Epiphany Trading Daily Blog

WED. MAR. 17- What I Do To Prepare

Many people have asked me what it is that I do to prepare for the trading day and stock watch list I put out for the firm when doing trades within the particular system I utilize. Mind you, everybody has their different ways of doing thing and no one way is right or wrong per se, but I do a few notable things pre-open and post-open which I feel help me prepare for the day. Let’s start with the previous night. After a close once I am done trading, I analyze that night’s earnings in a bit more detail. I then make sure I’ve read every headline on my news service since the close. Then, around 5:20PM ET, “WSJ.Com” publishes that day’s closing price stock tables with a tremendous amount of data. With that information, within the website, I go to MarketData, and then download the spreadsheets for the four major packets of data (NYSE, AMEX, NASDAQ, NASDAQSmall Cap), ‘rank’ them by percentage movers, and note everything that moved up or down at least 5% or more that day, traded at least 1 million shares, and closed near a high or low. I then look at the charts on all of them and then put them on a watch list. I do it this way because these are the stocks which were clearly the most volatile with the most momentum that particular day. Then, I monitor a few other extraneous things such as which stocks were mentioned on “Mad Money” that night and add them to the list along with the technical stuff and the news-related stuff. I them monitor the futures on and off at night until I go to bed around 12AM-1AM in seeing what the trend and overseas news is. Upon waking up around 5AM, I look at www.bloomberg.com as well as a host of news sites to see what happened while I was sleeping. I’m usually in the office by 6AM-7AM depending on how busy the day is setting up to be. Upon getting there, I peruse every headline on the wire that occurred overnight. I then use two different earnings services to see which companies reported their earnings that morning and analyze the data (and hopefully make a few trades off of the earnings very very early particularly during earnings season. I then monitor the wires for the rest of the morning while putting all of the news-centric stocks on the watch list mixed in with what I did the night before in ranking them in the order in which I think I will trade them that day. I quickly hammer out my observations for the day on the “good” and “bad” part of the blog based on how the stocks are performing. As the trading day progresses and it gets slower, I delete stocks which aren’t moving or are trading in the middle of a range and do research for the first part of the daily post if necessary and/or type out whatever is on my mind based on questions I’ve received or behaviors I’ve observed (in myself and in others). Thus, what I do is very work-intensive, but it thankfully has served me fairly well over the years and gives me a daily knowledge base to work off of.

Markets in Asia were very strong overnight with Hong Kong up 1.7% and Tokyo 1.2%. Prices are strong in Europe as well with markets up ¾% on average. Commodities continue their recent rally with oil up 1%. The dollar and bonds are little changed. Ostensibly, the actions of the Fed maintaining the “extended period” language through gas onto the fire of this relentless albeit slow yet steady march higher. Don’t look for much to change today. Focus on the various story stocks as well as the tech and finance stocks; follow the big caps for the true story of the market…that sounds obvious, but it’s really not today in particular as there will likely be some motion this morning. Trading should be fairly active early on, but make sure you get your stuff done early as the St. Patrick’s Day parade in Manhattan will slow things down as the day progresses.


Reiterating-


If the whole story is not there -

If something is good, assume either a short thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified.

If something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified-


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

FMCN- good earnings

KONG- good earnings

FNGN- closed near a high

CIT- decent earnings

VHC- awarded a $106 million judgment against MSFT…not bad for a company with a $220 million market capitalization

MDCO- A Virginia court set aside the Patent and Trademark’s Office’s denial of one of MDCO’s patents

OPMR- received buyout bid of $2.40

PLCM- according to a Reuters report, Reliance Communications has formed a partnership with PLCM to launch video conference services in India

AKNS- signed a deal with LOW to provide installation services

ABII- Abraxane met primary endpoint for phase III trial for advanced non-small cell lung cancer




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

MEE- acquiring Cumberland Resources and sees 1st quarter results below expectations

FUQI- abominable earnings

AMSC- downtrend continued in closing near another new low

EM- poor earnings

HRP- share offering

TOO- share offering

DFS- lukewarm earnings

MIPI- poor earnings and issued ‘going concern’ note

MOV- closed near a low after posting terrible earnings

CAGC- closed near a low

HGSI- phase 2 trial results of Mapatumumab not fantastic

VIVO- earnings warning

CSKI- bad earnings






Earnings:

WED MAR 17 BEFORE

ATU GIS HEAT

WED MAR 17 AFTER

GES MLHR NKE



Good luck today.


