this: “The asset sale will be implemented through a Chapter 11 bankruptcy filing in which Seahawk will seek expedited hearings to obtain Court approval. Both
companies expect to obtain regulatory clearance under the Hart-Scott-Rodino Antitrust Act and close the transaction in the second quarter of 2011. We expect no impact on Seahawk's operations and Seahawk will continue to perform work for its customers without interruption. Seahawk expects that full payment of all funded debt and trade payables will be made. Additionally, Seahawk expects to pay all vendors for goods and services provided after the filing.” Wha’? So on a Friday afternoon, the company gets a deal for $105 million (more than the market cap) and then declares bankruptcy? Nice. So what is the proper valuation for the stock? Well, the first thought was to seek out its total liabilities and pare that off (and yes, the number is higher than $105 million). But it’s not the right thought. Think about it. They declared bankruptcy. That makes the common stock (theoretically) worthless. But the stock, after trading tremendously lower in the very early pre-hours on Monday morning promptly rallied back from 1.50 to 4.86. I am not an analyst so I cannot hazard a qualified knowledgeable guess as to why this happened. What I do know as a day trader is that I do not care too terribly much. I just look for trades. For instance, around 10AM on Monday morning, upon going to a new intra-day high, the stock rallied from 3.60 to 4.31 in less than 10 minutes on short covering from people with as much understanding of the situation as I do who had short positions in the thing and panicked out. The moral here is that one never knows what trades on will encounter or when, but keep a very open mind always.

Markets overnight were higher with Tokyo up 0.6%, Hong Kong 1.1%, Frankfurt 0.2%, and London 0.6%. Gold is flat, oil slightly higher, dollar quiet, and bonds up a tinge. Futures are up modestly. Housings starts data came in much better than expected, building permits slightly worse, and PPI indicated more inflation at the producer level than expected. Industrial Production (0.6%) and Capacity Utilization (76.4%) are due out at 9:15AM, Crude Inventories at 10:30AM, and Fed Minutes at 2PM. Overall, it looks like a near inverse of yesterday…the tone is decent today so look for the gains overall to hold but not really augment (or compress). The focus will likely be on the various earnings plays, the farm sector off of the DE numbers, the ‘dollar store’ sector off of the FDO news, and any small caps in the news.

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
FDO- rumored to have receive a takeover bid from Carl Icahn; DG, NDN, DLTR may move with it

ADI- decent earnings

DELL- good earnings

CENX- decent earnings

TSLA- decent earnings

AAN- good earnings

ALTI- signed significant contract with an El Salvador energy company

VCLK- good earnings

GPRO- decent earnings

PRAA- decent earnings

PLAB- good earnings

CVV- closed near a high on positive January order data

GKNT- closed near a high after posting great earnings

NSIT- closed near a high after posting great earnings

ECPG- closed near a high after posting great earnings

AAWW- closed near a high for a second day after posting great earnings on Monday

WYN- closed near a high

RIMM- upgraded by Citicorp from a “Sell” to a “Buy”

ANF- decent earnings

CMCSA- decent earnings

DE_ good earnings

GENZ- accepted Sanofi takeover offer

PFCB- decent earnings

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

ROVI- poor earnings

DSCO- share offering

RLOC- bad earnings

CIT- closed near a low after posting bad earnings

GFC- closed near a low

CGNX- closed near a low

UCTT- closed near a low after posting bad earnings

JDSU- closed near a low

CPLA- closed near a low after posting bad earnings

SKH- closed near a low after posting bad earnings

GMCR- closed near a low on fears it will not aggressively partner up with SBUX

AUTC- closed near a low

MON, MOS- closed near their lows

XOM- closed near a low

APC- closed near a low

FCX- closed near a low

DVN- poor earnings

OMX- poor earnings

WCG- poor earnings

Earnings:

WED FEB 16 BEFORE

ANF CMCSA CVC

DE DF DVN

GENZ OC OMX

PAG PFCB ROC

WCG XEC

WED FEB 16 AFTER

AEM CBS CLF

EHTH ENOC ESRX

HL HMA IO

ITMN ITRI JAH

NFX NTAP NVDA

OII ORLY RBCN

SKX SNPS TRN

Epiphany Trading, LLC
www.epiphanytrading.com

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

TUES. FEB. 15- Getting In Versus Getting Out

2011-02-15T08:51:00.000-05:00

Whenever I write these pieces, I have a dual aim. The first is an altruistic one in trying to impart bits and pieces of knowledge about news events as well as providing insight into whatever success I have had through providing parcel snippets as to what has routinely worked for me as well as what has not worked for me over the years. The other aim is selfish. I learn as I type plus this writing exercise forces me to put into words matters related to the economy and trading in a very public venue. This demands searing focus. Usually, I am able to type a coherent place…not so sure this time as I am at a bit of a loss for how to say what I want to say, but let’s try. And another piece using WYNN as an example coincidentally enough! On Thursday afternoon, Wynn Resorts (WYNN) reported their earnings; the numbers were good with a huge beat of 91 cents per share versus 66 cents expected. The stock initially popped but slowly began coming in. With the stock in a range of up about 2 to about 4 after-hours, I shorted it with it up 1.90 on the after-hours session. It rapidly fell with me garnering 1.20 per share on the first half of my position in a few seconds and the rest for about 75 cents average in pieces. But then the stock began to fall anew and someone suggested that it was a short through unchanged (albeit with no consolidation…but this is not the point…maybe. I think. See. Told you it may become incoherent.). My response was “If I was still in the position, I’d be holding at least a fraction of my position but I would not enter into a new position.” I was up almost all night on Friday night letting that question settle in my mind. I still am not sure I have an answer as you can tell by my babbling. In any case, it’s the same exact thing- it’ll either keep going or it wouldn’t. What is the difference if I have a position with the aim of making money if I held it versus entering a new (exact same) position with the same aim? What is the psychological hang-up? All I can come up is that consolidation issue, i.e. in entering a new position, I’d be nervous that I could lose very fast since the stock was hurtling lower. Conversely, if I was in it, the mindset would be “well, I’ve taken a little off…let’s see how far this can go just in case it keeps on falling.” Thus, the psychology (well, my psychology) is that if already in the position, it’d be doing what I wanted yet if I wasn’t in it, I’d let fear trump greed. At first, I was annoyed with that answer but I am increasingly OK with it. It’s not exactly that it’s ‘house money’ per se if already in the position because, hey, it’s real money in your possession. But whereas I’ve attempted to make entering a trade as close to a science as I can, exiting a position is and likely always will be an art (for me). I let the market tell me where to exit a position as noted in Friday’s piece. I need a trigger with defined characteristics as noted on Thursday’s piece. Maybe it’s best to keep those two separate. So, I am not sure if that answers the question, but I think it goes back to the theme of discipline. See, if I’m right, I want to let my winners ride. However, when I seek to enter a position, I have certain characteristics that I desire. And those two innate mindsets directly conflict. My goal therefore as time progresses is to try to bridge those two mindsets- if it is even possible.

Markets in Asia were mixed overnight with Tokyo up 0.2% but Hong Kong down 1%. In Europe, prices are mixed as well with Paris up 0.2% but London down 0.2%. The dollar is stronger against the euro and the yen. Oil is up 1% with gold up a bit as well. Bonds are down slightly. There was a slew of economic data out this morning with retail sales coming in worse than expected, the Empire Index just under expectations, and export/import prices both indicating higher numbers than expected. Net Long-Term TIC flows are out at 9AM, Business Inventories (0.7%) at 10AM, and the NAHB Housing Market Index (16) at 10AM as well. Futures have been a bit weaker all morning. This particular day feels a bit different even with the Bernanke put seemingly at the market’s tailwinds. I am looking for the relatively weak tone to maintain itself throughout the day- nothing dramatic, but stocks aren’t acting as they have the last few mornings in terms of reacting to news. The focus will be on the many earnings plays out, the transports, the smallcaps with momentum from yesterday, and the refiners off of yesterday’s strength.

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

GMCR- closed near a high amid rumors of an impending partnership with SBUX

KV/A- closed near a high after placing a private placement of shares and boosted senior secured facility to $130 million

TSO, MRO, COP- closed near their highs

PAY- closed near a high after a boost in guidance by HYC

CLF- closed near a high

NYX- closed near a high on rumors of a hostile takeover by CME; NDAQ closed near a high as well

