THURS. MAY 12- Commodity Weakness And Stock Prices

Last week, I wrote in length about recent commodities pressures in this space. I also briefly noted that it could widely impact stocks- particularly to the downside- but I didn’t describe in detail exactly why I said this. So, let me briefly do so here (with references to the posts from last week which I will not repeat here- the detail is in those posts). With that in mind, pretend I am a hedge fund manager with $100 million in assets. For sake of argument, I am being aggressive in an attempt to post a good return in holding a portfolio with 10% of my funds in silver, 20% in oil, 20% short dollar investments and 50% in stocks. Well, in holding silver contracts with what was the low margin requirements, I got wiped out on the silver portion of the portfolio (and a little more). In the interim, a few people get nervous with the volatility and want to redeem their monies. So, I have no choice but to begin selling some other assets..likely some of the oil because I am now afraid of the margin. While doing that, I glance up and notice that the euro is getting hit quite hard against the dollar as metals prices come in. I now start scrambling to cover my aggressively short dollar positions. In the meantime, more and more people want their money. I now have one option left to cover my burgeoning losses along with covering the redemptions- sell stocks. And that is why on days like yesterday when oil plunges $5/barrel, silver falls $3/ounce, and the dollar rallies two full euros (even if most of this is good for the consumer), it is, in fact, certainly an ephemeral negative for stock prices.

Markets were down throughout the world with Hong Kong down 0.9% and Tokyo off 1.5%; London is trading lower by 1% with Frankfurt and Paris getting hit for about 1.5% losses each. Oil is down sharply anew (about 3%) with gold down 1% and silver plunging 8%. CSCO’s earnings woes are a main trigger along with the commodity weakness in the sharply lower indication for futures. PPI came in higher than expected with jobless claims and retail sales about in-line. Business Inventory data (0.9%) is due out at 10AM. For the day, commodities will likely continue to rule the roost. With as much weakness as is out there, it’s actually slightly bullish to me anyway that stocks aren’t indicated down more so that little tell may be enough to at least keep my eye out for short covering opportunities if commodities fail to keep declining. The focus today will likely be on big cap tech, the rare earths, the Chinese ADR’s, and relative strength plays.

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

TZOO- featured on “Mad Money” last night

SINA- decent earnings

PKT- closed near a high after posting decent earnings

SYX- closed near a high after posting decent earnings

GLBC- closed near a high

DVOX- decent earnings

VRSN- settled with Coalition for ICANN transparency


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

MCP- closed near a low after posting terrible earnings

STEC- closed near a low after posting terrible earnings

IL- closed near a low after posting terrible earnings

CYD- closed near a low after posting terrible earnings

PNSN- closed near a low amid concern of a potential write-down re its nonaccrual receivables

PANL- closed near a low on continued follow-through after posting poor earnings a couple days ago

CLF- closed near a low

WLT- closed near a low

GS- closed near a low

FSLR- closed near a low

POT- closed near a low

JOYG- closed near a low

FCX- closed near a low

CSCO- poor earnings guidance

CSIQ- poor earnings

SVM- poor earnings

ZIP- poor earnings

TCK- closed near a low

MOS- announced 100 million share secondary offering

GRS- poor earnings

IOC- poor earnings

Earnings:

THURS MAY 12 BEFORE

AMSC BCE DANG

GRS KSS PCP

TK

THURS MAY 12 AFTER

ALKS CA DAR

GA JWN LDK

NVDA SPWRA

Epiphany Trading, LLC
www.epiphanytrading.com

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

WED. MAY 11- Altering Trading Style

I love chocolate. And that, without a doubt, is my favorite beginning to a blog post in all the time I’ve been typing out these pieces. But, I do. More than any other food on the planet, the pleasure of a little chocolate is one of my favorite simplest pleasures in this life. Mind you, a little bit of chocolate every so often is a wonderful thing (for me anyway). Not often and not in great size……but say, one or two squares of a Hershey Bar after a filling meal is the perfect touch for me. Now, let’s say I ate 21 Hershey bars in one sitting. I may get a stomach ache and dull my affinity for chocolate. Or I may feel no pain at all and have quite the story to tell everyone I know about the time I ate 21 Hershey bars for fun. Either way, the cholesterol I am actively watching would soar. So, basically, I’d find out exactly what would happen if I just kept eating chocolate versus potentially getting sick and hurting my health. It’s just not worth it in the long-run net-net. And so it was when I began trading higher-priced stocks so many years ago. My first trade back in 1987 was for 100 shares of an eight dollar stock in Reebok. My next trade was for 200 shares of Church’s Fried Chicken (a seven dollar stock). Almost all of my next series of trades were in stocks which traded between 5 and 15. As I began to trade more actively in 1994, I slowly ramped up my trading of higher priced equities. I did quite well even before I started trading full-time in 1996. Let me rephrase- I did quite well for a time until I eventually got destroyed. Why? Because 10,000 shares of a 2 dollar stock does not play the same as 10,000 shares of a 20 dollar stock. The sheer delta indicates that a 25 cent change in a 2 dollar stock may be the same percentage as a 2 ½ point drop in a 20 dollar stock yet the monetary loss is 10% of the damage. Furthermore, stocks of similar prices act quite differently. For instance, when Citicorp was a low priced stock, it’d typically trade in a narrow range on huge volume. Sirius Satellite (SIRI) has the same big volume but trades in a much bigger range so trading the same size of SIRI as C will inevitably result in losses as human nature is to hold losers and cover winners ergo a faster moving stock would result in a poor outcome. So, particularly for those who haven’t traded stocks with double digits in them much less those with high deltas, realize that the size of your positions should not be identical as to the positions you executed in the lower priced stocks. Also, the movement of each stock is totally unique. Furthermore, it is even more important that one be on the right side of a trending market else the potential for damage is that much greater for immediate-term players. And by the way, a funny thing eventually happens…as your comfort level and knowledge increases of a different group of stocks, so too will your confidence, expertise, confidence, gut feel, confidence, size of your trading stake, and confidence to augment trade size without taking on undue risk.

Markets were mixed throughout the world last night with Tokyo down 0.2% but Hong Kong up 0.2%. London is down fractionally but Frankfurt is up 0.5%. The externals are a bit more notable with the dollar up a bit versus the euro and yen and commodities down across the board. Futures were up most of the morning but have come in. In general, it’s quite choppy but quiet. The choppiness will likely continue in what looks to be a consolidation session unless the commodities moves become exacerbated. The focus will likely be on the earnings flow, retailers, stocks with share offerings, and relative strength/weakness plays.



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

MED- closed near a high after posting good earnings

FOSL- closed near a high after posting good earnings

SREV- closed near a high after posting good earnings

CPE- closed near a high after posting good earnings

HELE- closed near a high after posting good earnings

CIEN- closed near a high on takeover rumors

DTG- closed near a high on more speculation that it will received a raised takeover bid

WYNN- closed near a high

SODA- closed near a high after Fidelity disclosed a sizable stake

ROVI- great earnings

ASYS- good earnings

IPSU- good earnings

GRC- closed near a high

OXGN- closed near a high

FEIC- closed near a high

AU- good earnings

TISA- good earnings

M- decent earnings

ZAGG- good earnings

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

MCP- closed near a low; had poor earnings as well

CLF- closed near a low

SINA- closed near a low

BMTI- closed near a low following the release of FDA documents ahead of the May 12 panel meeting for the company’s augment bone graft

DIS- poor earnings

SGMS- poor earnings

STEC- terrible earnings

CPTS- poor earnings

PAL- closed near a low after posting poor earnings

ADES- closed near a low

AIG- to offer 300 million shares; 200 million from the gov’t and 100 million by the company

ACOM- 4.35 million share secondary at 42






Earnings:

WED MAY 11 BEFORE

AH AU CGA

CYD GIL M

SFUN TEVA

WED MAY 11 AFTER

CSCO CSIQ IAG

IOC OAS SINA

SVM SYMC



Epiphany Trading, LLC
www.epiphanytrading.com

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

TUES. MAY 10- Strong Bonds

There’s been a somewhat strange occurrence in a pretty wild market environment. I’ve discussed silver and commodities in detail recently. The stock market continues to hang in there. The dollar has weakened against the yen but strengthened against the euro on the commodity weakness. But what has also been very noticeable has been an inordinate amount of strength in the bond market. The 10 year yield on the U.S. Treasury bond is now down to about 3.15% as the yield has declined in every type of market in recent weeks. What is strange about it is the buoyancy of the stock market, a jobs market that seems to be perking up if one is to believe Friday’s unemployment figures, and the Chinese have been paring back their holdings of U.S. Treasury debt. So, what gives? Well, usually a strong bond market portends a weakening economy. Is that the case? It can also indicate the U.S. Treasury going more towards “all in” in attempting to massage interest rates because even the slightest uptick in rates can cause a massive issue for the economy in terms of just paying interest on said debt. Or is it because the U.S. is being viewed more and more as the strongest economy in the world (or at least a safe haven) in the face of a weak Japan and Europe as well as Middle East turmoil? Well, gee, if I knew the answer to this, I’d take out a 2nd mortgage on my house and bet it. I simply bring it up because bonds have had quite the exaggerated move and as the 10-year heads back toward 3%, it certainly portends another reason for the stock market to remain increasingly volatile for us day traders.