Epiphany Trading, LLC


www.epiphanytrading.com


Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
Joseph R. McCandless- Managing Partner
D. Timothy Seaquist- Managing Partner
 
THURS. MAR. 18- Springtime

A few weeks ago, I penned this piece:
http://epiphanytrading.blogspot.com/...+meets+trading

In that particular post, I noted how the markets can largely become paralyzed by certain events as they did when traders sat mesmerized at their TV’s in watching to see what Tiger Woods would say a few weeks ago. I also noted that in general, there would be a paucity of opportunities overall but that one should not take their eyes off of their screens just in case because whatever moves happen could be wildly exaggerated rapidly due to the dearth of participants. Well, this could never happen for an extended period of time, could it? Yes, it can. We’ve having the perfect storm of calmness right now. The most beautiful weather in Manhattan in months. No major news. No major geopolitics. Very few companies reporting earnings. Oh, and St. Patrick’s Day when many traders leave for an ‘early lunch” and never make it back to their offices along with the two day mystical extravaganza known as the ‘round of 64’ from the NCAA basketball tournament. I mean, if Notre Dame-Old Dominion is a 1 point game with 7.2 seconds left at 2:15PM today, the myriad of Notre Dame fans across this great nation will be watching to see what happens rather than monitoring their positions (or initiating new positions). Thus, the same rules that were in place for the Tiger moments will ostensibly be in place for long stretches of time. Combined with options expiration tomorrow, moves will be far and few between, but when they happen, they will really happen. So, enjoy the games…and the sun…but be ready for anything.

Markets in Asia were down a bit overnight with Tokyo off 1% and Hog Kong a comparably smaller 0.3%. In Europe, prices are straddling the unchanged line with a slight positive bias. Oil is down slightly with gold up a few bucks. Notably, the euro is weak against most currencies on rumblings that Greece may not be able to meet its austerity measures. But benign CPI and the continued wall of liquidity are more than countering that with futures higher once again. For the day, look for a continued upside bias on slow volume. Focus on the earnings and relative strength/weakness plays.

Reiterating-


If the whole story is not there -

If something is good, assume either a short thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified.

If something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified-


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

IOC- rebounded from recent weakness in closing near a high

GES- decent earnings

NKE- great earnings

JCG- mentioned on “Mad Money” last night

VLTR- closed near a high

WGO- decent earnings

TEVA- acquiring Ratiopharm (Germany’s 2nd largest generics producer)

GME- good earnings

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

HGSI- closed near a low after releasing phase II results

FMCN- near complete reversal in closing near a low after posting earnings

FUQI- closed near a low after issuing abominable earnings

WHI- continued lower amid rumors about the FDIC; closed near a low

AMZN, RIMM- closed near a low

X, NUE- closed near a low

VHC- closed near a low in a near island reversal after winning a patent lawsuit against MSFT

AMSC- closed near a low

FCX- closed near a low

MLHR- poor earnings

I.HS- poor earnings

LIWA- closed near a low

TSL- share offering

CRAI- terrible earnings

FDX- poor guidance

VIP- poor earnings

ROST- poor earnings




Earnings:

THURS MAR 18 BEFORE

FDX GME ROST

VIP WGO

THURS MAR 18 AFTER

COMS CTAS PALM

SPWRA



Good luck today.


Epiphany Trading, LLC


www.epiphanytrading.com


Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
Joseph R. McCandless- Managing Partner
D. Timothy Seaquist- Managing Partner
 
My apologies- I just got an e-mail message from someone telling me this was not posted. I actually posted it at 7:54AM ET, but clearly, something went wrong and the text didn't post. So, again, I apologize for this being posted here now rather than three hours ago as intended.