CTXS- closed near a high

NFLX- closed near a high after a brokerage upgrade

FCX- closed near a high

RIG- closed near a high

WBC- closed near a high

IPGP- closed near a high

XOM- closed near a high

LLNW- good earnings

MAR- decent earnings and announced plan to spin off timeshare business

THOR- share repurchase program now in place

PKT- closed near a high after partnering with FFIV

TPI- closed near a high after posting earnings

GSIG- closed near a high

BWLD- closed near a high

HEES- closed near a high after a positive mention at UBS

TNGN- closed near a high

NSIT- good earnings

MERC- decent earnings

DGIT- good earnings

NVMI- decent earnings

SF- decent earnings

SPPI- good earnings

MMC- decent earnings

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

UCTT- bad earnings

A – poor earnings

DCT- share offering

CLI- share offering

FDX- lowered earnings guidance

AUTC- closed near a low

GFC- closed near a low

ANIK- the FDA failed to inspect the company’s facility which delays its plans to move its manufacturing equipment from another site

NLY- 75 million share offering

CIT- poor earnings

PMI- poor earnings

NFLX- cut at Morgan Stanley

SIRI- poor earnings

UTHR- poor earnings

HST- poor earnings

WLT- terrible earnings

Earnings:

TUES FEB 15 BEFORE

CIT CPLA CTL

FOSL HCP HST

MMC OMC PMI

Q SIRI UTHR

WPI

TUES FEB 15 AFTER

ADI CENX DELL

FRT GPRO MASI

MDRX NBR PAAS

ROVI TSLA VCLK

Epiphany Trading, LLC
www.epiphanytrading.com

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

MON. FEB. 14- Getting Over A Mistake

2011-02-14T08:52:00.000-05:00

On Friday, I suffered my worst tactical trade of the year. Wynn Resorts (WYNN) reported its earnings last Thursday night. On Friday morning, the stock opened a little lower but quickly breached the 'unchanged' marker. It rallied to around a point higher, got stuck for a few minutes, and looked poised to keep going. I bought it, had an instant profit in it...and then scrambled to exit in horror as it fell a point in seconds. The stock then fell almost three more points...before eventually rallying over 10 points over the duration of the day! There are several points of learning. First, when presented with a terrible situation such as that one, suck it up. Please understand- as recently as three years ago, I'd have essentially taken my keyboard over my knee in an effort to break it in two and bellowed loudly. That had its positive as it released anger...but besides the fact it was brutally unfair to all around me, how good was it for my blood pressure? So in my old age, I've realized what we should all realize- things happen. Nobody is perfect and nobody can trade perfectly. The second thing is to forget the trade immediately if your style is to trade for 1-2 minute time horizons. In a 162 game major league baseball season, a team is almost definitely going to win at least 54 games and almost definitely lose at least 54 games. The difference between the good and bad teams is what they do with those other 54 games. Well, that trade was one of the 54 that I was gonna lose (even the best teams can lose 19-1 on any given night). One corollary: if your game is to trade for longer than 1-2 minutes, study the trade very hard so as to see how you can improve otherwise the fact it went way down and then way up is irrelevant. Third, take time to understand the mistake. If you have a bad (or series of bad) trade(s), don't put it out of sight, out of mind without trying to figure out what happened. If you study the situation intensely, you'll probably realize at least one trigger for your mistake. If you don't take time to study, all that will happen is that it'll fester and you will have a "why me" attitude rather than trying to figure it out. In the specific case, I realized my mistake- instead of buying it thru unchanged, I bought it on momentum with precious little consolidation. So while I'm not being self-aggrandizing it in saying I deserved to lose, I certainly did put myself in position to maximize my odds of profitability. Next, study the broader picture. On Friday for instance, stocks acted differently than they had in recent times...subtle but things like CLX rallied several points upon a release of a report that an investor had accumulated a stake in the company. Such a reaction was highly unusual and signaled a bit of a change in the market tenor. Finally, live to fight another day. You gotta. What if I got way off my game? I could have lost two or three months of income in an effort to "get it back." Instead, I withdrew and reevaluated...I made a series of smaller trades in adapting to how the market was acting. I finished the day down less than 1/4 of what I'd made the previous day (about 1/15th of what I'd made on the week). I realized very positively that one mistake could wipe out some work...but not a career...and put myself in position to get everything back and a lot more the next day. So, a lot to soak in, but introspection without overanalyzing certainly does help.