Markets in Asia were mixed overnight with Tokyo up 0.3% but Sydney down 0.6%. Bourses in Europe are snapping right back from yesterday with moves of 1.3% to 1.6% to the upside prevalent. Commodities too continue to rally in general with metals up 1%-2% although oil is down a little after the margin requirement was (unsurprisingly) raised. The dollar is flattish. Import data came in notably inflationary with Wholesale Inventories (1.0%) out at 10AM. Futures are nicely higher. As long as things hold steady in commodities land, the markets should hold as well albeit on relatively low turnover. The focus will likely be on the earnings plays, momentum movers from yesterday if the market gets going, and relative strength/weakness plays.

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

NFLX- closed near a day amid rumors it is on the verge of making inroads into Latin America

ROSE- closed near a high after posting good earnings

DTG- closed near a high after receiving an increase takeover bid

JOYG- closed near a high

MCP- closed near a high

WLT- closed near a high

CLF- closed near a high

VRTX- closed near a high

PCLN- closed near a high

LULU- closed near a high

WTW- closed near a high

FEIC- closed near a high

MED- good earnings

ATVI- decent earnings

YONG- decent earnings

DF- good earnings

FOSL- good earnings

NOG- decent earnings

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

MOBI- closed near a low after posting poor earnings

HW- closed near a low after posting poor earnings

PANL- bad earnings

BID- poor earnings

CLNE- poor earnings

RAX- poor earnings

MNKD- poor earnings

NSPH- share offering

ATPG- poor earnings



Earnings:


TUES MAY 10 BEFORE

BR DEER DF

DYN EBIX EPD

FOSL IRDM JASO

JRCC MDC NOG

TM WEN

TUES MAY 10 AFTER

DIS MBI MCP

MDR NUAN ROVI

SGMS SSRI STEC

URS WX




Epiphany Trading, LLC
www.epiphanytrading.com

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

MON. MAY 9- Changing With The Times

When stocks switched over from fractions to decimals several years ago, I didn't know what I was going to do but I knew I'd adapt. When the markets reopened on September 17, 2001 following the horrific terrorist attacks, I didn't know what was to happen but I knew I'd adapt. When trading volume fell through much of 2004 following the volatility of the previous few years, I was scared but knew I had to adapt. When the markets had multi percent changes on a daily basis in the tumult of the sub prime crisis, I wasn't sure what was to happen but I knew I had to adapt. When there was discourse of changing short selling rules last year, I wasn't sure what was to happen but I knew I had to adapt. Things and circumstances perpetually change in the markets. Many times from these disturbing circumstances, opportunities can be created. For instance, when the markets were so volatile a few years ago, I cut down on my size but held on for bigger moves. So, if you're faced with a potential worrisome change in your trading career, do two things. First, figure out an alternative to get around the change. There inevitably thankfully is an alternative all of the time. Second, have confidence in yourself. Period. In short, when distressing circumstances occur trading-wise, realize that you better adapt and you better have confidence in yourself...else you won't be trading for a living much longer.

Markets in Asia were generally higher overnight with Hong Kong up 0.8%, Sydney 0.3%, and Singapore 1.2% although Tokyo was off 0.6%. However, European stocks are giving back a portion of Friday’s gains as the bourses close when Wall Street was on its highs with London down 0.8%, London 1.2%, and Paris 1.3%. Oil is sharply ahead by about 3% with silver up 5%. Gold is up 1%. The dollar is quiet as are bonds. Futures are mildly higher. It’s interesting to note that both the VIX and the Dow were positive on Friday so that’s a little warning sign for the week. Look for a very choppy session with some selling pressure likely early. Commodities will likely tell the tale from there. The focus will likely be on the rental car sector, the shrinking earnings flow, and relative strength/weakness plays.

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

GMCR- closed near a high after a successful secondary share offering

WCG- closed near a high after posting good earnings

NATR- closed near a high after posting good earnings

OXGN- closed near a high

CALX- closed near a high

SQNM- closed near a high

ACHN- closed near a high

BKS- closed near a high after a brokerage upgrade

DG- received raised $72/share cash takeover bid

BSFT- good earnings

SLW- decent earnings

SYY- decent earnings

X- mentioned positively in “Barron’s” over the weekend

MOBI- decent earnings


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

NTSP- closed near a low after posting bad earnings

WBMD- closed near a low after posting bad earnings

OME- closed near a low after posting bad earnings

TPC- closed near a low after posting bad earnings

RBCN- closed near a low after posting bad earnings

RIMM- closed near a low

GGC- closed near a low

NQ- closed near a low

WBMD- closed near a low




Earnings:

MON MAY 9 BEFORE

AUXL BSFT CDE

HL HOGS KWK

LPX NAT SRE

TSN VRX

MON MAY 9 AFTER

AG AGO AONE

ATVI BID CLNE

GSM HMIN IDTI

MED MR PANL

RAX RST


Epiphany Trading, LLC
www.epiphanytrading.com

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

FRI. MAY 6- Commodities Panic

The three most common comments I heard yesterday in no particular:
a) “Wow, oil is down how much?”
b) “What exactly changed between today and yesterday?”
c) Shouldn’t the stock market be up today if commodities prices are falling?”

I touched on all of these issues in yesterday’s blog (which was silver-focused) as well as discussed it all during the morning call. But clearly there was a lot of confusion so let me try to give my interpretation in a bit more detail in this space. For the first one, yes, oil was down going on $11/barrel yesterday with silver down $3.50 and gold off around $50 at one point. Those numbers are stunningly shocking for anyone who follows commodities even at a rudimentary level. Volume on the futures contracts for silver and oil smashed record levels yesterday. Indeed, the SLV instrument which tracks silver prices traded 16,000,000 shares or so on March 29. Yesterday, it traded over 18 times that amount! So what exactly changed? Nothing but for one major thing. Margin requirements were raised particularly in the silver market. Thus as silver began to precipitously decline, other entities (particularly commodities funds) began selling other commodities to make up for their losses in silver. This led to the widespread selling in instruments such as gold and oil. Fund managers were trapped. If, say, I wanted to take some money out of a fund in seeking a redemption, they’d have to raise it. The only way to do so as people raced out of commodities was to sell’ other stuff.’ This goes into question three. The selling pressure extended into equities as well as asset managers had to sell non-commodities assets to shore up books and maintain performance. As long as demand is not caving in on oil, yesterday’s decline did not signal a recession bur rather a market-induced panic due to too many humans and computers being in on the same side of a trade. Thus, in the immediate-run, this process may not end quickly as all of the forced hands out must be liquidated so expect some volatility today particularly ahead of the weekend.

Markets in Asia were down overnight with Tokyo down 1.5% and Hong Kong about 0.5%. The trend has shifted in Europe with markets up 0.5% to as much as 1% specifically in London. Gold is flat after trading lower. Oil is only down $1 after being down $3. The dollar is stronger across the board. The trigger for all of this was the 8:30AM jobs report which brought much stronger data than expected. Payrolls came in much stronger than expected. For today, the broader tape should hope up. Even with commodities down early, the futures have been up from the get-go today and with the commodities off of their lows, it gives equities even more of an impetus for stocks to go higher. The focus will likely be on the earnings plays, relative weakness plays, Chinese ADR’s off of YOKU, and commodities plays.

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

RAH- closed near a high on rumors of a higher takeover bid

ELON- decent earnings

PCLN- good earnings

HANS- good earnings

FLR- decent earnings

KFT- decent earnings

CF- good earnings

CQB- decent earnings

NVTL- good earnings

IMMR- decent earnings

SAPE- decent earnings

RBCN- decent earnings

WCG- decent earnings

WCG- decent earnings

ZEUS- decent earnings


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

ACOR- closed near a low after posting bad earnings

VMC- closed near a low after posting bad earnings

ARO- closed near a low after posting bad earnings

SVNT- closed near a low after posting bad earnings and amid worries over the company’s gout drug

JOYG- closed near a low

UDRL- closed near a low after posting bad earnings

SCEI- closed near a low amid rumors about the company’s health

AIG- poor earnings

V- poor earnings

QLGC- poor earnings

BRE- share offering

CNQ- poor earnings

DLB- poor earnings

MDRX- poor earnings

YOKU- poor earnings and announced share offering

NILE- poor earnings

SLXP- poor earnings

SPRD- poor earnings

SUN- poor earnings

WRC- poor earnings

GSIT- poor earnings

SMTX- poor earnings

GMCR- 8.1 million share offering at 71

ALU- poor earnings

AVNW- poor earnings

OMPI- bad earnings

OCZ- closed near a low


Earnings:

FRI MAY 6 BEFORE

ALU BPL CCJ

DSX LNG MSG

SRZ UPL WCG

WTW XEC

FRI MAY 6 AFTER

BRK/A MDVN

Epiphany Trading, LLC
www.epiphanytrading.com

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

THURS. MAY 5- Silver Margining

Many people falsely believe that the quickest way to halt a parabolic rise at least temporarily of a marginable asset is for a rise in broader interest rates or discount rates. However, this is absolutely not true. What does the trick is a rise in margin requirements. Maybe not the first time, but eventually it does the trick and it does it rapidly. For those not aware, margin is street talk for ‘borrowed money.’ For instance, an overnight margin requirement of “2 to 1” means that one could own twice as much assets as one has monetarily. Ergo, if one had $100,000 in a stock account, one could own $200,000 of assets. When margin requirements are raised, it forces people to put more money up which in turn shrink the amount of people able to get leverage in the market. On April 27th, the COMEX raised the margin requirement on a new contract of silver from $11,745 to $12,825. On April 29th, that number rose from $12,825 to $14,513. On Tuesday (the day after silver topped and had already reversed), the requirement was raised from $14,513 to $16,200. Thus, in less than a week, one had to have 38% more money to initialize a position in silver on the COMEX. Oh and by the way, after the bell yesterday, the CME announced it was going to boost margin requirements again! Furthermore, the margin requirement as a percentage of contract value has been around 8% (about ‘12.5 to 1“). Thus, an 8% decline in the value of silver would effectively wipe out a silver contract holder. So what happened in the last few days? The number of participants declined because more money was needed to play. And many of the current holders who bought recently lost all of their investment. This is what has caused the price of silver to decline so sharply. It’s also why it hasn’t led to widespread selling in the stock market in that it’s been generally an isolated incident. The issue will be if the other commodities take their cue from the silver market. So, the two points here are- 1)be aware of the mechanics behind a market beyond the fundamentals and b)monitor the commodities markets even closer than normal in coming days as the ghost of the May 6 flash crash from last year approaches.

