MON. DEC. 20- Irrelevance

You ever had a somewhat bad day just not care biochemically in that your mood didn’t change? Doesn’t happen often, but it happens. Conversely, ever had a pretty good day but you just felt, well, neutral to slightly blasé? Well, welcome to the last couple of weeks of the year as far as externals versus the equity markets in general. I don’t have dense treatises to back up my claim, but suffice to say that the focus of traders is elsewhere. So, what tends to happen are a few things. First, many people take off. It is a slow time in the corporate world so with low news flow and kiddies off on vacation, many traders take very needed breaks. Second, particularly in bull markets like the one we’ve had, many money managers do a lot of shuffling beneath the surface in window dressing and performance-related mechanics. Third, there tends to be a lot of speculation on low amounts of liquidity. With many people off, stock trading becomes a bit of a parlor game for many so movement can become exaggerated. Finally, circling back to the beginning of this piece, movements in the external markets (currencies, commodities, et al) tend to be more muted generally simply due to the dearth of participants and news. Furthermore, what movement there is in external markets tends to be largely ignored by the stock market with the focus again being on money managers sloshing things around as well as individualized stock stories. This said, it’s also a time to pay attention to the newswires as news events can be randomized with unexpected events such as the assassination of Pakistan’s former prime minister Benazir Bhutto on December 27, 2007 setting off a bit of a sell-off. So, expect nothing…and expect everything…but don’t expect the usual through the end of the year.

Markets in Asia were slightly weaker overnight over worries on the Korean peninsula with Tokyo down 0.9% and Hong Kong off 0.3%. However, after North Korea brushed off South Korea’s military exercises and nothing economically poor came out of Europe, the bourses rallied with Frankfurt up 1.1% and London 0.5%. Gold is modestly higher, the dollar is slightly stronger, bonds are a little bit ahead, and oil is up ½%. There’s no economic news of note. Futures are slightly higher. It is quite quiet with little news flow out there. Look for the positive bias to hold overall today on very little activity- movement and volume-wise. And get used to hearing a variation of that them for the next few weeks. The focus will likely be on the big momentum movers from Friday such as ITMN, stocks mentioned in the media such as IDCC, and A-B-A2 plays to the upside.

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

ITMN- closed near a high after the European Medicines Agency adopted an opinion recommending the granting of a marketing authorization for Esbriet in adults to treat idiopathic pulmonary fibrosis

ATI- closed near a high after one of its units was selected to supply titanium for a large seawater desalination project

FCX- closed near a high

LULU- closed near a high

AMRN- closed near a high

MMYT- closed near a high

ADES- closed near a high

SKY- closed on a high amid a big buy order on the close on Friday

EPB- closed on a high amid a big buy order on the close on Friday

XXIA- closed near a high after a brokerage action

HSFT- closed near a high after completing a share offering

KNDI- closed near a high after announcing its new Kandi EV model was approved for a national subsidy in China

IDCC, SWK, AEM- featured on “Mad Money” on Friday

REGN- reported positive results with Bayer for its VEGF Trap-Eye in phase III study in central retinal vein occlusion as well as phase II study in diabetic macular edema

APSG- to be acquired for $38/share in cash from RTN

QCOM- sold wireless spectrum to T for $1.925 billion

AEZS- announced agreement with the FDA on a special protocol assessment for Solorel

LVS- announced it received a letter from the Macau land, Public Works and Transport Bureau in which its Macau counsel advises that the company should be able to start prepping for the sale of shares in co-fashion to prospective buyers in having a Four Seasons-branded apartment at the Cotai Strip in Macau

CHTP- accelerates Northera FDA filing following meeting with FDA

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

NFLX- closed near a low despite being added to the S&P 500 on the close in Friday


Earnings:

MON DEC 20 BEFORE

JEF

MON DEC 20 AFTER

ADBE DRI JBL

PAYX


Epiphany Trading, LLC
www.epiphanytrading.com

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