MON. OCT. 4- The Other Markets

The stock market has had a very good month or so. But equity traders are hopefully paying attention to all of the other markets out there as the breadth of the movement has been nothing short of stunning. Pick a market. Any market. Let’s start with commodities. Gold has risen to nominal record highs day after day after day with bullion selling now at over $1,300/oz. Oil surged in the last week to close at a multi-month high over $80/barrel. The dollar has gotten absolutely crushed with the Japanese intervention already seemingly a distant memory and a close approaching $1.38/euro (almost a 15% decline in a couple of months). The 10-year bond yield hovers at 2.50% just off of its generational lows. The more esoteric markets are moving too with everything from sugar to cotton having made major moves. The reasoning behind these moves start with gold. Most central banks are hoarding their gold with big investors quietly gobbling up whatever else is out there on a fear that the world is awash in paper thus making the precious yellow a true benchmark asset. With that comes a lowering of the U.S. dollar in particular as most everything is priced in dollars plus there are fears that the economic recovery is stalling. Furthermore, the U.S. Federal Reserve continues to maintain its easy money policy plus the thinking that a 2nd quantitative easing lies ahead along with fears of a renewed recession has plowed money into bonds. Largely because of these moves, the stock market has had some buoyancy to it as there is precious little yield in bonds with domestic stocks suddenly looking cheap. On any given day, there are gargantuan moves in some of these external markets so particularly with volatility picking up recently as we head into earnings season, keep an eye on all markets. The moves made before our markets open can paint a picture for the day that much more than usual while moves made during the day may well shape trading over the course of the next few weeks on an intra-day basis.

Markets in Asia were higher overnight with Hong Kong up 1.2% and Tokyo ahead 0.3%. But prices are weighed down in Europe on worries over debt (again) but also nervousness over a broad terror alert with London down 0.5% and Frankfurt off 1.1%. Gold is actually down slightly along with oil and the dollar but bonds are up slightly. Futures are down in the pre-open. Factory orders (-0.4%) and Pending Home Sales (1%) are due out at 10AM. Look for a downside bias for the day but it should be limited amidst the heels of the recent strong rally and the nice uptick in financials on Friday. Focus on relative strength plays, the stocks up on actual mergers as well as merger rumors, and the aforementioned financial sector to see if there is follow-through.

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

FCX- closed near a high

GS- closed near a high

RIMM- closed near a high

MCP- closed near a high

CVV- closed near a high after announcing significant new orders for the third quarter

CAAS- closed near a high

DDMX- to be acquired for 21.25/share by Greenbriar Equity Group

PPD- poor 3rd quarter production results

WXCO- closed near a high

TPL- closed near a high

TRGL- closed near a high

AMAG- closed near a high

ACTG- closed near a high after resolving patent issues with Microsoft and entering into an agreement with Phillips Electronics

ACTL- to be acquired by MSCC for 20.88/share

V/MA- settlement in ongoing lawsuit against government expected imminently

CLSN- received positive FDA guidance for its new drug application for Thermodox

AAPL- initiated “Buy” at Ticonderoga with a 441/share price target

SLE- “NY Post” reported SLE is in play

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

BIDU- closed near a low

NFLX- closed near a low

AMZN- closed near a low

DVOX- closed near a low after warning on earnings

SDTH- CFO resigned for personal reasons

CBK- closed near a low after warning on earnings

TSLA- issued voluntary recall on several Roadsters

BNVI- closed near a low after announcing an intra-day share offering

LPS- closed near a low

PAY- closed near a low

HURN- divested its disputes and investigations practice to Grant Thornton and cut guidance

BPZ- A-17D well deemed a dry hole

GTSI- Eyak announced withdrawal of proposal to acquire company for 7.50/share




Earnings:

MON OCT 4 BEFORE

None today

MON OCT 4 AFTER

MOS



Epiphany Trading, LLC
www.epiphanytrading.com

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