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FRI. Mar. 19- Extending It Out

There are lots of things that we know will continue for an “extended period.” The NCAA tournament will take place for an “extended period.” The weather will hopefully be fairly nice throughout much of the United States for an “extended period.” Bears tend to hibernate for an “extended period” each year. There will be worries about geopolitics and terrorism for an “extended period.” In some of these cases, we have a general timeframe as to exactly how long the event will last. We know the NCAA tournament will be over in 2 ½ weeks. In some cases, we have a loose idea; we know approximately how long bears will hibernate in a given locale. In some cases, we have no idea what an “extended period” of time is as with the geopolitical example. Well, that last example seems to be where we are with the Fed and its “extended rate” policy. For those not aware, Federal Reserve officials repeated their pledge to keep the main interest rate near zero for an “extended period” of time. What this means is that because interest rates have remained so low, there has been a wall of liquidity which has created an inherently rising risky asset bias. If the average investor can only attain 1%-2% of interest in a short-term savings account on a million dollar deposit, it inherently causes people to seek higher rates of return elsewhere. Thus, by not even gently hinting to the world as to when interest rate policy will change, the inherent belief is that it will not be soon. Well, this is a very pricey game of guesswork because it directly impacts markets- and again, it largely explains the reasoning behind the ever-rising global stock markets. Thus, while we don’t need to know every nuance out there, every trader must know and understand the wording of the Fed statements as well as the meaning of what they don’t say.

Markets overseas were higher overnight with Tokyo up 0.8%. Hong Kong 0.2$, London 0.7% and Germany 0.3%. Commodities are down a bit with the euro again weak. Futures are marginally lower. There are a lot of clouds on the horizon with post-expiration weeks usually countertrend weeks, the Greek situation getting stormy anew, and healthcare legislation poised for a weekend vote. But the broader tape continues to shake everything off. Look for another quiet day with a modest downside bias. Almost all trading will likely be done at the beginning and end of the day with the middle dominated by Spring Sunshine and March Madness.

Reiterating-


If the whole story is not there -

If something is good, assume either a short thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified.

If something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified-


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

SOMX- FDA approved Silenor for treatment of insomnia

FDX- closed near a high after posting earnings

MDTH- closed near a high after an upgrade from Deustche Bank

PANL- closed near a high after posting great earnings

CHBT- closed near a high

BGC- closed near a high after changing its accounting methodology which caused the company to raise first quarter earnings guidance

WLP, UNH- closed near highs

POL- good earnings guidance

DIN- closed near a high after a brokerage upgrade

WNC- closed near a high

CTEL- CEO featured on “Mad Money” last night

BIDU- “China Business News” reported GOOG will close its businesses in China in April

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

TSL- closed near a low after announcing a share offering

X- closed near a low

MDVN- closed near a new trend low

PALM- abominable earnings

SPWRA- poor earnings and announced accounting restatement

CTAS- lukewarm earnings

NLST- share offering

ADUS- terrible earnings

CXO- closed near a low

BALT, CRU- mentioned on “Sell Block” of “Mad Money” last night,

TSL- 7.9 million share offering price at 20.25

APPA- received FDA complete response letter for APF 530 in which FDA express concerns about APPA’s two-syringe administrative system

GOOG- “China Business News” reported GOOG will close its businesses in China in April


Earnings:

None today

Good luck today.


Epiphany Trading, LLC


www.epiphanytrading.com


Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
Joseph R. McCandless- Managing Partner
D. Timothy Seaquist- Managing Partner


Posted by Erik Kolodny at 7:54 AM
 
MON. MAR. 22- Tug-Of-War

On Friday, in the ‘markets preview’ of this space, I called for a downside bias in noting that “there are a lot of clouds on the horizon with post-expiration weeks usually countertrend weeks, the Greek situation getting stormy anew, and healthcare legislation poised for a weekend vote.” With the markets reversing a bit on Friday and the outlook a bit murky versus the tide of liquidity, I want to delve a little more into my statement. First, fairly typical market behavior in the week after an options expiration week is the opposite of what occurred in the week or two leading up to options expiration. For instance, the NASDAQ staged one of its most historic rallies starting on April 4, 2001 and ending on Friday April 20, 2001 as the NASDAQ rallied from 1620 to 2202. On that Monday, the NASDAQ fell to 2043. Basically, a lot of options players not only unwind positions, but get stuck in positions they don’t want during the days leading up to options expiration so moves can get exaggerated. Thus, the day of options expiration and/or the days afterward tend to be countertrend in nature. Second, Greek Prime Minister Papandreou is doing his best to secure a direct pledge of European aid which would cut his nation’s borrowing costs as significant payments are due in the next couple of months. Investors are still demanding 3% more for Greek paper over German paper, but Papandreou insists that Greece cannot afford to hold out much longer at current rates. Thus, they want the EU to lower rates, but the likelihood of that just is not good nor does it make economic sense to the balance of Europe. In turn, this is leading to worries in Britain where the pound was ravaged on Friday which led to the euro declining which led to commodities and equities selling off. Finally, healthcare. Where do I start? Let’s keep it brief since you’ve undoubtedly read much discourse on the topic plus I don’t want this to become political. Let’s just say part of the plan is that wealthy investors would see their tax bill rise with a rise in tax rates on things like capital gains or dumb bank interest. This gives less of an incentive to invest so the markets need to price that in. Thus, one always needs to dig a little on the story behind the story particularly in interesting times thus this is a fairly important week. There are a lot of reasons for a countertrend reaction this week; the next few days will likely tell the tale on the strength and likelihood of the maintenance of this 13 month roaring bull market.

