The calendar says that the last day of the trading year is December 31. However, for many traders, today is the last day of the year. Historically, the last two weeks of the year are the lowest two weeks volume-wise almost year-in year-out. A lot of people take off the last two weeks for Christmas week and then particularly New Year’s week to enjoy well-deserved (well, in some cases) vacations. Furthermore, traders/funds who are monetarily ahead substantially oftentimes don’t want to change up their year total for reasons from mental purposes to tax purposes to relative performance reasons. There are immediate-term implications as well as implications for the next couple of weeks. First, today. Today is a quadruple options expiration day thus a slew of volume historically occurs on the 3rd Friday in December. Also, many traders put their final plays on so there can often be displacements on the bell, i.e. if a fund wants to show it is in (or out) of a particular stock. Also today, there will be a slew of index changes on the close with numerous stocks going to various indexes. Finally, the 3rd Friday in December is usually the general end of the year’s news cycle business-wise as few companies report earnings Christmas Week or the week before New Year’s much less make major corporate developmental news as so many analysts aren’t around. The next two weeks, as I’ll discuss more in a couple of days, despite the likelihood of lower volume, have the propensity to be great trading weeks in rampant bull markets. Small cap stocks much less all stocks can have exaggerated moves on the whiff of any news and there are often money managers who are chasing performance. Thus movements can become exaggerated. Thus, just because we’re around the holidays doesn’t mean it’s time to close up shop…personally, I feel the next two weeks will offer prepared day traders many opportunities due largely to this wonderful tape. But so will today.
Markets in Asia were lightly mixed with Tokyo down -0.1% and Hong Kong up 0.2%. In Europe, prices are generally lower with London down 0.2% and Frankfurt off by 0.4%.
Oil and gold are both down slightly, the dollar is flat, and bonds are marginally ahead. The big news of the night was a 5-notch downgrade of Ireland’s debt by Moody’s, but it’s been largely greeted wit ha yawn as it was widely expected. Leading Indicators (1.2%) come out at 10AM. Overall, the range for the broader indexes will likely remain narrow today but it will likely be a very active session with tremendous noise underneath the surface due to all of the factors written in this lead paragraph mentioned earlier. The focus will likely be on the earnings plays, the stocks in the merger arena such as MI, techs, the credit card entities, and the S&P changes late in the day.
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
RIMM- decent earnings
ORCL- good earnings
A.CN- decent earnings
TTWO- good earnings
APSG- decent earnings
ZQK- decent earnings
SCS- decent earnings
MON- closed near a high
FFIV- closed near a high
WLT- closed near a high
CYH- closed near a high
WYNN, LVS- closed near a high after a brokerage upgrade
NYMX- announced European licensing agreement for NX-1207
SAPX- closed near a high
DOLE- closed near a high
ARO- closed near a high after hiring Barclay’s to help bar would-be buyers
KND- closed near a high after raising earnings guidance
BCSI- closed near a high after a brokerage upgrade
NNBR- closed near a high
ITMN- announced approval of Esbriet in Europe for IPF
MI- to be acquired by BMO for .1257 shares of BMO upon closing
Bad-The following stocks have bad news and/or a weak technical pattern
SMOD- poor earnings
RSYS- poor earnings
V, MA, TCB- closed near their lows due to worries about the Fed’s rules establishing interchange fee standards
DRIV- closed near a low
MSB- closed near a low
CRK- closed near a low after announcing its 2011 exploration and development budget
YOKU, DANG- closed near their lows
AEM- closed near a low
VECO- closed near a low
PKOH- closed near a low
HSFT- 5 million share offering at 26
AZN- negative complete response letter from the FDA for Brilinta
Earnings:
None today
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
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