Markets in Asia were mixed overnight with Taiwan up 0.8%, but the Sensex was off 1.6% and Hong Kong 0.2%. In Europe, Frankfurt is off 0.8% and London is down just over 1%. Oil is down 3%, gold 0.5%, bonds are up slightly, and the dollar is much weaker against the yen (below 80 yen) but up strongly against the euro (up a full euro). Futures are weak on weak jobless claims data as well as continued commodity weakness. Look for a choppy but downside session in all likelihood while watching the commodities for a potential exacerbation. The focus will likely be on earnings plays and relative strength plays.

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

TMH- closed near a high after posting good earnings

MGM- closed near a high after posting good earnings

BKS- closed near a high

BMC- decent earnings

ERTS- decent earnings

JDSU- decent earnings

NUVA- decent earnings

WFMI- decent earnings

WFR- decent earnings

TSLA- decent earnings

CECO- decent earnings

ENOC- decent earnings

EXPD- decent earnings

LEAP- decent earnings

QNST- good earnings

PPO- good earnings

CI- decent earnings

EL- decent earnings

ONNN- decent earnings

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

JAZZ- closed near a low after posting poor earnings

FSLR- closed near a low after posting poor earnings

LVS- closed near a low after posting poor earnings

MOTR- closed near a low after posting poor earnings

CENX- closed near a low after posting poor earnings

WWWW- closed near a low after posting poor earnings

NXTM- closed near a low after posting poor earnings

CTCM- closed near a low after posting poor earnings

REGN- closed near a low

NOG- closed near a low

MET- poor earnings

MELI- poor earnings

SWIR- poor earnings

PRU- poor earnings

RIG- poor earnings

SWI- poor earnings

SAM- poor earnings

ATML- poor earnings

MUR- poor earnings

PAA- poor earnings

IO- poor earnings

NOG- closed near a low

ACOR- poor earnings

GM- poor earnings

TBL- poor earnings

WNR- poor earnings

Earnings:

THURS MAY 5 BEFORE

ACOR AEE ANV

ATK CBOE CEDC

CI CTL CVS

DANG DNR DTG

DTV EL EXK

FO GM HK

HOC IT MAC

MGA MINI NOG

NRG PDC PDE

PXP RGLD SFY

SHOO SLE SVNT

TBL VTR WMB

WNR

THURS MAY 5 AFTER

AIG BID CF

CFN CIM CNQ

CQB DLB EOG

FLR HANS JCOM

KFT MCHP MDRX

MHK MRX NFG

NILE NVTL PCLN

PKI PSA QLGC

RAH SD SEM

SGEN SGMS SLXP

SPRD SUN V

WRC

Epiphany Trading, LLC

www.epiphanytrading.com

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

WED. MAY. 4- Tracking Groups

I’ve witnessed literally countless times over the past few years the lack of preparation/knowledge for/of many traders much less an unwillingness to acknowledge basic trends. I know. I have been guilty of all of this countless times in the past. One of the top questions I am asked is: how you do track groups of stocks, how do you differentiate news flow, and how do you trade them in the context of relative strength/weakness? I want to try to address that. In my mind, it’s astoundingly simple, but I’ve never actually written it down. Let’s say for sake of argument that four of the major Chinese ADR’s that I follow are BIDU, SINA, SOHU, and YOKU. All of them are not exactly alike- I get it, but close enough. BIDU provides Chinese and Japanese language Internet search engines. SINA provides online media services in China. SOHU provides news, information, and communication services in China. YOKU is ostensibly a Chinese Internet video website. So, I’d place them in the general category of “Chinese technology companies.” Pretend that the Shanghai stock market overnight was down 2% with S&P and NASDAQ futures both down 1%. For ease of argument, amid that weak tape, BIDU is down 3%, SINA, and SOHU 2% with YOKU down 0.2% at 9:25AM ET when I notice this. I immediately question why YOKU is so strong and BIDU so weak. At that point, I look up the news on each as well as study the profile of each company to understand their general businesses. This takes me about one minute literally to do if not less in educating myself. From here, generally three things happen. In the first scenario, let’s say there is no news. Let’s also say that the market rallies off of the open. I don’t look to buy BIDU because it’s down more than the rest of the stocks. Rather, I buy YOKU through unchanged because it’s the strongest of all four. I do that because strength tends to beget strength. If groups of people came in heavily short YOKU and it gets positive on the day with the other Chinese ADR’s down, they tend to rush to cover. Furthermore, what if there is a reason for the moves but I don’t see it? Maybe there was an article in some arcane Chinese newspaper. I don’t know. I just know that the leader leads more in a strong market while the laggard will be among the first to fall in a weak market. In the other scenario, let’s say there is news. Pretend all four of the stocks were downgraded by Goldman Sachs. My strategy for purposes of relative strength/weakness is…exactly the same (with one slight corollary)! The corollary is that the news story makes the trade much more definitive as long as it’s universal, i.e. YOKU shaking off a downgrade is phenomenally bullish from an immediate-term vantage point. I don’t ask why it’s doing it…I just know it’s doing it and I‘ll buy it even heavier than in the earlier description.. And if BIDU, SINA, and SOHU were downgraded but YOKU wasn’t? I’d look to buy YOKU in a strong tape yet short BIDU (not SINA nor SOHU) if the market wore down more than in the first two scenarios. See a pattern much? So, the bottom line is that it’s inevitably best to buy strength in an upblip and short weakness in a down blip particularly if there is a news trigger involved.


Markets in Asia were down fairly sharply overnight with Hong Kong down 1.3% and Shanghai off 2.2%. The trend is the same in Europe although a bit more modest with Frankfurt down 0.3% although London is down to the tune of 0.9%. Gold and oil are both down a little with the dollar quiet. The MBA Mortgage Index, Challenger Job Cuts, and ADP have already come out (ADP notably a little weaker than expected). ISM Services (57.3) is due out at 10AM with Crude Inventories out at 10:30AM. For today, the markets will likely be quite choppy but with no real sense of direction. The focus will likely be on the earnings plays, the casinos, and the Chinese ADR’s following yesterday’s action with the RENN IPO.

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

EXLS- closed near a high after posting good earnings

ROG- closed near a high after posting good earnings

NEOP- positive NE03-09 study

GMCR- great earnings

JAZZ- decent earnings

INT- decent earnings

CBS- decent earnings

MYGN- decent earnings

CMCSA- decent earnings

FEIC- good earnings

GRMN- good earnings

ZBRA- decent earnings

VSEA- received $63/share cash bid from AMAT

RAH- received $86/share cash bid from CAG

SPPI- decent earnings

TRW- decent earnings




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

DNDN- closed near a low after posting poor earnings

EMR- closed near a low after posting poor earnings

ADM- closed near a low after posting poor earnings

MEE- closed near a low after posting poor earnings

SHLD- closed near a low after posting poor earnings

SOHU, SINA- among the Chinese ADR’s which closed near their lows

TZOO- closed near a low

VHC- closed near a low

TRMB- closed near a low

CVI- closed near a low

CSC- closed near a low after posting poor earnings

FST- closed near a low after posting poor earnings

FSLR- bad earnings

LVS- bad earnings

OPEN- decent earnings but management shake-up

MCK- poor earnings

OCZ- poor earnings

PLT- poor earnings

QSFT- bad earnings

THQI- poor earnings

BEXP- poor earnings

MOLX- poor earnings

MOTR- bad earnings

CENX- poor earnings

CNQR- poor earnings

OPLK- bad earnings

PWR- poor earnings

K- poor earnings

Earnings:

WED MAY 4 BEFORE

AGN AGU AOL

CHTR CLH DVN

FCN GRMN HCA

HNT ICE JOE

K LAMR MGM

MMC MMP PWR

RRD SPW TRW

TWX

WED MAY 4 AFTER

ACE ATML BMC

CECO CLR CVD

ENOC ERTS EXPD

GG GGC IPI

JDSU KIM LBTYA

LEAP MELI MET

MRX MUR NUVA

NWS ONXX PAA

PL PRU RIG

SWI THG TSO

VMC WFMI WFR

Epiphany Trading, LLC
www.epiphanytrading.com

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

TUES. MAY 3- Desire

“Yeah
Lover, I’m on the street
Gonna go where the bright lights
And the big city meet
With a red guitar, on fire”

Does anybody recognize the lyrics of this song? Hint, if you’re a U2 fan, you should really know it. The next word is the main theme (and name) of the song: “Desire.” Now, I’ve written of similar themes in the past- most recently a piece on “focus.” But there is a major difference between “focus” and “desire.” Obviously, one has to have “desire” to have “focus,” but there are different levels of “focus.” For instance, I typically clean the table and the floor after dinner since my wife usually makes dinner. When I “clean,” I typically sweep all the crumbs and wipe down the table. So, it’s pretty good as I focus on making sure we don’t live in total filth. Now, if we’re going to have people over, that’s a different story. The desire comes in to really clean- mopping, scrubbing, making sure every last dust crumb is off the floor. In trading, all the time, many traders focus when they need to when in trades or looking at prospective trades. But it disturbs me on many levels as I’ve written here countless times when people do things like gloat at 4:02PM at having made “$200” for the day…followed by a mass exodus routinely as a for instance. How can someone be satisfied with that paltry number…and then try not to enhance the number? During the day, when it’s quiet at times, why not concentrate on learning as much as one can about the field one is in? Thus, one may focus when trading…but it takes true underlying desire to do better- to understand one can always improve- to realize success not only in trading but in the bigger picture as well.

