In his inaugural address before commencing his presidency, Thomas Jefferson noted his commitment to “peace, commerce, and honest friendship with all nations, entangling alliances with none.” By that last phrase, he lent credence to the isolationists of the world in guarding against commitments with foreign nations. Basically, he wants to be on good terms so as to avoid war but not enough to cause irreparable damage politically or economically. The best analogy I can come up with is in knowing your neighbors for five houses/apartments in all directions. In this day and age, most of us may have met them, but don’t really know them and thus don’t have issues yet don’t have relationships which may or may not be beneficial to all. Well, that’s not how it works in the world economy as ostensibly every nation’s fate is tied to every other nation- particular in the modernized Western world and Far East. This is why I wrote this piece on Friday which I implored everyone to read and understand to the point we had an extended morning call regarding the topic on that day:
http://epiphanytrading.blogspot.com/search?q=irish+eyes
Well, yesterday, Ireland and other nations in Europe as well as China came to the forefront. The acute cash crisis almost came to a head yesterday for Irelanders with rumors of bailout programs and austerity measures flying all over the tape. The domino effect went to Greece as well when Austria indicated it may not be willing to do their part to help finance Greece’s package because in their view, Greece wasn’t doing enough to solve their own problems. Furthermore, Korea raised a benchmark interest rate and China intimated that price controls may go into effect on various products. How many people realize that according to “The Financial News of London,” vegetable prices exploded over 60% above last year’s prices in the first 10 days of November in China? Well, the whole world is intertwined. Thus, worries about Chinese inflation impacted commodity prices while worries about European economies had an impact on the dollar- all of which had an impact on the stock market. So as we day traders go forward, it is of crucial importance in the immediate-run to be certain to not only be aware of what is going on state-side but to also know what is going on overseas.
Markets overnight were generally lower in Asia. Tokyo was actually ahead 0.2% on the weaker yen, but Hong Kong and Shanghai both declined another 2%. In Europe, prices are lightly mixed with London down 0.1% and Frankfurt ahead 0.3% as of this writing. The dollar is little changed, bonds are given back a little of yesterday’s afternoon rally, and gold is up a touch with oil down a touch. CPI (0.3%), Core CPI (0.1%), Housing Starts (600K), and Building Permits (565K) are due out at 8:30AM with crude inventories due out at 10:30AM. Futures are slightly higher as of this writing. For the day, look for a less volatile session than yesterday with prices likely rebounding slightly as there still seems to be a lift from last night as the world political and economic situation has stabilized a bit with Ireland being viewed as not in immediate-term need of financing (for the time being anyway).. Focus on the biotechs in the news (such as HGSI), the earnings plays, the merger plays, the stocks with share offerings, and big cap tech and financials.
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
HGSI, GSK- received positive FDA panel approval vote for lupus drug Benlysta
STV- decent earnings
POT- announced $2 billion stock repurchase program
DKS- closed near a high after posting great earnings
URBN- closed near a high after posting great earnings
ONE- closed near a high
DGW- good earnings
TGT- decent earnings
BJ- decent earnings
CHS- decent earnings
VIT- decent earnings
HYC- to be acquired by PAY for .23 shares of PAY
LDSH- to be acquired by ATI for $24/share plus .4556 shares of ATI
Bad-The following stocks have bad news and/or a weak technical pattern
SINA- poor earnings
NOG- share offering
CVI- share offering
AVNR- share offering
PWRD- closed near a low after posting bad earnings
BIDU- closed near a low
LVS- closed near a low
MA- closed near a low
GOOG- closed near a low
FSLR- mentioned negatively on “Mad Money” last night
STP- poor earnings
Earnings:
WED NOV 17 BEFORE
BJ CHS DGW
STP TGT VIT
WED NOV 17 AFTER
AMAT ARUN DRYS
LTD NTAP NTES
PETM SPRD
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
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