As a kid, I like most other kids loved the week just before school ended. It was the anticipation…the good feeling that all kinds of summer activities, and well, freedom was about to start. What got short shrift particularly in middle school and high school was the fact we had final exams that last week of school. If it was the 1st quarter, 2nd quarter, or 3rd quarter, the exams would be met with dread and intense study (well, for me anyway…my parents were both teachers!). But that last quarter. That last quarter, no matter how much studying I did, I still had adrenalin coursing through me because I knew once I got past the difficult days in the immediate-term, fun lay ahead. Such was the case with the stock market from Friday-Tuesday. There was a heap of really bad news. From the Wikileaks worries to the European debt crisis with the strengthening dollar to nervousness about Korea, there was every reason for the market to have been drubbed. On Friday, the S&P 500 fell about 0.7%. On Monday, stocks got hit hard, but came back with the index settling down 0.2%. On Tuesday, stocks were crunched again initially but came back again with the S&P 500 down 0.6% (and the Dow down 0.2%). What the market was telling us was that summer was coming, i.e. the fact that it held so resiliently in the face of so much negative news set things up for a huge rally at the whiff of any good news. Mind you, it was as always quite difficult to foresee what that news would be, but the market by shaking almost everything off seemed to indicate the possibility of a day like yesterday. It is precisely why I noted in the markets section of the blog yesterday that the strength would likely hold. Basically, these past few days have been the ultimate case of “what doesn’t kill you makes you go stronger” in terms of the markets.
Markets overnight were ahead in Asia with Hong Kong up 0.9% and Tokyo up 1.8%. In Europe, markets are stronger as well but a bit more muted with London up 0.6% and Frankfurt 0.2%. Oil is flat, gold up slightly (although platinum is up 1.5%), and the dollar is marginally weaker against the euro. Bonds remain somewhat weak with the 10-year yield now approaching 3%. Jobless claims came in a tinge better than expected. Pending Home Sales (0.0%) are due out at 10AM. Trichet’s comments this morning came in pretty much as expected as he warned of slower growth in Europe but did interestingly not give specifics as to what lies ahead. Retail sales data came out strong for a host of companies. This mix is leading to a slight uptick in stock prices although futures are off of their highs. For the day, most will be looking for profit taking; I am not so sure this will happen as the strength this morning continues to be quite evident. Should the market open higher and fail to break back initially, look for some short covering on fairly high turnover. The middle of the day will likely be slow, but ahead of the jobs report tomorrow, trading will likely slow a bit although the strength likely holds pending a major news event. The focus will likely be on the myriad of retailers with sales data out this morning (ANF, JCP, et al), the earnings plays, biotechs in the news (such as SQNM), relative strength plays on A-B-A2s, and commodity 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
APKT- closed near a high for a 2nd day after posting good earnings
OVTI- closed near a high after posting good earnings
AGU- closed near a high
FCX- closed near a high
DECK- closed near a high
MA- closed near a high
PSS- great earnings
FNSR- decent earnings
ARG, URBN - featured on “Mad Money” last night
PUDA- closed near a high
RHT- closed near a high
HSFT- closed near a high
TGT- decent same-store sales
M- raised earnings guidance
ANF- great same-store sales results
IACI, LINTA- announced that Liberty had exchanged its entire stake in IACI for a combination of operating assets and cash in a transaction intended to be tax-free to Liberty and IACI
WBD- PEP to acquire 66% of WBD for $33/share
JCP- decent same store sales
KSS- decent same store sales
Bad-The following stocks have bad news and/or a weak technical pattern
SCMR- closed near a low after posting awful earnings
APWR- closed near a low after posting awful earnings
MCOX- closed near a low for a 2nd day after posting awful earnings
UTI- closed near a low after posting awful earnings
SODA- closed near a low
NFLX- closed near a low
TTM- closed near a low
ARO- poor earnings
SNPS- poor earnings
JAS- poor earnings
SMTC- poor earnings
ZUMZ- poor earnings
SQNM- share offering
NFLX- featured negatively on “Mad Money” last night
RBC- warned on 4th quarter and announced acquisition of Unico
Earnings:
THURS DEC 2 BEFORE
DLM GIL KR
TOL UTIW
THURS DEC 2 AFTER
AVGO CWTR FNSR
NOVL PAY PVH
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
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