Markets overseas were hit fairly hard overnight with Hong Kong down 2% and the European bourses down about 1% on average. Somewhat surprisingly, the currency market is very quiet with commodities down a little. The main triggers for the weakness are the healthcare bill passage, some inflammatory comments out of China, and negative comments about the world’s debt outlook from the IMF. Futures are down a bit, but not sharply and volume has been light so far this morning. For the day, the equities markets should open lower; notably, GS and AAPL are weak. Interestingly, healthcare stocks are not down that much. Focus on the aforementioned healthcare stocks, big caps for guidance, and the stocks in the news for action today. Also, make a mental note of what is relatively strong in the morning; if the markets shake everything off, whatever is strong early will likely lead the way higher.

Reiterating-


If the whole story is not there -

If something is good, assume either a short thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified.

If something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified-


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

TSL- closed near a high after announcing a share offering

POL- closed near a high after announcing earnings

SONS, SD- mentioned positively on “Mad Money” on Friday

WSM- decent earnings

NOVL- rejected $5.75 takeover offer in calling it “inadequate”

ARWR- reported positive trial data at its subsidiary Calando Ph.

CXG- CNX to buy rest of company for $38.25

BDSI- announced positive Pre-IND meeting on its BEMA Granisetron development program

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

SGA- crushed on the close due to a sell imbalance

SPWRA- closed on a low after announcing an accounting restatement

ADUS- closed near a low after posting terrible earnings

SOMX- reversal from Thursday and Friday’s mornings huge gains on a drug approval; closed near a low

FUQI- closed near a low; two major law firms announced an investigation into the company

AMSC- closed at yet another trend low

ANR- closed near a low

HGT- closed on a low after announcing its March dividend distribution

TVL- closed near a low

ONP- closed near a low

PALM- closed near a low after announcing abominable earnings Thursday afternoon

MDCO- closed near a low after “The New York Times” reported the company is racing to keep one of its key patents

BBX- reversal after huge recent gains in closing near a low

TIF- poor earnings

WLP, UNH- under some pressure this morning due to the passage of the healthcare bill last night



Earnings:

MON MAR 22 BEFORE

TIF WSM

MON MAR 22 AFTER

PVH


Good luck today.


Epiphany Trading, LLC


www.epiphanytrading.com


Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
Joseph R. McCandless- Managing Partner
D. Timothy Seaquist- Managing Partner
 
TUES. MAR. 23- Shaking It Off...Again Rate this Entry

As a kid, I always questioned how it was possible much less the sanity of friends of mine who had ferocious colds/fevers and/or something even more sinister wrong with them could manage to do things like play in major academic or athletic events. Note, I am not talking about minor maladies like a small cold or a cut or hypochondriacs who think there is something wrong when that is not the case. I’m talking about the person with the borderline thrashed Achilles tendon who plays well in a basketball game or the leader of the chess team with a 101 degree fever but wins the big match. While I can (and will at some point) go into a riff about how some of these people become traders, the focus for the moment is on the market. I typed out a piece giving every reason in the book yesterday as to why the market could in theory sell off a bit and ended it with this: “There are a lot of reasons for a countertrend reaction this week; the next few days will likely tell the tale on the strength and likelihood of the maintenance of this 13 month roaring bull market.” Well, the market passed through yesterday with flying color’s. By the NYSE open yesterday, the euro had fallen below 1.35, commodities were down 1% plus across the board, Europe was showing 1% losses, and everyone was waiting for healthcare stocks to get drilled. Ne-ver Hap-pened. The market, legs and arms tied behind its back, managed to sport very nice gains by early afternoon (albeit on anemic volume). Now, there is of course no guarantee to anything, but I will say this much: as a day trade, I trade what I see. I always do. But as this incredible bull market rolls along, one must be aware of the tidal force of liquidity just simply overruling all news flow in this current atmosphere.