Markets overnight were down throughout the world with Hong Kong down 0.4% and Frankfurt and Paris each off about 0.8%. Gold is down about 1% with silver off an even more notable 4%, the dollar is down across the board, and oil is down 1%. Bonds are up again with the 10-year now at 3.25%. Futures are modestly lower. The main trigger overnight seems to have been a surprisingly bigger-than-expected interest rate hike in India along with vague terror worries. Look for a relatively quiet and choppy session pending exaggerated movement in the non-equity markets which would likely lead to a sudden exacerbated move stock-wise. The focus will likely be on the earnings plays, Indian ADR’s, and the rare earths.

Good- The following stocks have good news and/or a strong technical pattern

RAH- closed near a high amid rumors Apollo Global management on verge of bidding for company

DISH- closed near a high after posting good earnings

HIG- decent earnings

HLF- great earnings

BGC- decent earnings

FMC- decent earnings

IRF- decent earnings

VVUS- decent earnings

OXGN- closed near a high

AVP- decent earnings

FDP- decent earnings

IPGP- decent earnings

KLIC- good earnings

PCS- decent earnings

MA- decent earnings

AAPL- closed near a low, but featured on “Mad Money” last night


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

REDF- closed near a low

MOBI- closed near a low

TZOO- closed near a low

FSLR- closed near a low

LULU- closed near a low

SOHU- closed near a low

RIG- closed near a low

TDSC- closed near a low

CHK- poor earnings

DNDN- poor earnings

NETL- poor earnings

PFG- poor earnings

ANR- poor earnings

CTSH- poor earnings

FWLT- poor earnings

EMR- poor earnings

FIS- poor earnings

PFE- poor earnings

CLX- poor earnings

Earnings:

TUES MAY 3 BEFORE

ADM AMT ANR

AVP BBG BYD

BZH CLX COCO

CTSH DVA EMR

FIS HCN HCP

IPGP JOE LM

MA MLM MRO

MYL NYX OSG

PCS PFE PRGO

PWR RDC SMG

SU VNO

TUES MAY 3 AFTER

ASIA ATW AUY

BEXP BRE CBS

CENX CMCSA CNQR

CRL FSLR FWLT

GMCR GNK GNW

HRS INT JAZZ

LVS MCK MOLX

MOTR MYGN OKE

OPEN PEET PXD

THQI UNM VRTX

WFR XL

Epiphany Trading, LLC
www.epiphanytrading.com

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

MON. MAY. 2- Tempering Euphoria

As I began watching the news reports last night of the death of Osama bin Laden, I remembered back to the first time I had heard of him- 1998. I read several stories about him and knew of his actions. Upon getting married in August 2001, I took a three week honeymoon to Australia and New Zealand. While there, I noted a missile attack in the Middle East. About 10 days in, I told my newlywed wife I was getting antsy. She of course thought I was crazy and we had our first true argument because she felt it was her rather than my strange vibes. But it wasn't. When the first plane hit the World Trade Center on that horrible September day in 2001, I immediately said "this is bin Laden." I started trying to get ahold of everyone in the New York area (I lived in Chicago at the time) in telling them to be careful. As time progressed, certainly bin Laden was prominent but has largely become a symbolic target with much of his effectiveness having been taken away over the years. But he has no doubt been a unifying force for the venom and hurt of countless people across the world in the War on Terror. Alas, this is a trading blog so among my thoughts is this- what really changed? With bin Laden largely a figure head these last few years, the world is still a very dangerous place- and perhaps moreso today than in 2001...much less three days ago as Gaddafi was almost killed over the weekend with bin Laden now gone. So there will be euphoria by many today as well as in the financial markets but let's not forget that this euphoria should be tempered due to many terror cell elements out there. Indeed, the rally may be quite capped as the realization sets in this is indeed the end of a horrible chapter of history but it is quite possibly the start of a new one with the true operatives of organizations such as al Qaeda still quite alive and active.



Markets were mixed in Asia overnight with Sydney down slightly but Tokyo up 1.6%. Prices are higher in Europe with Frankfurt up 0.7% and Paris 0.4%. Gold is flat along with the dollar. Oil and silver are down sharply albeit off of their lows. Construction Spending (0.0%) and the ISM Index (59.7) are due out at 10AM with auto and truck sales out at 3PM. Equity futures are nicely ahead but off of their overnight highs. For the day, the tone seems to be set with the bin Laden capture and a rash of mergers. The focus today for me will likely be in the earnings plays, the myriad of merger plays, and relative weakness plays.

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

RADS- closed near a high after posting good earnings

ACOM- closed near a high after posting good earnings

SWKS- closed near a high after posting good earnings

LFT- closed near a high after holding conference call and increased stock buyback program size

WLT- closed near a high

GS- closed near a high

OXY- closed near a high amid continued gains following earnings from Thursday morning

EQT- closed near a high amid continued gains following earnings from Thursday morning

JKS- decent earnings

HUM- decent earnings

CPO- decent earnings

AWI- decent earnings

DISH- good earnings

CEPH- received takeover bid from TEVA for $81.50/ share in cash

SPPI- FDA approved Fusilev in patients with colorectal cancer

TIVO- received $500 million in patent settlement with DISH Network and EchoStar



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

REGN- closed near a low amid a downgrade and worries in the market for its eye drug

VFC- closed near a low after posting poor earnings

RIMM- closed near a low after posting poor earnings warning

DECK- closed near a low after posting poor earnings

CLF- closed near a low after posting poor earnings

PBI- closed near a low after posting poor earnings

FFIV- closed near a low

YRCW- reached definitive agreements in restructuring plan but will be dilutive for the company

SATS- poor earnings

ACI- to acquire ICO for $14.60/share in cash



Earnings:

MON MAY 2 BEFORE

AWI CPO DISH

EIX HUM JKS

JRCC L SATS

SYY

MON MAY 2 AFTER

ADP AHC APC

BGC BXP CHK

CRK DNDN EXM

FMC FN FST

HIG HLF HOLX

IRF NETL PFG

PRE RBC VVUS


Epiphany Trading, LLC
www.epiphanytrading.com

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

FRI. APR. 29- Keep It Simple

Recently, I took my two kids (ages 5 and 2) to my local Pathmark grocery store.  Unfortunately, I sadly learned as evidenced by the bare shelves that the store was to be shuttered.  A couple of weeks ago, I remarked that we needed a few things.  My older daughter told me "Well, Dad, you can't go to Pathmark because it's closing but Waldbaum's and King Kullen are open for business." After marveling at Rayna's vocabulary, intellect, and logic, it drilled home one of my favorite trading lessons.  My Mom is way above average intelligence but has never traded a stock in her life.  I learned a long time ago that if I am with her on a one-on-one basis and I cannot make her understand a specific trading idea, I probably shouldn't do it.  In general, the more complex that something is, the higher the likelihood that the intricacy of the idea will get in the way of it working.  For instance, it makes sense to me that if a stock has run up 70% in the last three months, it beats its earnings, and the stock barely trades higher, I'll short it through unchanged.  Maybe the company's growth is slowing.  Maybe the company beat its earnings on sketchy accounting practices.  I don't know.  But I do know that if a company comes out with good news on the surface and its stock prices fails to react, the likelihood that the stock accelerates to the downside in time is quite high (witness JPM and its ensuing performance post-earnings last week).  So, as my daughter who has not entered kindergarten as yet reminded me, everything does not have to be complicated.  Her young mind was able to soak up the difference between closed and "open for business." As we trade on a daily basis, things should generally be that easy.  I spent time a couple of weeks ago with a trader who'd been in the business for many years but had not traded in awhile.  I asked him to explain what it was he sought to do.  He spent half an hour talking to me and patiently answering my questions.  And after half an hour, I hadn't the foggiest idea of his strategy.  I am not the brightest tool in the shed, but I've been trading full-time almost 15 years.  That was a warning sign.  The moral: don't overcomplicate.  Focus on what you see and react to it rather than what you think the facts should indicate.

Markets in Asia were generally weaker overnight with Hong Kong down 0.4%. Things are quiet in Europe with eyes turned to the wedding as all indexes are not straying too far from unchanged. The dollar is once again weaker with commodities once again stronger. Personal Income and Personal Spending are due out at 8:30AM, Chicago PMI (68.0) at 9:45AM, and University of Michigan confidence data (68.7) at 9:55AM. Futures are slightly weaker. Look for a relatively quiet day with Europe not moving plus it’s the first nice sunny Friday of the year so a few people may filter out a little early. The focus will be on the earnings plays, RIMM and its competitors, and A-B-A2 strength plays in the week’s momentum movers.

