TUES. APR. 13- Don't Overthink

According to Yahoo Finance, “Houston American Energy Corp. (HUSA) engages in the exploration, development, and production of natural gas, crude oil, and condensate. It primarily focuses on properties located in the U.S. onshore Gulf Coast Region, principally Texas and Louisiana, as well as focuses on the development of concessions in the South American country of Colombia. The company was founded in 1981 and is based in Houston, Texas.” The company has a market cap of about $450 million. It also had a whopping $8 million in revenues last year yet the stock is still up 600% in the last 52 weeks despite last week’s sell-off. And what caused the stock to go from 20 to 14 last Wednesday? This: http://seekingalpha.com/instablog/191022-shareholders-unite/61916-houston-american-energy-husa-priced-for-perfection

The authors of the piece (Shareholders’ Unite) cited an oil exploration project as the trigger for the stock’s performance. According to them, the company only had one well planned this year for production, cited several arguments to statements that HUSA made, as well as claimed that the company’s principal asset was just worth $15 million and the company has just three employees. Wednesday after the close, HUSA called the posting’s claims “unwarranted and outrageous.” I am not an HUSA analyst nor do I play one on TV. Rather, I try to focus on good set-ups. So, to me, there was but one trade here: “shorting it thru unchanged.” You see, if there is a horrible rumor regarding a corporation, the company denies it after its stock price has fallen over 20% in a day, and the stock opens higher but cannot stay positive the next day…it’s a bad thing. If I manage an institution’s monies and I had part of my funds in there as a HUSA shareholder *and* the stock couldn’t rally the next day after the stock classified the story as patently false, I know I’d be nervous. Thus, one gets a punch through unchanged on the trading session in a case like this. The overall point is to not over think these things in utilizing whatever common sense one can muster when trading- always. Don’t think that just because a company denies a story that the stock can’t go against the obvious. Finally, when the ‘opposite’ move of what you’d expect is occurring, don’t think the move cannot become exaggerated- and fast at that.


Markets overseas were weaker overall with Tokyo down 0.8% and Europe down about 1/3% across the board. Currencies are flat with oil little changed as well and gold down slightly. Futures are down slightly largely because of AA as Alcoa’s revenue estimates missed guidance. I hope I’m wrong, but look for more malaise today with a slight downside bias for the markets. The focus is on revenue expansion on earnings and AA put a damper on things in the immediate-term. Look for a very quiet day overall with a focus on microcaps for trading.


Reiterating-


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

MIPI- announced results from a completed phase II clinical trial of Onalta

SUN- mentioned on “Mad Money” last night

TNC- boosted earnings guidance

ABK– closed near a high

CPRX- closed near a high after announcing positive clinical trial data

KERX- closed near a high

RNN- announced yesterday that the CEO would make a presentation at the NASDAQ Marketsite at 12:15PM today causing it to close near a high yesterday

INFY- decent earnings

TLB- decent earnings

HK- announced 340 million barrel resource potential in Eagle Ford Shale

ENMD- initiated phase II trial for ENMD-2076 in ovarian cancer

XOMA- granted two new U.S. patents for methods of treating type 2 diabetes using Interleukin-1 beta antibodies

FAST- good earnings

TLB- decent earnings




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

NYNY- received judgment from the Supreme Court of the State of New York indicating the company is in default to convertible notes

AA- missed revenue guidance

CF- share offering

EPD- share offering

DG- share offering

LZ- closed near a low






Earnings:

TUES APR 13 BEFORE

FAST INFY TLB

TUES APR 13 AFTER

ADTN CSX INTC

LLTC

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