THURS. SEP. 30- Fed Speak

Over the last few weeks, I along with many other much more prominent (and well-versed) individuals have discussed the divisiveness prevalent at the Federal Reserve. Well, on an otherwise slow day of trading yesterday, the day was punctuated by one interesting feature- three Fed officials all had competing speeches regarding the state of the economy and how much (or little) help will be forthcoming from the Fed. The president of the Federal Reserve Bank of Minneapolis (Narayana Kocherlakota) and the president of the Federal Reserve Bank of Philadelphia (Charles Plosser) made a case that a quantitative easing would not really aid the economy while the president of the Federal Reserve Bank of Boston (Eric Rosengren) intimated that Fed policymakers need to do what they can to aid the situation. In their speeches, both Plosser and Kocherlakota noted that they felt that quantitative easing would not drive down rates much less impact the economy as much as it did during the height of the recession. As financial markets are more stable now than two years ago this time, the difference between Treasury securities and rates on other loans has narrowed. Rosengren in contrast felt that the government could do more to benefit the economy such as implement policies targeted at lowering unemployment and reducing the possibility of deflation. Interestingly, Rosengren is currently a voting member of the Federal Open Market Committee (the group that makes decisions on interest rates and other policies) with a two-day meeting due to wrap up on November 3- just ahead of the election. What was notable today was how clear it truly is that there is widespread dissension even among the nation’s highest economic decision makers much less a crystal clear notion that the Fed is truly worried about the economy. For day traders, with stock prices whipping around as these gentlemen spoke and many more speeches to come in the next few weeks with speculation rampant as to what the Fed will do (or won’t do) ahead of the mid-term elections, it is but one more feature likely to constantly monitor.

The Nikkei plunged 2% overnight as worries that the yen intervention are failing crept in although other Asian markets were mixed. In Europe, markets have shaken off all sorts of bad news from the de facto nationalization of Allied Irish Bank to a downgrade of Spanish debt in trading higher by about 0.1% to 0.3% across the board. State-side, futures have also shaken off the passage of a bill by the House of Representatives aimed at the Chinese yuan. GDP data and jobless claims data came in marginally better than expected. Chicago PMI of 56 is due out at 9:45AM. Oil and gold are both higher, bonds are slightly stronger, and the dollar is weaker across the board. Futures are nicely higher. For today, the action of the market is downright bullish this morning. It would not have surprised me to have come in and see the market down 10 S&P handles, but it’s up. Look for the strength to hold albeit not augment. Focus on the major news plays such as AIG and associated companies with its news, big cap techs, and relative weakness plays.
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

SNTS- positive phase III Budesonide MMX results

HYC- received $5.25/share cash buyout bid from PAY

SNX- good earnings

WOR- decent earnings

NFLX- closed near the high of the day at a record high

V- closed near a high

OCLR- closed near a high

THO- closed near a high after posting great earnings

IIG- closed near a high

BIDU- closed near a high

SGEN- closed near a high

LLNW- featured on “Mad Money” last night

PLX- closed near a high

EXXI- closed near a high

IDSA- closed near a high

NANO- closed near a high

AIG- announced plan to repay U.S. government

MKC- decent earnings

RNO- 3.2 million share IPO at 20.50, near high end of expected 19-21 range


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

XRTX- poor earnings

NCT- canceling dividend for the quarter

QLIK- closed near a low

GMCR- closed near a low amid an SEC accounting probe

URBN- closed near a low

OMN- poor earnings

SFUN- closed near a low

FUQI- received NASDAQ delisting letter

AIB- will undergo major capital raise

PRU- acquiring two Japanese units of AIG for $4.8 billion

VLCCF- 4.25 million share offering at 19

ELT- pricing 16.2 million ADS IPO at 13, below 14-16 range


Earnings:

THURS SEP 30 BEFORE

MKC

THURS SEP 30 AFTER

A.CN BLUD LWSN

RECN


Epiphany Trading, LLC
www.epiphanytrading.com

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