THURS. AUG. 6- Earnings Drivers

There has been a very unique feature to this particular season. A substantial minority of major public companies managed to beat earnings estimates handily (most usually do), but they missed revenue estimates. It’s one thing if it was a handful of corporations, but this action happened time and again in a broad array of industries. How about this? About 77% of the S&P 500 members which reported quarterly earnings beat earnings estimates, but only 53% of the members beat revenue guidance. A good example of this is the strange example of Microsoft (MSFT) which beat the estimates of analysts slightly, but its quarterly revenue was over $1 billion under analysts’ estimates. Thus, what is clearly occurring is that the vast majority of companies are beating (lowered) bottom-line earnings estimates but doing so only because of continued cost reductions. Now, the degree of the slashing of costs is admittedly impressive, but at some point, if you have no employees left or no parts to make product in stock, you’re not in business anymore. This trend has largely been ignored by Wall Street because most investors/traders are breathing a sigh of relief that the earnings have not been worse and/or at least shown stabilization. But now that the market has rallied immensely, one would think that as we exit this earnings season in the next couple of weeks, it is time to begin thinking about the crucial need for real revenue stabilization if not growth in earnings seasons to come. In the immeidate-term, enjoy the rampant bull market.


Markets in China turned a little lower overnight, but the trend shifted in Tokyo and Hong Kong with those markets both up more than 1%. The European bourses followed through even with the ECB meeting with the averages there up about ½% on average. Commodities and bonds are quiet while the dollar is a little stronger. Futures are shaking off the CSCO news; this significantly reduces the chances for any reversal today. Look for a quiet day overall ahead of the jobs report tomorrow, but with a strong underlying tone. Once again, the heavy trading will be in the earnings and microcaps stocks.

Watch list:

08062009Eriklist.zip

Reiterating-
Please understand that if the ideas do not get to the hoped for set-ups cited below, more often than not, one should not blindly trade the symbol next to said idea.
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

AIG- stampeded higher on short covering; closed near a high

RDN- closed near a high after posting great earnings

SOLR- closed near a high after great earnings

CATM- closed near a high

AXL- closed near a high

EVR- closed near a high

ETM- closed near a high

DFR- closed near a high

BKI- closed near a high

MTG- closed near a high

JVA- closed near a high

TGIC- closed near a high

KND- closed near a high

DTG- closed near a high

RL- closed near a high

RCON- closed near a high

MRX- good earnings

ATW- good earnings

MBI- good earnings

ACF- good earnings

GIVN- good earnings

MELI- good earnings

MUR- good earnings

BEAT- good earnings

TLAB, STO- on “Mad Money” last night

ATK- good earnings

CSIQ- great earnings

TDC- good earnings

CMCSA- decent earnings

FUQI- great earnings

ANSS- good earnings

LINE- good earnings

MS- repurchasing TARP warrant

DLTR- good earnings





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

BHI- closed near a low

CSCO- poor earnings

ALL- poor earnings

BGC- poor earnings

PRU- poor earnings

CBEY- poor earnings

GDP- poor earnings

NHP- poor earnings

SHO- poor earnings

SVR- poor earnings

AHT- poor earnings

NSIT- poor earnings

VITA- poor earnings

EXM- share offering

OSK- share offering

ACAD- share offering

EAT- poor earnings

LAMR- poor earnings

LNT- poor earnings

PXP- decent earnings, but share offering

HUN- poor earnings

PCS- bad earnings









Earnings:

THURS AUG 6 BEFORE

ACM AEE ANPI

ANSS ARE ATK

BCE BX BVF

CDE CLR CMCSA

CSIQ CTB CTCM

CTL DAN DLTR

DSX DTV EAT

EP FTO GNA

HME HPT HUN

ISIS KEG KG

LAMR LINE LNT

LXP MBI MF

MFC NDAQ OEH

PCS PXP RAH

SNI SUG TDC

TNDM TTI WMB

WNR


THURS AUG 6 AFTER

ACS AGO AINV

ALKS APL BZH

CBS CROX CSC

DCT ECLP ELX

EOG INT IPI

KFN LEAP MCHP

ME MIL MXIM

NVDA PSA RMD

SD SQNM VRSN

WR WTW






Good luck today.


Epiphany Trading, LLC
www.epiphanytrading.com

Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
Joseph R. McCandless- Managing Partner
D. Timothy Seaquist- Managing Partner