Markets in Asia were mixed overnight with Tokyo down 0.5% but Hong Kong up 0.3%. In Europe, the bourses are up about ¾% on average in recouping most of yesterday’s early losses on the heel of Wall Street’s reversal. Commodities are down about 1/3%. The notable feature this morning is heavy losses in European currencies with the euro piercing the 1.35 level and the pound just below 1.50. Those numbers will likely tell the tale today. The market is clearly OK with the 1.35 euro/1.50 pound level at this point. If these levels hold, the early gains in the futures are likely built upon. If however, the European currencies begin really breaking for no apparent reason, there’s going to be some selling pressure in all likelihood for the broader tape. Focus on the relative strength plays as well as the stocks in the news with some momentum trades certainly possible if the dam breaks on the currencies otherwise stay the course in being extremely selective.

Reiterating-


If the whole story is not there -

If something is good, assume either a short thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified.

If something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified-


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

PVH- decent earnings

ISSI- good earnings

FCX- closed near a high

CNC- reversed dramatically in closing near a high

IDSA- closed near a high after posting great earnings

WSM- closed near a high after posting great earnings

LPNT- closed near a high

WYNN, LVS- closed near their highs in a strong casino sector

ITMN- closed near a high

NKE- featured on “Mad Money” last night

PRGO- acquired infant formula manufacturer PBM Holdings; expects acquisition to be immediately accretive

TGI- buying Vought Aircraft; expects acquisition to be immediately significantly accretive

SQNM- upgraded by Lazard Capital

DVAX- announced positive safety data from Heplisav

AOS- raised earnings guidance

BPAX- positive leukemia vaccine results and second FDA orphan drug designation

APCVZ- received FDA go-ahead for Indomethacin for injection

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

SOMX- share offering

MEE- major share offering

MNKD- closed near a low

SPWRA- closed near a low on continued weakness after announcement an accounting restatement Thursday afternoon

UNH, WLP- closed near lows

KBH- poor earnings

ONTY- temporarily suspending program for Stimuvax after a patient developed swelling in the brain



Earnings:

TUES MAR 23 BEFORE

CCL FUQI KBH

WAG

TUES MAR 23 AFTER

ADBE DRI JBL

PRGS SONC



Good luck today.


Epiphany Trading, LLC


www.epiphanytrading.com


Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
Joseph R. McCandless- Managing Partner
D. Timothy Seaquist- Managing Partner
 
WED. MAR. 24- The Markets Love The Bill

I noted yesterday that the markets entirely shook off the health care bill passage on Sunday night. But I want to go into a couple of crucial points that I barely touched upon. Markets are forward looking in that the theory goes that every major outcome is factored in, but that can only go for so long. I mean, it’s ostensibly impossible to truly have a crystal clear version for what will happen in 2030. Nobody can predict natural disasters, for instance. But there’s another facet as well in that another popular market hypothesis is that all available market information is factored in to things. While I don’t completely subscribe to that one either, it’s actually quite plausible in that the ‘market’ is the true arbiter and ‘knows’ much more than the average investor/trader. From that regard, the market was able to parcel out the healthcare plan for the broader investor class faster than most of us could figure out on Monday. It is true that taxes are going to broadly go up for many people. But the legislation would apply Medicare taxes to investment income received on wealthier households ($200,000 for individuals and $250,000 for married couples) for the first time in 2013. The long-term capital gains tax rate would rise to 20% in 2011 for the same earners. Also in 2013, Americans under the age of 65 would not be able to deduct medical expenses until said expenses exceeded 10% of income rather than 7.5%. Individuals who don’t purchase insurance would be subject to fines in 2015 and 2016. There are obviously many other provisions as well, but you’ll note that the earliest any of these taxes go into effect is 2011- that gives plenty of time for politicians to play political games in gearing up for the 2012 (and 2014) election seasons. What it also means is that the budget deficits will balloon with mass expenditures and no additional tax revenue in the immediate-term. This is not opinion. This is fact. But all of this is a major reason if not the reason why the market not only sold off the last couple of days, but continued to rally. This is a de facto stimulus as many people will now not pay for healthcare plus the taxes have plenty of room to be debated as time progresses! So, right or wrong, nobody is scared yet. And because taxes aren’t gonna be levied until now (and the cynical among us wonder if they’ll be pushed back due to the presidential election in 2012), the money keeps flowing. And if the money keeps flowing, so does the stock market which is why everyone waiting to pounce on weakness the last two days has been totally mistaken.

