THURS. MAR. 3- The Fallback

There have been a few times over the years in which I had to change a major aspect of my trading. One of the major instances occurred when stocks began to be priced in decimals rather than fractions. I had a set of strategies I'd use when a stock was priced at say, 10 1/4 to 10 7/16 rather than say 10.25 to 10.28. When the old Instinet terminals went out of vogue, I was forced to adapt to the new set of ECNs over the comfortable monochrome numbered machine I'd utilize particularly at 6AM in the glory days of the late 1990's. Arguably the most stark change for me occurred when my favorite trading vehicle- QQQQ- had a stock split. Oh how I loved trading the QQQQ early in the mornings. Oftentimes, as QQQQ was based off of the NASDAQ 100 while futures would move faster than the cash market, I could find arbitrage opportunities in the delta of multiple points. That one was the hardest to get over because so much of my trading was based on one particular stock/trading instrument. Thankfully, I prepared ahead of time by utilizing my strategies in exploring a variety of stocks and trading patterns so I did have a fallback and soon was doing even better than before. I bring this up because many people to this day tend to focus their trading activities on 1-3 stocks. Anything can happen to them at any time from a change in an industry to a stock split which changes the entire way they trade. So please- if you are one of those people who trades a handful of stocks, don't be stunned if the stocks you trade change in some fashion and have a solid back-up plan for trading other equities at all times.

Markets overnight traded higher throughout the world with Hong Kong up 0.3%, Tokyo 0.9%, London 1.3%, and Frankfurt 1.4%. Bonds are down a bit, the dollar is a tinge stronger against the yen but notably weaker against the euro, oil is down 1% (although well off of its low), and gold is down 1%. Initial Claims data came out much better than expected as did productivity. ISM Services (59.0) is due out at 10AM. Futures are sharply higher as positive economic data and the QE2 is trumping the oil story for the day (plus it helps that oil is down as well..albeit still over $100/barrel). For the day, look for a very active morning in a strong tape; much of the gains will likely hold and things will slow as the day progresses ahead of tomorrow’s unemployment report. The focus will likely be on the small cap energies, the earnings plays, biotechs in the news, notable relative strength/weakness plays particularly early, and the myriad of retailers with same-store sales data out this morning.

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

SIMG- closed near a high on news that the iPad 2 will have an HDMI accessory

MDR- closed near a high after posting earnings

BGS- closed near a high after posting earnings

EDGW- closed near a high after posting earnings

CCME- closed near a high despite a negative Muddy Waters report

LEI- closed near a high on the completion of a well

ROYL- closed near a high

RIG- closed near a high

WLT- closed near a high

AMZN- closed near a high

ZN- closed near a high

LMLP- closed near a high

SHS- good earnings

ZUMZ- decent same-store sales

ITMN- received European Commission marketing approved for Esbriet

BIG- decent earnings

HNZ- decent earnings

BPAX- positive data from a phase II pancreas cancer vaccine study

AMLN, ALKS- poor Duration-6 results

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

ZAGG- closed near a low after AAPL unveiled a new iPad cover

MET- closed near a low after announcing a share offering

CPF- closed near a low

CCSC- closed near a low after posting poor earnings

WTI- closed near a low after posting poor earnings

CQB- poor earnings

FL- poor earnings

SIGM- bad earnings

OPK- share offering

GEF- terrible earnings

HITK- closed near a low after it was indicated that the FDA seeks to pull Lodrane

MET- 146.8 million share offering at 43.25

CNQ- poor earnings


Earnings:

THURS MAR 3 BEFORE

BIG CNQ HNZ

KR ORN UNFI

WNR

THURS MAR 3 AFTER

COO MRVL SLW

SPRD ZGNX


Epiphany Trading, LLC
www.epiphanytrading.com

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