Good- The following stocks have good news and/or a strong technical pattern

AFL- closed near a high after posting good earnings

NSC- closed near a high after posting good earnings

ZMH- closed near a high after posting good earnings

FTNT- closed near a high after posting good earnings

VCI- closed near a high after posting good earnings

SRDX- closed near a high after posting good earnings

SPWRA- received a $23.25/share cash buyout for 60% of the company from TOT; FSLR, STP, TSL, CSIQ may move with it

CLF- decent earnings

CSTR- good earnings

DOX- decent earnings

KLAC- decent earnings

SIMO- good earnings

EMN- good earnings

MMI- decent earnings

CERN- good earnings

QLIK- decent earnings

SWN- decent earnings

TRLG- good earnings

NTKR- great earnings

ACOM- great earnings

SWKS- good earnings

CAT- good earnings

MRK- decent earnings

WBC- good earnings

SCEI- good earnings

AXL- decent earnings

GT- decent earnings

LEA- good earnings

AGP- decent earnings

DHI- decent earnings

LPNT- decent earnings

WY- decent earnings

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

TDSC- closed near a low after posting bad earnings

HHS- closed near a low after posting bad earnings

POT- closed near a low after posting bad earnings

HP- closed near a low after posting bad earnings

FFIV- closed near a low

VRSN- poor earnings

CAVM- poor earnings

MSFT- poor earnings

DECK- bad earnings

RIMM- terrible earnings guidance

CROX- poor earnings

DRIV- poor earnings

AEM- poor earnings

LPS- poor earnings

KND- RHB had poor earnings; KND is buying out RHB

ENDP- poor earnings

IM- poor earnings

MWW- poor earnings

MTW- poor earnings

OCLR- bad earnings

RMD- poor earnings

VSEA- poor earnings

FRI APR 29 BEFORE

AGP AON AXL

CAT CPN CVH

CVX CX DHI

ETR FLIR GT

ITT LEA LPNT

MRK NVE PBI

PNW PPC RAS

SIFY SPG VFC

WBC WY

Epiphany Trading, LLC
www.epiphanytrading.com

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

WED. APR. 27- Changing Of the Fed

For the duration of my trading career, there have been several constants. One of them has been the Federal Reserve meetings. These meetings are typically held several times a year and when they conclude, we find out if there is any change in interest rate policy much less guidance from the Fed. Sometimes the meetings go for one day and sometimes they go for two days. But the steady tenet is that the results have been released at or around 2:15PM on days of the policy meetings. There has historically been much talk about the policy leading up to the meeting with the market active in the morning, dull in the hours leading up to the announcement, and traditionally much more active just after 2:15 as things are digested. This all changes today. There is going to be a brand new process with a post-statement briefing for the first time in FOMC results history. Thus, the statement will be released today at 12:30 followed by a briefing at 2:15. The seven year note auction- usually occurring at 1PM- will instead take place at 11:30AM. So, we are in uncharted waters. There still be speculation as to Fedspeak. There still will be a busy morning. But the window of slowness will likely shorten from 10:30ish to 2:15ish down to 12:30. After that, there will be a reaction to the number followed by a rapid quieting as traders await the press conference. From there, nothing and anything can happen depending on the length of the conference and the type of question asked (“do you anticipate doing a QE3, et al?”). This day will have a different kind of feel to it with the first-time schematic; adjust your lunch much your trading day accordingly.

Markets in Asia were mixed overnight with Tokyo up 1.4.% but Hong Kong Down 0.5%. markets in Europe are positive across the board from 0.2% in London to 0.8% in Frankfurt. The dollar is notably stronger against the yen amid rumors of a Japanese debt downgrade. Gold and oil are both slightly ahead. Futures are mildly positive. Mortgage Application data already came out, Durable Goods (2.0%) are due out at 8:30AM and then the Fed Show takes over. Look for a very busy morning amid all of the earnings flow followed by slowness as nobody knows exactly what to expect today. There will likely be a flurry of action just after the Fed announcement at 12:30 and then be ready for anything during the initial briefing. The focus will be on all of the earnings plays, rare earths and then financials and techs during the Fed periods.

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

IIVI- closed near a high after posting great earnings

MMM- closed near a high after posting decent earnings

KND- closed near a high after posting good earnings

REDF- closed near a high after announcing a group deals service in 40 Indian cities

WTI- closed near a high after posting good earnings

CSL- closed near a high after posting good earnings

LO- closed near a high after posting good earnings

CMI- closed near a high after posting good earnings

ASH- closed near a high after posting good earnings

GRA- closed near a high after posting good earnings

AAN- closed near a high after posting good earnings

ITW- closed near a high after posting good earnings

REGN- colon cancer treatment met goal in study

BDX- decent earnings

ALTR- decent earnings

BWLD- good earnings

DV- decent earnings

PNRA- decent earnings

SIMG- decent earnings

UHS- decent earnings

FORM- decent earnings

QCOR- decent earnings

KEYN- decent earnings

VSI- decent earnings

HUSA- decent earnings

ABX- decent earnings


BP- decent earnings

MWV- decent earnings

ROC- decent earnings

ARMH- decent earnings

BA- decent earnings

BHI- decent earnings

EDU- decent earnings

GLW- decent earnings

HES- decent earnings

JNY- decent earnings

MCO- decent earnings

ROK- decent earnings

TUP- decent earnings

WHR- decent earnings

WLP- decent earnings

ARW- decent earnings

SVVS- received takeover bid from CTL for $40/share- $30/cash and $10 in CTL stocks





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

NFLX- closed near a low after posting terrible earnings

UIS- closed near a low after posting terrible earnings

X- closed near a low after posting bad earnings

UA- closed near a low after posting terrible earnings

RCII- closed near a low after posting terrible earnings

TZOO- closed near a low amid a report that Facebook will be entering the daily deals space

AAPL- closed near a low

ABX- closed near a low

VHC- closed near a low

AMZN- poor earnings

APKT- poor earnings

BRCM- terrible earnings

CBI- poor earnings

RKT- poor earnings

SWK- poor earnings

WU- poor earnings

FTI- poor earnings

LIFE- poor earnings

NBR- poor earnings

CHRW- poor earnings

PPDI- poor earnings

STM- poor earnings

SMCI- poor earnings

MIPS- bad earnings

LDK- bad earnings

SFSF- bad earnings

PFCB- poor earnings

ROK- poor earnings

YOKU- downgraded by GS

NXY- poor earnings

RGS- poor earnings

WPI- poor earnings

COP- poor earnings





Earnings:

WED APR 27 BEFORE

ABX ARMH ARW

ATI BA BHI

BP CIT COP

DPS EAT EDU

EXC GD GLW

GT HES HL

JNY LAZ MCO

MPEL MWV NOC

NOV NXY OC

OXPS PFCB PH

PX RGS ROC

ROK SEE TMO

TUP WHR WLP

WPI

WED APR 27 AFTER

AFL AKAM ALL

BIDU CCI COG

CTXS CYH EBAY

EFX EQIX EQR

EXXI FISV FLEX

FLS GMCR IDCC

ISIL LNC NSC

NVLS OII OIS

ORLY OTEX PMTC

RE RYL SBUX

SGEN SLG SPN

TER TRN VAR

WLL XLNX

Epiphany Trading, LLC
www.epiphanytrading.com

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

TUES. APR. 26- The Dollar-Equities Relationship

When I went to Australia as the first leg of my honeymoon in August 2001, the cab fare from the Sydney Airport to my hotel was about $15 before tip. In November 2009, my brother-in-law and sister-in-law went to Sydney and stayed at the same hotel. The cost of their cab ride before tip? $48. Granted, there was some inflation in nine years. But at 4% a year (higher than the CPI over that time), that’s about 50% exponentially which would put the cab ride at $24. So, what accounted for the difference? The value of the American dollar declined sharply over that time. We hear all of that theoretical mumbo-jumbo about the decline of the dollar. Well, that gives but one human example of how the U.S. dollar has declined against say the Australian dollar. Right now, people wonder exactly how the market keeps going up when the dollar is going down. The thing is that our assets are priced cheaper relative to much of the developed world with the weak dollar (i.e. it’s much better for an Australian to take a cab upon arriving in New York than it is for a New Yorker to do so in Sydney relative to how it was 10 years ago). This makes things like oil and gold (traditionally priced in dollars) relatively cheap as well. But it especially makes American stocks look cheaper. Thus, for now, a weaker dollar is good for the markets as money flows to relatively cheap places. On Monday, I noted I was quite worried about the market (and was right for about a day) but I was more intrigued with the possibility of volatility. We sure got that over most of last week. But it was largely because of the movement of the dollar with strengthened and then weakened…conversely, the market weakened and then strengthened. So, this relationship will remain a constant for a very long time to come- know it and monitor it.

Markets overnight were down in Asia with Asian indexes down 1% in Tokyo and 0.5% in Hong Kong. Prices are slightly ahead in Europe- up about 0.3%. Oil is up slightly with gold down slightly. The dollar is flat. Futures are modestly ahead. Case-Schiller was in-line. Consumer Confidence (64.5) is due out at 10AM along with the Richmond Fed Survey (18). Two Year Treasury auction is out at 1PM. Futures are slightly ahead. The market will likely remain fairly strong with a focus on earnings plays, relative strength/weakness plays, and the rare earths.