Markets overnight were ahead slightly in Asia with Hong Kong up 0.1% and Tokyo up 0.4%. The trend shifted in Europe, however, as Fitch downgraded Portugal’s long-term foreign issuer default rating a notch to AA- from AA. This sparked a sell-off in the euro through the 1.35 barrier, the pound thru 1.50, and commodities as well with gold and oil both off more than 1%. European bourses immediately sold off, but they have come right back; most bourses are down only ¼% as of this writing with Germany almost positive. I just don’t see how this is a good thing for the markets…but I don’t understand a lot of things. If equities shake it off this morning, look for another nice rally as the day progresses. With GS off yesterday and AAPL weak this morning (i.e. the generals), I think the strength will be capped. Thus, the most likely scenario should the euro stabilize is a tight range not straying far from unchanged…but use the euro as your guide for the session.


Reiterating-


If the whole story is not there -

If something is good, assume either a short thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified.

If something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified-


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

MF- announced Jon Corzine will be the new CEO effective immediately

ADBE- great earnings

OCNF- inked order for three carriers

USU- Department of Energy to give USU $45 million to fund American Centrifuge technology demonstration and manufacturing activities

GENT- positive Defibrotide results in high risk pediatric patients

SSY- closed near a high

MPG- closed near a high after posting earnings

WLT- closed near a high

CLF- closed near a high; mentioned on “Mad Money” last night

PRGO- closed near a high after announcing acquisition of baby food manufacturer

TIE- closed near a high on takeover rumors

SQNM- closed near a high after being upgraded

SLXP- closed near a high

CCME- closed near a high after posting great earnings

JOYG, BUCY- closed near a high

MEE- reversed in closing near a high after announcing a share offering

AAPL- closed near a high

AMSC- closed near a high after an upgrade

X- closed near a high

BIDU- mentioned positively on “Mad Money” last night

MXL- 6.44 million share IPO at 14, up from expected 5.43 million at 11-13

CALX- priced 6.33 million share IPO at 13 in upper end of expected 11-13 range

LEN- good earnings

NVAX- positive clinical results from first stage of pivotal study of 2009 A/H1N1 VLP Pandemic Influenza vaccine

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

DRI- lukewarm earnings

JBL- poor earnings

LIME – poor earnings

KAMN- poor earnings

RXII- registered 2.7 million shares of stock at 6 before the close yesterday; closed near a low

GOOG- mentioned negatively on “Mad Money” last night

LINE- priced 15 million share secondary offering at 25

CMC- poor earnings


Earnings:

WED MAR 24 BEFORE

CMC GIS LEN

WED MAR 24 AFTER

PAYX RHT


Good luck today.


Epiphany Trading, LLC


www.epiphanytrading.com


Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
Joseph R. McCandless- Managing Partner
D. Timothy Seaquist- Managing Partner
 