Markets overnight were stronger throughout Asia with Hong Kong and Tokyo closing higher in excess of 1% but the rest of the world is quiet with the bourses in Europe trading in a tight range from up 0.2% to down 0.2% depending on the market. Gold is down slightly, oil is up slightly, bonds are a tinge lower, and the dollar is mixed with slight losses against the yen but showing decent gains against the euro. Futures are down ever so slightly. It’s the first relatively quiet day in awhile with no economic news of consequence due out today nor any major earnings out. Look for the quietness to continue for the averages what with the VIX closing below 16 but there should be some noise within all of that. The focus will be on the companies in the news such as the few earnings plays and the merger news plays, the momentum plays based on slightly older news (such as JDSU closing near a high after gapping higher on earnings last week), small biotechs in the news, and the casinos to see the reaction to MGM numbers.

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

CLX- closed near a high after Carl Icahn disclosed a 9% stake in the company

OPEN- closed near a high on followthrough from earnings and a mention on “Mad Money” on Thursday night

WBC- closed near a high after posting earnings

INPH- closed near a high after posting earnings

WYNN- closed near a high after posting earnings

RAX- closed near a high after posting earnings

PNRA- closed near a high after posting earnings

PNSN- closed near a high after posting earnings

BIDU- closed near a high

NPTN- closed near a high

SMED- closed near a high

SWS- closed near a high

MEG- closed near a high

MLP- closed near a high

VECO- closed near a high

MERU- closed near a high

PANL- closed near a high

PNSN- closed near a high

JDSU- closed near a high

NFLX- closed near a high

CREE- closed near a high

AMZN- closed near a high

POT, MOS- closed near their highs

COP- closed near a high after announcing a major stock buyback and dividend increase

KLAC- announced additional 10 million share repurchase program

TEVA- featured on “Fast Money” on Friday night

NVDA- partnered with Samsung to develop Galaxy Tab 10.1 Honeycomb tablet

ACUR- Acurox tablets new drug application was accepted for filing with priority review status

BPAX- positive LibiGel safety data

STEC- decent earnings

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

VTRO- closed near a low after posting earnings

CGNX- closed near a low after posting earnings

MDC- closed near a low after posting earnings

EXPE- closed near a low after posting earnings

WLT- closed near a low

TCI- closed near a low

ENOC- closed near a low

MCP- closed near a low after announcing its share offering priced at 50

SWSH- announced private placement of up to 12,262,500 subscription receipts at $4.80/share

XOMA- filed $100 million mixed securities shelf offering

HUGH- to be acquired by SATS for $60/70/share

HAUP- poor earnings

HAWK- sold assets to HERO via a chapter 11 bankruptcy

EMS- to be acquired for $64/share in cash from Clayton, Dubilier, and Rice

Earnings:

MON FEB 14 BEFORE

DBD MGM STEC

VAL

MON FEB 14 AFTER

A FTI LLNW

MAR MAS SKH

UCTT WLT

Epiphany Trading, LLC
www.epiphanytrading.com

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

FRI. FEB. 11- Preventing The Win

2011-02-11T08:51:00.000-05:00

I want to follow-up on one point from a piece I did yesterday about “paying retail.” This time, I want to focus more on exiting. It is often said that traders tend to cut their profits short and let their losses run. I’ve discussed many times in this space and on our chat room the import of not building positions and exiting quickly when wrong if you are an immediate-term trader. But in one of the great paradoxes of all-time, traders tend to have hope when positions are against them and fear losing gains when they have them so they inevitably exit too quickly. It’s basic human nature. We as a species much less as traders want to protect what we have when acquiring more yet when we’re losing we as the eternal optimists most of us are rationally or irrationally hope/think/hope/believe/hope that we’ll get our money back. But it should be the opposite. When one is wrong and one ignores his/her uncle spot, usually, there’s a reason to have had the uncle spot in the first place and the loss gets worse. But on the opposite yet just as important a place on the spectrum is that it is asinine just to post bids or offers when a stock is going your way if for no other reason than to protect your winnings. All this can do is limit your gains. The question to ask yourself is this: if I had no position in the stock, what would I do? What I do is I let the market tell me what to do. If I am right and a stock goes my way, I exit half of my position as soon as the stock pauses. But I do the same thing twice more with the other quartiles of my shares in letting the market dictate what to do rather than guessing. By doing so, it allows me to better maximize a move. If the thing is going my way, why would I randomly throw out a price when it could easily go a lot more? All this does is contain my profits. So, please, when wrong, exit. But when right, let the market tell you what to do rather than guessing what to do else you’ll leave a lot of money on the table time and again.

