All of us turn our eyes to Punxsutawney, PA for a couple of minutes every year around 7:20AM on February 2. It’s unavoidable. I personally checked CBS, NBC, FOX, MSNBC, Fox News, CNBC, and CNN at 7:20AM on Wednesday; every station carried the ceremony. “The ceremony” I refer to as most if not all of you know is the one whereby Punxsutawney Phil crawls out of his burrow on Gobbler’s Knob to predict the weather for the rest of the winter. If Phil does not see his shadow (as was the case this year in the middle of the biggest storm the nation has had in years), it means an early spring is finally coming. The history of this annual occurrence is rather fascinating. It began as a custom in central Pennsylvania in the 18th century and has its origin from European weather folklore. There’s also a quirk in the ancient Gregorian calendar in which the date of the equinox could drift, but in the Julian calendar, the spring equinox fell on March 16- exactly six weeks after February 2. Crowds began gathering in Punxsutawney, PA in 1886 for the Groundhog’s Day celebrations there with accurate records dating back to 1944. So what does this all mean for the stock market? Since 1944, Punxsutawney Phil has seen his shadow 56/67 times (well, now 56/68 including Wednesday). According to a study put out by Bespoke, in those 56 years when a long winter is predicted, the average return of the S&P 500 during each of those years is 0.16% with a 51.8% shot of the market being positive. In the 11 times that Phil has not seen his shadow, the S&P 500 had a 4.06% return and was positive 81.8% of the times. There’s a hypothesis that an earlier spring means excess sunshine which brightens moods of traders which makes them more optimistic. Then again, it doesn’t mean that the little groundhog will be (or has been) right at any specific time anyway. So, what does all this prove after mulling it for a few minutes? Nothing. But the piece was to fun to write anyway!
Markets were up in the Asian markets that were open overnight with Tokyo up 1%. The bourses are slightly ahead throughout Europe with the indexes up 0.2% to 0.5% throughout the continent. Oil is up about 2/3%, gold is down slightly, the dollar is flat, and bonds are notably selling off with the 10 year yield approaching 3.60%. Futures are up marginally. The main feature of the morning has been a notably mixed jobs report with the overall number of 36,000 jobs created well below the 150,000 estimate but the unemployment rate of 9.0% well ahead of 9.4% expected. But seasonal factors seem to have played a part and QE2 is there so the bid to the market remains. Look for a relatively quiet day with a modest upside bias as seemingly nothing is knocking down the tape right now. Keep your eyes tuned to the news ticker as it seems regime change may be at hand after 31 years in Egypt.
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
ROST- closed near a high after raising earnings guidance
EL- closed near a high after posting good earnings
SFLY- closed near a high after posting good earnings
SGI- closed near a high after posting good earnings
CELL- closed near a high after posting good earnings
AN- closed near a high after posting good earnings
BCO- closed near a high after posting good earnings
SFN- closed near a high after posting good earnings
ASNA- closed near a high after posting good earnings
LQDT- closed near a high after posting good earnings
ABMD- closed near a high after posting good earnings
SHLD- closed near a high
BSFT- closed near a high
GT- Appaloosa’s David Tepper reported a 6.1% stake in the company
DSCI- closed near a high after positive phase II results for DSC127
SIMG- good earnings
NCR- decent earnings
POWI- decent earnings
FEIC- good earnings
OPXT- good earnings
AVNW- good earnings
JDSU- great earnings; FNSR and OCLR may move with it
XXIA- decent earnings
ALKS- decent earnings
TRMB- decent earnings
TA- closed near a high
LMLP- closed near a high
AET- decent earnings
AVID- decent earnings
FO- decent earnings
TSN- decent earnings
WY- decent earnings
YRCW- good earnings
KV/A- FDA approved Makena- the first treatment designed to reduce the risk of preterm birth
Bad-The following stocks have bad news and/or a weak technical pattern
CELG- closed near a low amid concerns about Revlimid
AMP- closed near a low after posting poor earnings
ISIL- closed near a low after posting poor earnings
AFOP- closed near a low after posting poor earnings
TZOO- closed near a low after posting poor earnings
KEM- closed near a low after posting poor earnings
ANW- closed near a low after posting poor earnings
SWM- closed near a low after posting poor earnings
LVS- bad earnings
CSTR- bad earnings
DLB- poor earnings
LPS- poor earnings
PWER- terrible earnings; may drag other solars such as JKS and FSLR with it
RLD- bad earnings
FISV- poor earnings
LIFE- poor earnings
DHT- share offering
RIG- taking a huge non-cash charge to earnings
OTEX- near island reversal in closing near a low after posting earnings
TNK- share offering
UFS- poor earnings
Earnings:
FRI FEB 4 BEFORE
ABC AET AON
CEG CLX FO
PHM PPL SPG
TDW TSN UFS
WY YRCW
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
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