WED. SEP. 22- Scale Of Price

For those who remember, one of the main lighter topics of conversation following the exile of the Marcos family from the Philippines was the excess of handbags and shoes that Imelda Marcos possessed. I am not sure if there is a precise estimate anywhere, but most reports indicate that Ms. Marcos possessed approximately 1,000 handbags and 3,000 pairs of shoes. The love of shoes in particular by Ms. Marcos was widely panned by the likes of icon Johnny Carson and many other late night comics. The much more serious side to this is that countless Filipinos were starving as Marcos collected her shoe collection. I bring all of this up because of a lesson that we utilized in a middle school math class. If a destitute women living in the Philippines had but one ratty handbag but was given a new bag, she’d go from possessing one to two handbags (100% gain). Conversely, if an individual later indicted on corruption charges had 500 handbags and acquired another 500 handbags to now own 1,000, well, that too is a 100% gain. In the midst of the recent stock market rally, this very principle has come into pay with the likes of triple digit stocks such as AAPL, AMZN, GOOG, and NFLX. Using the example of AAPL, people are amazed at how, for example, the stock rallied from 269.50 to 287.35 over a few days. Well, would anybody be paying quite as much attention if AAPL rallied from 26.95 to 28.74? No- even though it is the exact same percentage move! Thus, as we continue to trade in what has been a hot market recently, don’t let the scale of price skew your decisions on either the buy or the sell side.

Markets were mixed in Asia overnight with Hong Kong up 0.2% and Tokyo down 0.4%. The tone was decidedly more negative in Europe with Frankfurt off 0.7% and London down 0.5%. The reaction overseas to the Fed announcement has been negative overall in-line with the reversal yesterday domestically. Initially, it was viewed as positive that the fed basically stands ready to do what it takes…but then the prevailing thought became “why are they so eager to be so ready?” The dollar declined yesterday afternoon and is down a little more today. Gold is continuing to mushroom in challenging $1,300/oz now. Oil too is up about ½%. Bonds soared yesterday and are up slightly again this morning. The only economic news is the weekly crude inventories report at 10:30AM. Futures are down a bit after trading nicely higher overnight. Look for a downside day overall with an attempt to rally just after the bell. The upside will likely be capped by the fears of what is out there but the downside limited as well as a number of money managers stand ready to do some window dressing into the end of the quarter after the recent run-up. Focus on relative strength plays particularly early in the day, big cap techs and financials, and the stronger earnings plays for some action.

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

CTAS- decent earnings

PWER- announced stock buyback

ALOG- good earnings

RIMM- closed near a high

BIOF- closed near a high on hopes of an approval by the EPA of its E15

SCOR- closed near a high

TTPA- closed near a high on takeover speculation

CLGX, PLL- featured on “Mad Money” last night

OGXI- positive Custirsen phase II trial

KMX- decent earnings

SEED- reached an agreement with the Chinese Academy of Agricultural Sciences re its BT gene


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

ADBE- terrible earnings

PMCS- warned on earnings guidance

DRI- poor earnings

AMAG- closed near a low after pulling out of an investment conference

CHBT- closed near a low after a brokerage downgrade

FUR- share offering

BIIB- indicated there is a need for safety monitoring for Gilenya



Earnings:

WED SEP 22 BEFORE

GIS JEF KMX

WED SEP 22 AFTER

BBBY RHT

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