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

AAPL- closed near a high

MCP- closed near a high

SODA- closed near a high

SOHU- closed near a high after posting good earnings

EBF- closed near a high after posting good earnings

VECO- decent earnings

MSPD- decent earnings

HXL- decent earnings

AAN- decent earnings

ALB- closed near a high

CMI- good earnings

CRDN- decent earnings

CSL- decent earnings

F- decent earnings

GRA- decent earnings

MMM- good earnings

TKR- decent earnings

UA- decent earnings

UPS- decent earnings

AGCO- decent earnings

ACI- decent earnings

USAT- announced partnership with Verizon Wireless

CE- decent earnings

DAL- decent earnings

ASH- good earnings

ROP- decent earnings

WAT- decent earnings

R- decent earnings

SIAL- decent earnings

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

CYMI- closed near a low after posting poor earnings

ABX- closed near a low after announcing an acquisition

NFLX- bad earnings

ORCL- CFO resigned

ESRX- bad earnings

ELX- poor earnings

SANM- poor earnings

RCII- poor earnings

SWSH- closed near a low

AMED- poor earnings

COH- poor earnings

LXK- terrible earnings

KO- poor earnings

X- poor earnings

Earnings:

TUES APR 26 BEFORE

ACI AGCO AKS

AMED AMG AN

ASH CE CMI

COH CPO CSL

CTB DAL ECL

ENR F GRA

HSP HSY IACI

ITW KCI KO

LMT LRY LXK

MHP MMM MNI

ODP OXPS PDS

R ROP RYN

SIAL SNV TLAB

UA UPS VLO

WAT WDR X

TUES APR 26 AFTER

ALTR AMZN APKT

BDX BRCM BWLD

CBI CHRW CNI

DV DWA FTI

GGP ILMN JLL

LIFE MEE NBR

NLC PNRA PPDI

RKT RRC SIMG

STR SWK UHS

WMS WU


Epiphany Trading, LLC
www.epiphanytrading.com

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

MON. APR. 25- Seeking Out Opportunity

There was a fascinating article I read in a local paper on a recent weekend mini-trip. The author wrote of weekends he spent with his Dad at Yankees games in the Bronx. Now that he has his own kids, he too takes them to Yankees games...in Baltimore. The author spent $12 each for the equivalent of $150ish seats at the new stadium. So he was already ahead about $550. I understand factors such as food and gas come into play but it still makes tremendous financial sense for the author to do what he did. In trading, the same principle applies. First, there are times when it is harder than others to make a trade. It could be a function of the markets, the day, or a factor such as exhaustion. But anything is possible. Second, opportunities are there for the finding...if you look hard enough. Maximum effort is a must for success in this field. Finally, for the effort, one can find fruit with the work. The reward is there but it can take some doing although it can be well well worth it. Thus, you can generally get what you want even if it is more difficult than you thought it'd be. It may be a slight tangent to get it but success in trading is certainly obtainable.

World markets were ostensibly inactive. Tokyo was net near flat for the last couple of days with Hong Kong and every major European bourse having been closed Friday and today. The dollar is quiet but mixed with oil slightly stronger and metals screaming with gold up 1% and silver up 6%. New Home Sales (280K) are due out at 10AM. Futures are modestly positive. With so many people still out for vacation, look for a very low volume session today. There will be pockets of activity amid some of the earnings flow and ahead of the crush of economic and earnings data due out starting this afternoon. The focus will likely be on the earnings plays from this morning, the metals/commodities plays, China ADR’s, and relative weakness plays particularly early.



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

SCSS- closed near a high after posting earnings

WLT- closed near a high after posting earnings

ESI- closed near a high after posting earnings

COF- closed near a high after posting earnings

TZOO- closed near a high after posting earnings

LULU- closed near a high

IBM- closed near a high

FCX- closed near a high

NFLX- closed near a high

AMZN- closed near a high

PLCM- great earnings

CB- decent earnings

EZPW- decent earnings

IGT- good earnings

BCR- decent earnings

NEPT- closed near a high

TRGL- closed near a high on a positive French shale hydrocarbons report

CYOU- decent earnings

SOHU- good earnings

NKE- featured in “Barron’s” over the weekend




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

MCP- closed near a low

OCZ- closed near a low

HNI- closed near a low after posting poor earnings

AMGN- closed near a low after posting poor earnings

SYNT- closed near a low after posting poor earnings

BIIB- near island reversal in closing near a low despite posting good earnings and drug results

VNET- near island reversal in closing near a low on the day of its IPO

YUM- near island reversal in closing near a low despite posting good earnings

SNDK- poor earnings

MXIM- poor earnings

RMBS- poor earnings

SYNA- poor earnings

MCRL- poor earnings

CYMI- poor earnings

ABFS- poor earnings

KMB- poor earnings

ABX- announced agreement to buy Equinox

RSH- poor earnings



Earnings:

MON APR 25 BEFORE

ABFS ACV BEAV

JCI KMB SIFY

SOHU

MON APR 25 AFTER

AMP EFII ELX

ESRX HLX HXL

JEC MAS MSPD

NFLX PCL RCII

RGA RSH SANM

SFG SWI UIS

VECO WCN


Epiphany Trading, LLC
www.epiphanytrading.com

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

THURS. APR. 21- Time Horizon Is Everything

Sometimes, there are just times to divert a little bit from the norm. This is not usually the case, but this piece is about one of those rare 'exceptions to the rules.' Such was the case on Tuesday when Seagate Technology (STX) announced that Samsung had taken a stake in the company. Mind you, the stock had run up several points ahead of the announcement amid the thinking that maybe, just maybe, STX was going to be a takeover candidate. The thought process to the trade was this: STX was trading less than 1% higher around the time of open. It could not get any traction on the news. Ergo, it'd be a conventional short through unchanged as some longs who felt the company was an imminent buyout candidate would be disappointed with no merger announcement forthcoming. Now, usually, I am in trades for 10 seconds- 3 minutes with the entry a near science and the exit an art quite admittedly. But in this case, the thought process was quite cut and dry...if it had rallied several points on the thinking it was to be bought out and now it wasn't to be bought out, it could really really go. I shorted several thousand shares of the stock as it breached unchanged and made good money thankfully. But the theory in this one went that it was a solid 30-90 minute idea if not longer as common sense would dictate that disappointment would lead to a larger decline which sure enough occurred as it proceeded to fall almost a dollar from unchanged. So here's the point: when you have a degree of success at whatever type of trading you are doing, do it by all means. But in the rare exception that you want to divert for a very logical reason, don't fall back into your traditional mindset because if your trading parameters are different, your mindset should be different as well.

Markets were stronger throughout the world overnight with the Asian markets trading ahead just shy of about 1% with the European bourses up more moderately- about 0.2% to 0.4% across the board. Oil and gold are both up modestly with the dollar getting hit once again. Jobless claims data came in slightly better than expected, LEI is out at 10AM (0.3%) and Phily Fed (36.0) at 11:30AM. Futures are nicely higher on the generally positive earnings flow- specifically from AAPL. As the day progresses, look for the gains to likely hold on slower volume over time. It will be frantically busy yet illiquid on the bell. The focus will be on the tons of earnings out along with relative weakness plays.

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

VMW- closed near a high after posting good earnings

UTX- closed near a high after posting good earnings

STJ- closed near a high after posting good earnings

GRA- closed near a high after posting good earnings

SNDK- closed near a high

JOYG- closed near a high

FFIV- closed near a high

AMZN- closed near a high

BIIB- closed near a high

MEE- closed near a high

ALTR- closed near a high

KLAC- closed near a high

CAVM- closed near a high

CRM- closed near a high

AAPL- good earnings

PLXS- great earnings

QCOM- good earnings

YUM- good earnings

FFIV- great earnings

SCSS- great earnings

GDI- good earnings

EW- good earnings

SLM- good earnings

HON- decent earnings

ALGN- good earnings

TSCO- decent earnings

ETFC- decent earnings

CSR- received a $6.50/share takeover bid

BAX- decent earnings

BIIB- decent earnings and positive drug data

CY- decent earnings

COF- decent earnings

DD- decent earnings

DO- decent earnings

GE- decent earnings

MS- decent earnings

NEM- decent earnings

NOK- signed licensing deal with MSFT

PENN- decent earnings

PNC- decent earnings

TPX- decent earnings

TRV- decent earnings

UNH- good earnings


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

QIHU- closed near a low

SYK- closed near a low after posting poor earnings

MCP- closed near a low

THG- closed near a low

AMGN- poor earnings

AXP- poor earnings

WDC- poor earnings

CMG- poor earnings

LRCX- poor earnings

NE- poor earnings

GILD- poor earnings

CPHD- poor earnings

CAKE- poor earnings

RIG- being sued by BP for $40 billion for the Gulf oil disaster last year

SLB- poor earnings

WFT- poor earnings

WLT- poor earnings

TEVA- sudden increased competition from BIIB’s pill

SINA- cut to “sell” by Goldman Sachs

Earnings:

THURS APR 21 BEFORE

ALK ALXN APD

BAX BBT BLK

BX COL COV

CP CSH CY

DD DHR DO

DOV ESI FHN

FITB GE GMT

GR HON IR

JNS JBLU KSU

LH LLL LSTR

LTM LUV MCD

MS NEM NOK

NUE NYT PCX

PENN PNC PPG

RAI SHW SLB

SON ST STI

TCB TEL TPX

TROW TRV TZOO

UAL UNH UTEK

VZ WCC WFT

XRX


THURS APR 21 AFTER

ADS AMD AMSG

BCR BIIB CB

COF CYT EZPW

GILD IGT INFA

MCRL MXIM PLCM

RMBS SNDK SYNA

WLT


Epiphany Trading, LLC
www.epiphanytrading.com

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

WED. APR. 20- More On Hyper Fast Trading

I have repeatedly mentioned the phrase “hyper fast trading” in the last few days. I wrote a few pieces about it in the past with the most notable post being this one:

http://epiphanytrading.blogspot.com/2010/02/mon-feb-8-hyper-fast-trading-and.html