Markets overnight were lower throughout the world on the Egyptian strife. Tokyo was down 0.5% and the bourses throughout Europe were down from 0.3% in London to almost 1% in Paris. Gold is down slightly, oil is up a bit, and the dollar remains quietly strong. Futures are down a bit after yesterday’s rally. Michigan Sentiment (75.5) is due out at 9:55AM ET. For today, the strong Bernanke put is fighting tooth and nail with the chaos on the streets in Cairo (which will likely dramatically worsen today). Whether it spreads to the Suez Canal is the key; that will likely set the day’s tone. Otherwise, prices will likely remain choppy with no major bias. The focus will be on the earnings plays (CMG, et al), stocks with major news (MCP), and all of the news plays yesterday which closed strong for a shot at short covering today (OPEN,MOS, et al).

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

CLB- closed near a high after posting earnings

ALXN- closed near a high after posting earnings

WFMI- closed near a high after posting earnings

SWI- closed near a high after posting earnings

GT- closed near a high after posting earnings

IPGP- closed near a high explosively after posting earnings

EQIX- closed near a high after posting earnings

LMLP- closed near a high after posting earnings

SCI- closed near a high after posting earnings

TLEO- closed near a high after posting earnings

RAS- closed near a high after posting earnings

DIOD- closed near a high after posting earnings

SFSF- closed near a high after posting earnings

RIMM- closed near a high after it was said that RIMM is planning Playbook software to run GOOG's Android

BIDU- closed near a high

POT- closed near a high

RIG- closed near a high

CREE- closed near a high

ICE- closed near a high

DSCI- closed near a high

SCON- closed near a high

CTXS- closed near a high

REGN- closed near a high

CVLT- closed near a high

NTES- closed near a high

QLIK- closed near a high

ESV- closed near a high

JNPR- closed near a high

FTO- closed near a high

MDS- closed near a high

CMG- great earnings

FALC- great earnings

STMP- great earnings

OPEN- closed near a high and was featured on “Mad Money” last night

CEPH- decent earnings

DVA- decent earnings

GRM- decent earnings

PNRA- great earnings

RNWK- decent earnings

NBIX- decent earnings

VITA- received 510k clearance for Vitoss bimodal bone graft substitute

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

AKAM- closed near a low after posting earnings

IFF- closed near a low after posting earnings

TRGL- closed near a low

MCP- closed near a low

WYNN- poor earnings

EXPE- poor earnings

KFT- poor earnings

IM- poor earnings

MNKD- poor earnings

NILE- terrible earnings

RSG- poor earnings

LF- poor earnings

KOOL- poor earnings

OPTR- share offering

NOK- announced a broad strategic partnership with MSFT…but no far-reaching strategic changes

MCP- share offering at 50

Earnings:

FRI FEB 11 BEFORE

BPL DISCA MDC

WBC

Epiphany Trading, LLC
www.epiphanytrading.com

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

THURS. FEB. 10- Paying Retail

2011-02-10T08:25:00.001-05:00

Buying a car and buying a mattress tend to be a similar experience at the dealer. When one walks in to one of these places, one looks at the sticker and knows that there is no way no how that one will walk out of there paying sticker price. It’s obviously up to the consumer to do a lot of homework and figure out exactly what a good deal is, but it’s well known that if one pays retail, one is likely getting ripped off. As a guy who purchased his last car for several thousand dollars under manufacturer’s retail price and his last mattress for 40% off of the original quoted price (plus free delivery thrown in), there are fewer people you’ll meet than me who try to scour out a good deal. In stocks though…in stocks, it is utterly totally different in my immediate-term trading. I demand to enter at retail and exit at retail. Let me explain. I seek definitive trigger points for every trade that I do. As a for instance, I wanted to trade Molycorp (MCP) yesterday per my commentary in the Trade of the Day section on the forum. The Chinese government made some noise about building up its strategic reserves of rare earth metals on Sunday night. By Tuesday’s close (near the high of the day), the stock was four points higher than where it closed Friday. My initial line of thinking was that there’d be some short covering but the stock broke down to 54.50 from a 55.40 close shortly after the opening bell. It tried to rally but failed. When it ticked to 54.50 at 11:13AM ET, I shorted it at the low of the day. Had I tried shorting it at many other times (say 55.05 at 10:45AMish), I’d have watched the stock spring a bit and lost money. The idea is that many of the people who were long the stock would panic out if it took out its old intra-day low because the stock clearly failed to react in a continuation pattern to the news. Ergo the idea is that I wanted to wait until the last possible second to short the thing at the low of the day rather than springing in early. Then when the stock thankfully broke, I didn’t throw a bid out hoping I’d get hit. Rather, I wait until the stock pauses..and then I bid up for it. Had I thrown out a bid to cover half my position at say 54.40, I’d have missed out on the fact it broke 35 cents rapidly…I did not cover 54.15. Instead, when I saw one bid refresh there, I paid up and exited 54.20 in making sure I was able to exit it ( a nickel off the low but 20 cents better than I otherwise would have done). So, as you enter into a trade, know why you want to enter it and don’t try to get in exceptionally early; similarly, when exiting, let the market comes to you and particularly when something is really going your way you have got to make sure you pay up when you exit to assure your exit (which will tend to be better than if you did not pay retail).

