The oldest philosophical question in the history of the world is “Why?” And of course the answer to that question as any student of philosophy knows is “Why Not?” The 2nd oldest is “What’s Up?” And the answer can range from “Not much” to what I often say which is “Anything and everything,” because that can spur actual conversation! Along the same vein, I am often asked two questions about today. The first one is “Why is the stock market opened today?” I always say “Why Not.” But there actually is an answer. With the exception of stretches like the period following the September 11, 2001 terrorist attacks when lower Manhattan was burning, the stock market does not close for more than four days in a row due to a potential for build-up of orders particularly if a major news event occurs. Movements can often become even more exaggerated on Mondays if an event occurs on a Friday or over the weekend. There is time to digest the news but if it is major and the implications for the news become clear, the volatility and deltas tend to increase. The second question is “What can I expect today?” That goes back to “Anything and everything.” There are days in which there is some movement in the morning and it dries up much like the type of day we had on Tuesday in which the S&P 500 traded in a range of around 2 ½ points for several hours. However, movements can also become exaggerated particularly in the presence of news on days before holidays. A good example occurred on Thanksgiving night in 2000 when the results of the presidential election were finally released. The day after Thanksgiving the next day, the markets had gigantic net moves. So, just be grateful that we get to have a three day weekend and hopefully use today as a springboard for a little extra cash for all those presents that have been purchased these last few weeks.
Markets in Asia were mixed overnight with Hong Kong down 0.6% and Sydney ahead 0.4%. In Europe, prices are every bit as mixed with London up 0.2%, Paris ahead 0.1%, but Paris down 0.4%. Oil and gold are down a tinge. The dollar is down slightly against the yen but up slightly against the euro. Futures are hovering near unchanged. Personal income (0.2%), personal spending (0.5%, PCE prices- core (0.1%), Durable orders (-1.0%), durable orders ex transports (1%), and initial claims (424K) are due out at 8:30AM with Michigan sentiment (75.0) out at 9:55AM, new home sales (303K) at 10AM, and “Wait ‘Til The Sun Shines Nellie” just after 2PM. All of this economic data will obviously move prices today but not much. It is as quiet as can be right now and will likely remain so overall today. Volume will likely be light with almost all activity done in the first 1 ½ hours of the day and maybe a little at the tail end. Whatever focus there is will be on the limited earnings flow, the merger stocks such as VRGY, and small cap biotechs which have moved in recent days
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
OXM- closed near a high after announcing acquisition of Lilly Pulitzer
BBBY- good earnings
HDY- closed near a high
INHX- closed near a high
CNET- closed near a high
REDF- closed near a high
ANW- closed near a high after announcing it will commence operations in Cape Verde
BXS, PACW- closed near a high in a strong regional bank sector
VRGY- received $15/share in cash from Advantest
SONC- received $14.17/ share bid from ROVI in which SONC holders can received $14/share in cash or.2489 shares of ROVI in 55% and 45% shares
JAS- received takeover bid for $61/share in cash from Leonard Green & Partners, LP
Bad-The following stocks have bad news and/or a weak technical pattern
NKE- closed near a low after posting bad earnings
LNN- closed near a low after posting bad earnings
CPY- closed near a low in a continuation move after posting poor earnings on Tuesday morning
GILD- terminated phase III clinical trial of Ambrisentan in patients with idiopathic pulmonary fibrosis
MU- poor earnings
CROX- CFO resigned to pursue another opportunity at another company
AIB- Ireland recapitalized the bank by 3.7 billion euros to meet the regulator’s year-end capital requirements in effectively nationalizing the bank
Earnings:
None today
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
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