This is definitely a market for that type of trading. Ostensibly, I do what it is I normally do but I do it much faster and love when news directly impacts whatever it is I am doing. After re-reading that piece, I can only add but two things. First, it is of utmost importance to realize the market type and trading environment one is working amidst. No matter your style of trading, when prices are whipping around the way they have, there are of course perilous dangers if doing asinine things like accumulating positions, being stubborn, and not cutting down on trade size. Furthermore, since I am in these for such a brief time and they happen so fast, I am terrified of having anyone join me because of the things I just said…when I am wrong, I exit expeditiously…when right, I do my best to take what I can get. It is, happily however, a major opportunity if one views it that way because the excessive movement allows one to earn very quick yet decent profits- simply by keeping one’s eyes, ears, and most importantly- one’s mind open.. The other thing I can add is to simply describe what it is I am doing a bit more and why I am doing it. With that in mind, here are the trades I did one Wednesday afternoon from 2PM to 3:30PM when the market was whipping around…every single one- with the trade and reason I did them...note the relatively low trade size and the quick movements in adapting to the conditions:
1)
14:01:12 WLT SLD SHRT 100 115.01 EPIPHANY18 NSDQSTGY D
14:01:12 WLT SLD SHRT 300 115 EPIPHANY18 NSDQSTGY X
14:02:36 WLT BOT 200 114.7 EPIPHANY18 NSDQSTGY J
14:03:23 WLT BOT 100 114.44 EPIPHANY18 NSDQSTGY X
14:04:17 WLT BOT 100 114.6 EPIPHANY18 NSDQSTGY A

The stock was in a tight range and the market began caving amid a negative story about Japan. I shorted 115 and was cued up to exit 115.10 if 115 refreshed.

2)
14:06:57 MEE BOT 100 60.57 EPIPHANY18 NSDQSTGY R
14:07:10 MEE SLD 100 60.48 EPIPHANY18 NSDQSTGY R

MEE had been holding near unchanged and I bought it small to see if it’d pop right back through unchanged in a test of market strength. The low had been 60.50. It breached 60.50 and I sold immediately.

3)
14:12:24 CCJ SLD SHRT 100 29.02 EPIPHANY18 NSDQSTGY A
14:13:14 CCJ SLD SHRT 400 29.01 EPIPHANY18 NSDQSTGY A
14:13:34 CCJ BOT 200 28.95 EPIPHANY18 NSDQSTGY R
14:13:34 CCJ BOT 100 28.95 EPIPHANY18 NSDQSTGY R
14:14:33 CCJ BOT 200 29.03 EPIPHANY18 NSDQSTGY A

The market was in near freefall. Uranium stocks were breaching lows so I shorted CCJ. It took out 29 with 28.93 refreshing. I took some off at 28.95. I didn’t think it’d get back above 29. When it did, I covered the rest.


4)
14:18:31 AAPL SLD SHRT 200 328.06 EPIPHANY18 NSDQSTGY X
14:19:26 AAPL BOT 10 327.03 EPIPHANY18 NSDQSTGY R
14:19:26 AAPL BOT 16 327.07 EPIPHANY18 NSDQSTGY R
14:19:26 AAPL BOT 74 327.08 EPIPHANY18 NSDQSTGY R
14:21:31 AAPL BOT 100 327.4 EPIPHANY18 NSDQSTGY R

This was a ‘technical’ trade. The market was trending toward a low and AAPL was rolling over. I shorted it through the low of the day. At the first pause (327), I took the first part off. It got down to the mid 326’s…there was then a rumor which vaporized all offers. When it poked above 327, I was cued up to cover at 327.50…and in giving up 50 cents, I covered 327.40 (and it was up 50 more cents less than a minute later).

5)
14:34:34 WLL BOT 100 64.19 EPIPHANY18 NSDQSTGY R
14:34:34 WLL BOT 100 64.19 EPIPHANY18 NSDQSTGY R
14:34:34 WLL BOT 100 64.19 EPIPHANY18 NSDQSTGY X
14:36:13 WLL SLD 100 64.52 EPIPHANY18 NSDQSTGY R
14:36:13 WLL SLD 100 64.52 EPIPHANY18 NSDQSTGY R
14:36:42 WLL SLD 100 64.46 EPIPHANY18 NSDQSTGY R

The stock was mentioned on a mid-day update by Jim Cramer as something that he was going to discuss on his show that night with the CEO to be on. It had rallied a bit already but the market was in a rally phase on a positive nuclear rumor. It got to 64.60 or so. It got stuck there so I went to sell some of it at 64.50 and got filled 64.52. When it ticked below there, I sold the rest.

6)
14:41:41 AAPL SLD SHRT 1 332.53 EPIPHANY18 NSDQSTGY R
14:41:41 AAPL SLD SHRT 100 332.51 EPIPHANY18 NSDQSTGY R
14:41:41 AAPL SLD SHRT 99 332.5 EPIPHANY18 NSDQSTGY R
14:42:03 AAPL BOT 100 332.33 EPIPHANY18 NSDQSTGY X
14:42:50 AAPL BOT 100 331.9 EPIPHANY18 NSDQSTGY A

AAPL had run up a couple of points fairly fast. There was a sell program with a quick 15 point downtick in the Dow. I figured AAPL would catch up. There was a refreshing offer at 332.60 so if wrong, I’d have exited there.

7)
14:45:56 AAPL SLD SHRT 7 332.72 EPIPHANY18 NSDQSTGY R
14:45:56 AAPL SLD SHRT 100 332.71 EPIPHANY18 NSDQSTGY R
14:45:56 AAPL SLD SHRT 13 332.7 EPIPHANY18 NSDQSTGY A
14:45:57 AAPL SLD SHRT 80 332.7 EPIPHANY18 NSDQSTGY A
14:46:16 AAPL BOT 100 332.41 EPIPHANY18 NSDQSTGY R
14:46:22 AAPL BOT 100 332 EPIPHANY18 NSDQSTGY R

The stock ran up upon a report that people would be dispersed back to the plants in Japan. As the reporter on CNBC noted this, he then said “but it could be a awhile before it happens.” I shorted it as soon as I heard the word “but.”

8)
14:49:15 AAPL SLD SHRT 100 333.34 EPIPHANY18 NSDQSTGY R
14:49:15 AAPL SLD SHRT 100 333.34 EPIPHANY18 NSDQSTGY R
14:49:38 AAPL BOT 98 332.8 EPIPHANY18 NSDQSTGY A
14:49:38 AAPL BOT 2 332.8 EPIPHANY18 NSDQSTGY A
14:50:04 AAPL BOT 100 332.7 EPIPHANY18 NSDQSTGY A

See trade 6 (except it was 10 Dow points)

9)
14:52:09 AAPL SLD SHRT 100 333.62 EPIPHANY18 NSDQSTGY R
14:52:09 AAPL SLD SHRT 100 333.62 EPIPHANY18 NSDQSTGY R
14:52:27 AAPL BOT 100 333.15 EPIPHANY18 NSDQSTGY R
14:52:33 AAPL BOT 70 332.98 EPIPHANY18 NSDQSTGY R
14:52:33 AAPL BOT 30 332.99 EPIPHANY18 NSDQSTGY R

See trade 6

10)
15:02:28 AAPL SLD SHRT 13 333.9 EPIPHANY18 NSDQSTGY A
15:02:28 AAPL SLD SHRT 88 333.9 EPIPHANY18 NSDQSTGY A
15:02:59 AAPL BOT 100 333.5 EPIPHANY18 NSDQSTGY A
15:02:59 AAPL BOT 1 333.5 EPIPHANY18 NSDQSTGY A

See trade 6 (except it was about 10 Dow points)

11)
15:12:35 AAPL SLD SHRT 100 333.8 EPIPHANY18 NSDQSTGY R
15:12:35 AAPL SLD SHRT 100 333.8 EPIPHANY18 NSDQSTGY R
15:12:54 AAPL BOT 100 333.78 EPIPHANY18 NSDQSTGY X
15:13:18 AAPL BOT 2 333.73 EPIPHANY18 NSDQSTGY R
15:13:18 AAPL BOT 98 333.73 EPIPHANY18 NSDQSTGY R

Litmus test to see how strong the market was…it immediately fell 30 cents and then came back up…when 333.70 bid held and refreshed, I took the first piece off. When 75 bid came in and held, I took the other part off.

12)
15:28:30 AAPL BOT 100 332.31 EPIPHANY18 NSDQSTGY X
15:29:21 AAPL SLD 100 332.2 EPIPHANY18 NSDQSTGY A

The market leveled out with 332.10 refreshing along with 332.30, I bought it as soon as 30 left. When it failed to go in chopping around, I sold it. I then also realized amid the choppiness that enough was enough and I stopped doing this. I cut down on my size dramatically so I could control my risk in giving myself leeway if wrong and came away going on $1,000 richer overall in the 1 ½ hour time period. I didn’t trade 1,000-2,000 shares of these things as I routinely do in trying to make $10,000 because if wrong just once, I could have wiped everything out particularly on a headline and in illiquid conditions at that. The day of the flash crash, had I been wrong on say an average 1500 shares, I could have lost upwards of $50,000. Thus, do not chase, do not over trade, exit rapidly, and do not build positions. And hopefully I made my point: this is a trader’s market if one pays attention, cuts down on size, and is super fast in executing one’s trades.

