When I bought my house in 2004, I was faced with fun things like the real estate market going up 1% every week or two. I’ll never forget almost having a deal in place only to have it fall through after I gave the guy a binder because the house failed inspection. That happens every day of course. What doesn’t happen in every era is that the house sold for 20% more than the price we agreed to a mere six months later (and the guy did not do a lick of work to it). I know this because I kept in touch with him in trying to negotiate something for about three months. Times changed, didn’t they? My brother bought a condo in April 2008. As I helped him with his taxes earlier this year, I noted that he got a $7,500 federal tax credit. The way it works for those that do not know is That he basically got a 15-year interest free loan from the government in which he was allowed to take $7,500 off of the bottom line of what he owed in taxes and has to re-pay it $500 per annum for the next 15 years. Well, it got better. Turns out if he had waited a few months into January 2009, the law was modified so that there was a $8,000 giveaway from your friends at Uncle Sam. Yup. No loan. Cash money. This leads to yesterday. The homebuilders were heavily weighed down yesterday which helped depress the equity markets in general. The rumor was that when this tax credit expires in November 2009, Congress may not extend it. The theory goes that this will provide a bit of a dampening effect to housing. The thing is that most of the housing ‘recovery’ has been in lower-end homes as well as foreclosures. Thus, people of million dollar homes are always glad to take the $8,000, but they don’t need it as much as my elementary school teacher brother. Ergo, take the credit away and it harms a segment of buyers which are trying to creep back into the swing of things. Now, I am not saying this particular item is going to impact stocks dramatically, but it had a mild mitigating effect yesterday. In any case, Washington, DC is gonna be a happening place from now until Thanksgiving (particularly after Election Day until Thanksgiving week) so monitor this situation as well as any headlines from pending legislation (or lack thereof) that could impact the markets.
Markets overnight in Asia were up from 0.3% in Tokyo to just over 1% in London. Markets in Europe are also strongly ahead, up about 1% average. Gold is up a little along with oil with the dollar a tinge weaker. The three main impetuses are the positive buzz out of industrial metals stalwart Alcoa (AA), a slew of good retail reports, and harking all the way back to yesterday’s blog- an unexpectedly positive jobs report out of Australia. Futures are correspondingly ahead nicely. There appears to be no reason for the rally to stop so look for a relatively quiet day but one with a positive bias. The only corollary is that if some of the leaders such as GS and AAPL give way, a reversal could happen, but it’s not a likely “if.”
Watch list:
10082009Eriklist.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
AA- good earnings; CENX may well move with AA along with other industrial metals stocks
CPKI- decent earnings
MBLX- awarded Dept. of Agriculture grant to develop biobased, biodegradable bottles
PANL- closed near a high after being touted on CNBC just before the close; announced two new U.S. Department of Energy Phase I grants after the close
SQNM, PLCM- mentioned positively on “Fast Money” last night
TLR- microcap gold stock which closed near a high of day
TRIT- closed near a high
HELE- closed near a high on good earnings
TLB- closed near a high after positive comments by FBR
VG- closed near a high after Citicorp raised price target on company from 50 cents to $1.50
COV- on “Mad Money” last night
OMER- IPO- priced 6.82 million shares at 10
TSCO- pre-announced positive earnings
PEP- good earnings
AEO, ARO, TJ, TGT, KSS- positive retail sale reports
KERX- positive phase 2 study of Perifosine
LIZ- entered into exclusive department store outlet agreement with JC Penney
Bad-The following stocks have bad news and/or a weak technical pattern
SVNT- four million share stock offering
FNSRD- notes offering
RINO- file $150 million mixed securities shelf
WFC, STI- initiated with a “Sell” rating at UBS
LXRX- stock offering
MG- IPO- priced 8.7 million shares at 12.50; below expected range of 14-16
ISCA- bad earnings
GYMB- lowered guidance
Earnings:
THURS OCT 8 BEFORE
MAR PEP
THURS OCT 8 AFTER
none
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
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