Markets were down very slightly in Tokyo (0.1%) but much bigger in Hong Kong as the Hang Seng slid almost 2%. In Europe, Frankfurt is down 0.4%, Paris 0.7%, and London 0.9% as of this writing. Oil and gold are down slightly with the dollar up against the euro. Bonds are up a bit this morning as well. There are two catalysts. First, CSCO’s conference call was terrible; shares of CSCO are off 10%. The other thing is that Portuguese debt spreads widened dramatically to the point whereby it’s a legitimate concern as to whether the nation will need a bailout. On the domestic front, Initial Claims (413K) and Continuing Claims (3900K) are due out at 8:30AM, Wholesale Inventories (0.7%) at 10AM, and the Treasury Budget (-$50.0 billion) at 2PM. Futures are sharply lower at the moment. For the day, there will likely be some stirring of a rally what with the recent market momentum and an eight-day Dow winning streak on the line. But the market likely won’t make it; I’m looking for the downside bias to hold with no huge swings either way from the open. The focus will be on the earnings plays, the techs off of CSCO, the insurance sector, and relative strength plays for some potential short covering.

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

BWLD- closed near a high after posting earnings

SWS- closed near a high after posting earnings

RAH- closed near a high after posting earnings

DSCI- closed near a high

WSM- closed near a high

ECA- establishing a joint venture with PetroChina through 50% interest in Cutbank Ridge assets

MCX- good earnings

WFMI- great earnings

RE- decent earnings

SFSF- good earnings

MYGN- positive Prolaris test results

CLB- decent earnings

SWI- decent earnings

ENS- great earnings

SCSS- great earnings

BG- decent earnings

S- decent earnings

ALU- great earnings

GT- decent earnings

SQNM- announced publication of ‘locked assay’ study in “American Journal of Obstetrics and Gynecology”

IPGP- raised earnings earnings

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

RIG- closed near a low

NAK- closed near a low

DGW- closed near a low

SIAL- closed near a low after posting earnings

NTGR- closed near a low after posting earnings

MOTR- closed near a low after posting earnings

CSC- closed near a low after posting earnings

CSCO- bad earnings

AKAM- terrible earnings

ALL- bad earnings

ATVI- bad earnings

EQIX- poor earnings

NUAN- poor earnings

FLIR- bad earnings

AMKR- bad earnings

CGA- poor earnings

TEX- poor earnings

TQNT- bad earnings

PACR- bad earnings

PEP- poor earnings

TKLC- poor earnings

SHPGY- poor earnings

TX- 19.2 million share offering at 36

Earnings:

THURS FEB 10 BEFORE

ALXN BG BWA

CBOE ECA GRA

GT LF LH

LPX MNTA NBL

PEP PM S

SHPGY SNI SPR

TAP TDC TKLC

WWE

THURS FEB 10 AFTER

ATHR CEPH CGNX

CMG DVA EXPE

GDI GRM IM

KFT MNKD NILE

PNRA RAX RSG

TCO

Epiphany Trading, LLC
www.epiphanytrading.com

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

WED. FEB. 9- Rising Yields And Rising Stocks

2011-02-09T08:47:00.001-05:00

As investors and traders alike have continued to doubt the veracity of this bull market, one of the major factors that people have recently cited is that rising interest rates are bad for the stock market. If the rate rise were to get extraordinarily out of hand, they’d be completely correct. Completely making up numbers- if, say, a 10-year mortgage suddenly was given to homebuyers at a 14% rate rather than the 4% to 4 ½% range it has been, it’d very arguably cripple the housing market as it’d price out many more people. However, in the immediate-term, what many investors don’t realize is that (no matter the circumstance of the rise), rising rates are bullish as it implies that the economy may finally have stabilized and is hopefully primed for growth at this point. Basically, one has to understand that one should utilize what the interest rate would be ex inflation. If I received 2% in a savings account, but inflation was 7%, I’m behind the 8-ball. Thus, if corporations feel that they can borrow money relatively cheaply due to a stronger economy, it creates a greater demand for money which creates a stronger economy. Real interests have been low because although the government has been a net borrower in the last 2-3 years, businesses and consumers have actually been net savers (overwhelming the government’s borrowing) as they have done things like pay off credit cards at a faster pace than the government has borrowed money. With real interest rates significantly below historical norms, they arguably have quite a bit to go. Thus, rising rates should be appreciated in the immediate-run rather than vilified as all else equal, we’re in a window whereby the perception is that the economy is expanding. For day traders, the fate of bond yields will likely be one of the keys to stock market performance in 2011 (much less intra-day many days should bond moves become exacerbated). It’s one of those concepts whereby the rising bond yields are a good thing signaling a belief in a strong economy…but too much of a good thing can become a bad thing.

Markets in Asia were down a bit overnight on the China interest rate news with Tokyo down 0.2% and Hong Kong down 1.2%. In Europe, prices are modestly lower across the board from 0.2% in Frankfurt to 0.4% in London. Oil is up almost 1%, gold is flat, and the dollar is lightly mixed. Bonds are very slightly weaker but the 10-year yield closed at its high level in 10 months yesterday. Stock futures are modestly weaker. Crude Inventories are due out at 10:30AM. Trading today will likely remain relatively quiet with prices on both sides of unchanged. There’s no real factor to keep the rally going or to shove stocks down. Fed Chair Bernanke testifies on the economy at 10AM so that could be a market mover. The focus as has been so often the case recently will be on the earnings plays, small cap biotechs and momentum plays, and relative strength plays (particularly early on if the market upblips).

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

MCP- closed near a high

AMZN- closed near a high

AAPL- closed near a high

VVTV- closed near a high

ZLCS- closed near a high

IDCC- closed near a high on continued momentum from the weekend’s “Barron’s” mention

LULU- closed near a high after a positive mention on “Mad Money” last night

VECO- closed near a high after posting earnings

XIDE- closed near a high after posting earnings

SNCR- closed near a high after posting earnings

TTHI- closed near a high after posting earnings

KND, RHB- closed near their highs after KND agreed to buy out RHB

DIS- decent earnings

PBI- decent earnings

BGC- good earnings

CERN- decent earnings

ATML- decent earnings

ASYS- decent earnings

BWLD- decent earnings

TTWO- decent earnings

PRCP- decent earnings

WWWW- decent earnings

ANDE- decent earnings

CBL- decent earnings

AGU- decent earnings

KO- decent earnings

RVI- to be acquired for .435 shares of DSW

DSW- raised earnings outlook and announced acquisition of RVI

MMM-share buyback

UQM- closed near a high after announcing it’d supply electric drive motors for Audi A1 e-tron Test-fleet build

FDO- closed near a high after an RBC upgrade

BIDU- brokerage upgrade

JOE- exploring strategic alternatives

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

EPD- closed near a low amid a Texas factory fire

POT- closed near a low

WFC- CFO Atkins retired effective immediately

ILMN- poor earnings

MOTR- terrible earnings

GIL- poor earnings

TCK- poor earnings

NTGR- poor earnings

MDMD- bad earnings

SWIR- terrible earnings

USNA- terrible earnings

PTP- poor earnings

HIBB- warned on earnings guidance

IR- bad earnings

CSC- bad earnings

Earnings:

WED FEB 9 BEFORE

AGU ANR CSC

ENER ICE IR

JNY KO NOC

RL SIAL WYN

XRAY

WED FEB 9 AFTER

AAP AKAM ALL

AMKR ATVI CGA

CLB CSCO EQIX

FLIR HIW KIM

MET NUAN PL

PRU RE SWI

TEX TMK TQNT

WFMI WSH

Epiphany Trading, LLC
www.epiphanytrading.com

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

TUES. FEB. 8- In With The New...