Markets were very strong overnight with Hong Kong up 1.6% and Tokyo up 1.8%. In Europe, Frankfurt is surging 2.8%, London 2.2%, and Paris 2.4%. Strong strong gains. Gold has breached the $1,500 level in trading up 2/3%, oil is up over 1%, and the dollar is stronger against the yen but getting pounded versus the euro. The risk-on trade is in full effect. The earnings overnight were terrific (excepting IBM) and it’s reignited the run. The only economic report of note today is standing home re-sales at 10AM (2.5%). The market should hold all else equal today with a lot of action. The focus will be on the dozens of earnings plays, the techs, the casinos, the Chinese ADR’s, and any relative weakness play (particularly shortly after the 9:30AM open).

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

AAPL- closed near a high

NFLX- closed near a high

BIDU- closed near a high

DANG- closed near a high

ARCO- closed near a high

CLF- closed near a high

WLT- closed near a high

TCK- closed near a high

X- closed near a high

VHC- closed near a high

POT- closed near a high

BBBB- closed near a high after announcing it had retained Barclays Capital in response to unsolicited offers

RVBD- decent earnings

INTC- good earnings

WYNN- good earnings

VMW- great earnings

YHOO- decent earnings

JNPR- decent earnings

LLTC- decent earnings

ALB- good earnings

XG- closed near a high after announcing a new high grade gold-silver discovery at Cerro Moro

GROW- closed near a high

TKR- closed near a high

BKS- closed near a high

CROX- closed near a high

CYOU- closed near a high

ELN- decent earnings

KCG- decent earnings

EMC- decent earnings

PII- good earnings

UTX- decent earnings

STJ- decent earnings

T- decent earnings

APH- decent earnings

PLD- decent earnings

AMB- decent earnings


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

GOOG- closed near its low

CRU- closed near a low after receiving a downgrade from Walls Fargo

RIMM- closed near a low

IBM- poor earnings

CREE- bad earnings

CSX- poor earnings

SYK- poor earnings

SHZ- closed near a low after receiving a going concern qualification

TRGL- closed near a low

TRGP- share offering

URI- poor earnings

ECA- poor earnings

TXT- poor earnings

WFC- poor earnings

LUFK- poor earnings



Earnings:

WED APR 20 BEFORE

ABT AMB AMR

APH DAL DGX

ECA ELN EMC

ETN FCX HBAN

KCG LUFK MO

NDAQ PII PLD

STJ T TIN

TXT UNP USG

UTX WFC



WED APR 20 AFTER

AAPL ALGN AMGN

AXP BAS BSX

CAKE CMG CPHD

ESV ETFC EW

FFIV GDI KMP

LRCX MAR NE

NFX QCOM SLM

TCO TEX TSCO

WDC YUM

Epiphany Trading, LLC
www.epiphanytrading.com

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

TUES. APR. 19- Inflation Concerns

It’s been awhile since I read the editorial page in “USA Today,” but there was something quite notable there a couple of weeks ago. There was a column in which the person of note making comments indicated that U.S. consumers face “serious” inflation in the coming months for clothing, food, and many other goods. The individual noted that he was “seeing cost increases starting to come through at a pretty rapid rate.” Furthermore, labor costs in places like China along with fuel costs for transportation are weighing heavily on his company. This was no ordinary interview. It turns out the person I am discussing is Bill Simon (aka the CEO of Wal-Mart). I did a little digging. The consumer price index rose at its fastest clip since mid-2009 in the month of February with the CPI rising 0.5%. Now, entities like WMT have access to any manufacturing facility located anywhere on the planet so some of its costs can be mitigated. But what about everyone else? We’re already seeing prices rise at the fuel pump and the grocery store. And of course this impact is found in the stock market as well as one of the effects of QE2 has been rising asset prices- including equities. As we progress, there are a few things to monitor for the next three months. First, pay extra attention to the stories during earnings season rather than earnings season to see if inflation is hitting corporate America. Second, there are a number of Fed governors out talking and the QE2 is supposed to end at some point this quarter. Finally, just look around…personal anecdotes of inflation are always the best because it’s how we learn. Certainly as time progresses, the theme of inflation will be discussed increasingly so be ready for the discourse much less the actual inflating of prices themselves.

Markets in Asia were down overnight following yesterday’s declines on Wall Street with Tokyo down 1.2% and Hong Kong off 1.3%. In Europe, prices are rebounding as the U.S. market did close off of its lows with Frankfurt ahead 0.5% and London 0.6%. Gold and oil are both down a little with the dollar and bonds flat. Housing starts and building permits data came out better than expected. Futures are ahead on the GS earnings and European strength. The day will likely be quite choppy with AAPL and GS the benchmarks for what will happen. The focus will be on the earnings plays (GS, BTU, TXN) and relative weakness plays.

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

AMRN- closed near a high after positive phase III AMR101 data

SINA, QIHU, YOKU, SNDA- closed on or near their highs

REGN- closed near a high after getting a faster than expected FDA review for its eye drug

LULU- closed near its high

LVS- closed near its high

CF- closed near a high

ARCO- closed near a high

LLEN- closed near a high after announcing two contracts to supply coal to Kunming Steel

TITN- closed near a high after posting good earnings

DGSE- closed near a high after posting good earnings

ANTH- closed near a high after announcing a successful VISTS-16 study

MOH- decent earnings

CR- good earnings

STLD- decent earnings

STX- missed earnings, but expanding joint operations with Samsung

STT- decent earnings

NVS- decent earnings

OMC- decent earnings

JNJ- decent earnings

GS- decent earnings

MICC- good earnings

PKD- takeover rumors

IRM- announced it was exploring strategic alternatives to enhance shareholder value

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

VPHM- closed near its low after being downgraded at Citadel

TXN- poor earnings

PKG- poor earnings

BMI- terrible earnings

GNK- closed near a low after a downgrade by Citicorp

HOG- poor earnings

BTU- poor earnings

Earnings:

TUES APR 19 BEFORE

BK BTU CMA

FRX GS HOG

JNJ MICC NTRS

NVS OMC PCAR

RF STT USB

TUES APR 19 AFTER

CCK CREE CSX

IBM INTC ISRG

JNPR LLTC PTP

STLD STX SYK

VMW WYNN YHOO


Epiphany Trading, LLC
www.epiphanytrading.com

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

MON. APR. 18- The Pause Before The Potential Storm

I am an optimist at heart. I have also been very bullish regarding the stock market for quite some time now. Thus, it pains me to spend even a few minutes typing out something negative which I voiced on Friday’s video but I am gonna have to as all I can do is call it as I see it. Simply put, I absolutely don’t like the way the market acted last week. When an army is led into a war, the soldier relies on their generals. When a bull market goes to continue being good, it particularly relies on its leaders. The major tech leader for two years has been AAPL while the major financial leader has been GS. Few realize (I know I did not until I studied it) that AAPL is down 10% plus from its high in definitive corrective mode in closing at its lowest point in a month on Friday. GS is actually down almost 10% for the year in closing at its lowest point in a month as well on Friday. Thus, what has been propping the market up has been things like mining stocks (gold and silver closed at new highs on Friday) with cyclicals like PG closing at their highest point in a month on Friday. Furthermore, the VIX closed at its low for the year while bond prices had their biggest rally last week of the entire year. It’s also worth noting that very quietly, Ireland’s debt was downgraded two notches with Greek bond spreads exploding. All of this spells trouble. It’s very uncomfortable when you look to your leaders and they’ve taken off already while you look around and see your enemies gaining ground. Am I saying the market is in imminent danger of collapse? No. But I am saying for day traders that I fully expect a pick-up in volatility and news flow imminently and that the market is likely on the verge of a fairly major move. If these factors reverse themselves (Greece settles down, AAPL/GS begin performing better, and so forth), the move will be the other way. Regardless, there is tremendous pressure building underneath the surface and I am more on guard for something than I’ve been in quite some time.

Markets in Asia were lower with Tokyo down 0.4% and Hong Kong off 0.7%. Markets are even weaker in Europe as Frankfurt and London are both down 0.9% and Paris 1.4%. Gold and oil are weaker with the dollar a bit stronger against the euro. There’s a lot of news. Saudi Arabia indicated the world had too much oil. China raised a key interest rate. Citicorp announced decent earnings. Greek defaults continued to widen. A lot going on. The NAHB Housing Market Index (17) is due out at 10AM. Look for a choppy session with more volatility than recently in what will be the slowest day of the week in all likelihood. The focus will likely be on the earnings plays, biotechs in the news, metals, and relative strength plays.

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

HOGS- closed near a high after signing an agreement with China Construction Bank

IEC- closed near a high after issuing positive earnings guidance

ATI- closed near a high

MEE- closed near a high

MNTA- closed near a high

LLEN- closed near a high

ACOR- closed near a high after a USPTO posting suggested new IP could be issued in coming months

TITN- good earnings

HAL- decent earnings

LLY- decent earnings

AMRN- phase III Anchor trial met all primary and secondary efficacy endpoints

RIMM- positive article in “Barron’s”

GWW- good earnings

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

ALTI- contract with INE cancelled due to regulatory issues

ZOOG- poor earnings

YOKU- closed near a low

AAPL- closed near a low

FSLR- closed near a low

RIG- closed near a low

HOLI- closed near a low

CF- closed near a low

GOOG- closed near a low after issuing terrible earnings

CYH- indicated the U.S. government is probing improper claims


Earnings:

MON APR 18 BEFORE

AMLN AMTD C

GCI GWW HAL

KEY LLY MMR

MON APR 18 AFTER

CR LNCR MOH

PKG TER TXN

ZION