MON. DEC. 27- The Week Before New Year's

OK…so now we’ve here after a nice three day weekend and into New Year’s Eve Week. So now what? Well, typically the week before New Year’s actually has a different ‘feel’ than does the week before Christmas. There are several main differences. First, volume until the last day of the year itself is typically even lower than it is during Christmas Week. This is because this week is the most common vacation week of the year as kids are off from school and people are quite frankly tired from the stresses of the year. Second, there is a push and pull among the people left. Many fund managers who have a comfortable lead over the averages for the year leave but many of the ones behind do remain. Furthermore most offices with people out are represented by the 2nd tier group/skeletal crews as after all there are five business days here so there are trades to be made. Third, moves in individual stocks can become rapidly exacerbated; we got a whiff of that on Friday when XOMA moved from 5.90 to 6.90 in less than 10 minutes after a recurring seller left. Typically many microcaps can really really go. Finally, there tends to be a lot more movement overall. The ‘good/happy’ feel with all the Christmas music on the radio is over and those of us who are here are really thinking about trading rather than the kids opening presents. So, as the week goes on in particular after today’s snow day, there are going to be some pockets of major inactivity but overall expect a busier week than last week with many more opportunities.

Markets overnight were generally higher in Asia with Tokyo up ¾% but lower through Europe as both Frankfurt and Paris are trading down over 1%. Oil is slightly weaker, gold slightly stronger, and the dollar flat with bonds a tinge weaker as well. The two big topics today are the Chinese interest rate hike over the weekend with the blizzard in the Northeast being the other major topic of conversation. Trading desks will be sparse with many people not in. Expect a bit of a downdraft early on followed by consolidation the rest of the day on anemic volume. The focus- what focus there is- will likely be on small cap biotech momentum play such as XOMA, financials, and relative strength plays.

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

XOMA- closed near a high on continued momentum from a mention in a newsletter on Wednesday

RPRX- closed near a high after submitting new data on a testosterone replacement drug

SBAY- closed near a high after releasing earnings

CF- closed near a high

FCX- closed near a high

AGU, POT- closed near a high

OPHC- closed near a high

NOA- closed near a high

VRML- closed near a high

APWR- announced EPC contract with Inner Mongolia Huolinhe Coal Trade Group

OPEN- mentioned on “Mad Money” on Friday

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

MSB- closed near a low

TSLA- closed near a low after it was started as a ‘sell’ at Capstone

ALIM, PSDV- FDA issued negative complete response letter to ALIM regarding its application for Iluvien

HRB- HSBC ended refund anticipation loan agreement with HRB

NFLX- mentioned negatively in “WSJ” over the weekend


Earnings:

MON DEC 27 BEFORE

CALM


None today

Epiphany Trading, LLC
www.epiphanytrading.com

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