2011-02-08T08:49:00.000-05:00

Recently, I was in a checkout line at Staples with my daughter, Rayna. There was a massive bin of Silly Bandz- last year's arguably hottest product. What would have cost several dollars last year for a pack of 24 animal bands was marked down to $1. I asked someone there about it and was told the store had put everything out in an effort to unload them. I had to go back a week later...and almost none had been sold. Fads like this have come and gone through time from Cabbage Patch dolls to Garbage Pail Kid stickers. But it's been the same in day trading. First, awesome day trading stocks in the past such as WCOM or KIDE permeated the trade blotters of many day traders including myself on a nearly daily basis. But times constantly change and the docket of stocks to trade constantly evolve as well. It's up to the trader to constantly seek out new ideas- and realize when the time to trade other stocks has passed (declining volume, loss of liquidity, et al). The other note is that certain types of trades were great but no longer exist. One of my favorite types of trades to do, for instance, would be to buy or short from a huge pool of liquidity near an intra-day high or low. With the advent of algorithms and increased liquidity overall, this trade has been all but phased out. It's quite commonplace now for a stock like BIDU or XOM to have an offer for 250,000 shares on an offer, the liquidity to gradually disappear, the stock to rally six cents, and then fall 32 cents in the next minute. Sometimes the stocks reassert their trend...sometimes not but that type of picking away at liquidity action for a quick gain is no longer viable. Thus, in the vein of the Silly Bandz, be aware that the pool of stocks to trade as well as the types of trades out there constantly change and we as day traders need to be pro-active in evolving with them.

Markets were mixed overnight throughout the world with Tokyo up 0.4%, Hong Kong down 0.3%, Frankfurt up 0.2%, and London down 0.2%. Like I said, mixed! Oil is notably weaker in trading 1.5% lower, but gold is flat. The dollar is off a little and bonds are flat. There’s no economic data today. Stock futures have been drifting in a narrow range overnight with a slight downside bias. Look for a quiet session today with a lot of choppiness with movement not far from the unchanged line. The focus will be on earnings, small cap biotechs such as OCLS, small cap momentum plays moving around yesterday which closed near their highs, and takeover rumor plays such as BIG.

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

MERC- closed near a high

KNL- closed near a high

AIG- closed near a high

POT- closed near a high

AAPL- closed near a high

CMI- closed near a high

RPRX- closed near a high

IGOI- closed near a high

HILL- closed near a high

CSL- closed near a high after posting earnings

TGA- closed near a high as fears for the company’s business cooled re Egypt

HAIN, LULU- featured on “Mad Money” last night

HRLY- received $19/share cash bid from KTOS

CNXT- received unsolicited bid from Golden Gate which would top bid from SMSC; the price is $2.35-$2.45 per share

CSPI- decent earnings

SNCR- decent earnings

XIDE- great earnings

MGM- upgraded at Bank of America

MT- decent earnings

SVVS- decent earnings

VSH- decent earnings

OCLS- received new FDA 510(k) clearance for microcyn-based dermatology hydrogel for management of atopic dermatitis

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

FCX- closed near a low

GFC- closed near a low

NFLX- closed near a low

DHR- closed near a low in a near island reversal after announcing buyout of ESV

TRGL- closed near a low amid rumors of France conducting studies on shale oil and gas

HUM- closed near a low after posting poor earnings

SYY- closed near a low after posting poor earnings

CPW- closed near a low after announcing a share offering

FMC- bad earnings

BDX- bad earnings

GLUU- bad earnings

VECO- poor earnings

LNCR- poor earnings

OPXA- share offering

PFG- poor earnings

AVP- poor earnings

CVH- poor earnings

BZH- poor earnings

ELN- poor earnings

NYX- poor earnings

TEVA- poor earnings

ALLT- poor earnings

BR- poor earnings

FSLR- negative talk out of Morgan Stanley re solar 2011 global shipments

Earnings:

TUES FEB 8 BEFORE

AGCO AVP BR

BZH CHBT CNC

CVH ELN ETR

FIS GET HGG

MAC MLM MT

NYX SLE SVVS

TEVA TIN VSH

TUES FEB 8 AFTER

ATML AXL BGC

CERN CMP CRL

DIS GIL ILMN

MOTR OPEN PBI

PPDI PPS PTP

RNR TTWO XL

Epiphany Trading, LLC
www.epiphanytrading.com

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