WED. AUG. 5- Staircasing

In the roaring 2009 bull market which started in March, there has been an extraordinarily notable feature. Let’s do the analogy and then the boring explanation. If you work a normal job (aka not a day trading job)…let’s say a post office gig. One major advantage if you have been a postal employee for, say, 32 years is that you get a steady paycheck and you know what your paycheck is. So, you will get paid the same amount on a Monday, Tuesday, Wednesday, Thursday, and a Friday (if you got paid everyday rather than every two weeks). Thus, if you take a #2 pencil and make a chart of your daily pay, you’ll see that you have five up days and then two days (Saturday/Sunday) of a straight line. The next week, it is the same thing. And if you’re reading this fast and didn’t understand what I just wrote, please take out the #2 pencil and do the visual. It is of crucial import because this has been the pattern for the stock market for the last few weeks. OK, not up every day Monday-Friday…but the idea is the same. There have been many days which have been sharply higher, but when the bears try to come out and play, buyers rush right back in and match them. It makes things look like a steady ascending staircase in that the two options for several weeks now for a stock market close has been sharply higher or steady. The reason this is so fundamental to understand is because it shows how strong the buying support has been. Money managers now trailing the benchmark averages cannot afford to stay on the sidelines, simply put else they stand to lose their jobs. Imagine- losing money last year and failing to make money this year. Thus, any instance there has been any attempt to take things lower (as was the case yesterday state-side after UBS’s abysmal performance), things don’t necessarily zoom upward, but they snapback with a quiet close. On a daily basis, I hear words like "unbelievable," "ridiculous," and "asinine" to describe this rally. Besides the fact that none of the words are applicable in any basis of reality, it is of no consequence. As day traders, this is why we cannot moan and groan and guess as to what we think will happen. When the pattern is shattered, reevaluate. But, as always, go with what you see particularly on an intra-day basis else you will not make money as a day trader.

Markets in Asia were generally weaker overnight with prices down fractionally in Tokyo, but over 1% in places like Hong Kong. In Europe, the markets are quiet with prices mildly up. Commodities and bonds are also quiet. Futures are mildly higher in the early going. There seems to be no obvious trigger to stop the rally at this point so let’s go with the odds…the broader averages should be in consolidation mode overall, but the tone is strong. As has been the case so many days recently, focus upon the microcaps and the stocks out with earnings; this week and next week are the last big weeks of the summer reporting season so enjoy it while you can.


Watch list:

08052009Eriklist.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

UTA- closed near a high

RCON- closed near a high

DVAX- positive developments in its phase 3 data for its Hepatitis B Vaccine

ERTS- decent earnings

TNC- closed near a high

LPX- closed near a high

MBI- closed at a high

CLI- closed at a high

SCLN- terrific earnings

UFS- closed near a high after posting positive earnings

IEC- closed near a high

CTSH- closed near a high after posting great earnings

BMC- good earnings

CTRP- good earnings

DTG- great earnings

CAR- good earnings

WFMI- fantastic earnings

DVA- good earnings

PXD- decent earnings

PODD- good earnings

CBL- good earnings

MOLX- good earnings

CSTR- good earnings

TSRA- great earnings

TRLG- good earnings

CNO- good earnings

BAC, TRP- featured on “Mad Money” last night

UNM- good earnings

GGC- good earnings

INO- first human demonstration of an antibody response using its DNA vaccine published in Human Gene Therapy

NVAX- achieved pandemic H1N1 influenza production milestone

HLS- decent earnings

AGU- good earnings

DVN- good earnings

FWLT- good earnings

GRMN- great earnings

FIG- good earnings

CMLS- great earnings

OWW- good earnings

RDN- great earnings

RL- decent earnings

EXM- decent earnings





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

MLNX- closed on a low after a pretty major reversal

HK- poor earnings and doing share offering

CEPH- poor revenue guidance

KFT- in-line guidance

ONXX- bad earnings

CRL- bad earnings

JACK- poor earnings

BBND- terrible earnings

HCP- share offering

JLL- bad earnings

AMMD- bad earnings

SOLR- bad earnings

ACAS- horrible earnings

PG- poor earnings

RIG- bad earnings

PWR- bad earnings

CCC- poor earnings

BHI- bad earnings



Earnings:

WED AUG 5 BEFORE

AGU ASCA AVT

AXL BHI BYD

CCC CEDC DF

DVN EXM FIG

FOE FWLT GRMN

HK HLS IFF

IRC KWK MMC

OC OSG PCG

PG PQ PWR

RDN RIG RL

RRD TKLC WTR

XTO

WED AUG 5 AFTER

ACF ALL ATHN

ATW BEAT BEXP

BGC CECO CNQR

CSCO CXW ES

ESS FCH GDP

GFA GXP HCN

IOC MELI MRX

MUR NDN NHP

OEH PRU PVA

REG SHO SUN

SVR TEG VRTX




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