On Friday, there was a confirmation of a story that had been circulating for a few days. Namely, the next step of the TARP process began to unwind for banks. Banks became allowed to increase their dividends once again- kind of an uncloaking of the tight rope around them due to the TARP. The most popular question I received on what was a very important session on Friday was this: why did banks reform differently intra-day? It’s because there were three classifications of banks did. First, you have the Bank of Americas (BAC) of the world. These banks did not indicate they were going to pay dividends this year. When the press release came out, it barely budged. Then there were the Suntrusts (STI) of the world which did things like announced they were going to issue stock and pay off their cloaked debt to the Feds. Finally, you had the grouping including JPM and GS. Since there was a limit as to what banks could raise their dividends by according to government guidelines, they announced other tricks- such as stock buybacks. I find all of this notable because over the course of the coming weeks, we’re going to learn a lot more about the banks involved not only by their method of capital raising/deployment but also about the health of each based on stock performance. So, note Friday’s date on your calendar with a few banks and track them over the next few months. You (and I) will come away with a lot more knowledge/understanding of how banks are truly performing- and what work and what didn’t as far as the events of Friday.
Markets overnight were stronger throughout the world. Tokyo was closed but Hong Kong rallied sharply and the European bourses followed suit with Frankfurt up more than 2%. Oil is up 2%, gold 1%, the dollar mixed, and bonds off a bit. The major news is the offensive launch on Libya, the acquisition of T-Mobile by AT&T, and nothing additional devastating coming out of Japan. Futures are soaring. For the day, look for a little give-back off the top as the day progresses in all likelihood following two nice days but the rally mode is still in full-effect. The focus will likely be on the small cap biotech in the news, telecoms, and the big cap techs and financials.
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
NEXS- closed near a high after winning a contract to sell LED light bulbs at Lowe’s
GS- closed near a high after raising dividend and announcing plan to buyback Berkshire’s preferred GS shares
LO- closed near a high as uncertainty lifted after an FDA’s panel findings on menthol cigarettes
JVA- closed near a high in extending a major move from last week’s earnings
VDSI- closed near a high
FRZ- closed near a high
HTWR, TRNX- featured on “Mad Money” on Friday night
T- to acquire T-Mobile for $39 billion
CRIS- announced positive phase II clinical GDC-0449 trial results
TIF- decent earnings
OXPS- to be acquired by SCHW for 1.02 shares of SCHW for each OXPS share
Bad-The following stocks have bad news and/or a weak technical pattern
FSLR- closed near a low
NKE- closed near a low after posting poor earnings
WYNN- closed near a low
NFLX- closed near a low
AAPL- closed near a low
AIG- closed near a low in a late-day sell-off
WLT- closed near a low
S- directly affected by the T proposed acquisition
MOS- closed near a low
FFIV- closed near a low
XNPT- disappointing phase 2b clinical trial of Arbaclofen Placarbil
PANL- filed to sell 5 million shares of common stock
Earnings:
MON MAR 21 BEFORE
TIF
MON MAR 21 AFTER
None today
Epiphany Trading, LLC
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
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