THURS. MAR. 25- Long-Term Vs. Short-Term Worries

In what has become a year-long theme in trying to drill home a point from several different angles, I am going to try again because I was questioned a lot about this yesterday. The example I kept using in dialogue I had with people was this: imagine in high school or college taking a multiple choice mid-term and scoring a 91 on it…without studying! You’d feel like you got away with something, but intrinsically know that there’s no way that if you tried to pull the same stunt on the all essay final exam) that you’d get away with the same results. So, you’d be happy, but nervous. Certainly in my case, I wouldn’t understand how I did well either although there could be a deeper reason (maybe I got lucky to maybe I listened in class and really soaked in the material). Well, this is how it is with the stock market. I am constantly seeing apt pieces from analysts such as one from an acquaintance of mine (Nick Kalivas): “Not sure you have been following, but the 10 year and 30 year swap rates are below that of their corresponding treasury. The 7 year swap spread is at 3.81 bps. The swap market has already downgraded US debt to AA at the long end. I did not think it was possible a few months back, but it is starting to look like the whole swap curve will have a yield below that of the treasury curve. Only 12 bps at 2 years. This is going to be interesting to watch, and will catch the attention of rating agencies. Add to the mix the China issues, the Greek issues which have been discussed in detail in this space, the euro travails, and now a terrible bond auction yesterday and it adds up to problems. You have to understand- in the words of my roommate of five years and a former business partner (Paul Matthews), “For those who don't understand swaps, essentially the market is now lending money to high quality institutions via the London Interbank Market at LOWER RATES than they are willing to lend to the US Government.” Furthermore, “it could also be a function of uncertainty surrounding what will happen at month end when the Fed's Quantitative Easing (QE) is allegedly going to end. (although with those lovely home sales numbers (Tuesday) morning and the $8,000 tax credit coming to an end next month, I don't see how they can allow mortgage rates to free float without triggering a spike in mortgage rates resulting in a subsequent decline in home prices. Then we would be back to square one---into the vicious cycle of banks needing to raise even more equity to pay for deteriorating mortgage books---essentially what we saw in the late summer/fall of 2008.)” The net of all of this is that longer-dated US Treasuries are now trading above some corporate issues out there (Berkshire, Johnson & Johnson, etc.) in terms of yield making Warren Buffett’s paper more intrinsically valuable than Uncle Sam’s paper. Paul and Nick will both likely be right…eventually. A mortgage rate spike could appear early next month (although everyone is aware of the issue), the euro crisis could worsen, and so forth (i.e. the final exam discussed above). But as day traders, we must be weary of all of these factors, but also have a deep understanding of other phenomena which are apt in the immediate-term. For instance, as written before, it makes all the sense in the world for a bank to get an interest-free loan from Uncle Sam and sell it back to him for an increasing margin of profit as the rate is above 0% (and going up). This perhaps explains why ban stocks traded higher yesterday. Thus, you must be aware of the myriad of problems which will be needed to dealt with at some point…but we just don’t know when that final exam will come…so prepare for it, but don’t let all of the worrying keep you from focusing what may happen in the coming minutes/hours rather than the coming months/years.

Markets in Asia were mixed, but generally lower with the Hang Seng notably down 1% on more bellicose talks over Sino-American relations regarding the yuan peg. However, the trend shifted in Europe with the bourses up 0.7% on average on more positive buzz about the Greek situation. Commodites are bouncing back with gold recouping about ¾% and oil up 1/3%. The euro has taken a baby step back up with the pound notably stronger finally. And futures- well, at this point, futures indicate a complete recoupment of all of yesterday’s losses. The mood right now is a bit more electric…with the currency and commodity markets wilder, equities are poised to make a relatively major move shortly it’d seem. For today, with everything being shaken off, look for a total rebound from yesterday. If the euro is stable, the rally is going to grow; that particular currency right now is the key to the day.


Reiterating-


If the whole story is not there -

If something is good, assume either a short thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified.

If something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified-


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

RDN, MBI, PMI- closed near highs amid positive buzz from BAC lowering payments owed by subprime borrowers

CBPO- closed near a high after posting good earnings

BEE, FCH- among the smaller REIT’s with significant short covering yesterday; closed near highs

DRI- closed near a high after posting earnings

GOOG- major reversal in closing near a high

GENT- closed near a high after positive Defibrotide results

PAYX- decent earnings

TRIT- good earnings

SCLN- European approval of ondansetron RapidFilm announced for 16 EU countries; the drug is used to treat nausea from things like chemotherapy

SLXP- Xifaxan OK’ed by FDA for use in liver failure disorder

ETM- featured on “Mad Money” last night

GIII- good earnings

CAAS- good earnings

LULU- good earnings

FSLR- upgraded by Kaufman

NIV- great earnings

BBY- great earnings


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

ESE- closed near a low on fears of competition for a smart meter contract

ADBE- near island reversal in closing near a low despite posting great earnings

GENZ- closed near a low on expectation of FDA action at a troubled plant

RIMM- closed near a low

ZOOM- near island reversal in closing near a low despite announcing a deal with a Chinese entity in tapping the China market

RHT- poor earnings despite announcing significant stock buyback

MELA- received questions from FDA regarding its melanoma treatment

ORRF- closed near a low after announcing a 1.4 million share offering at 27 to Sandler O’Neill

AUTC- closed near a low after announcing a 2 million share offering at 35

WHI- closed near a low

CALX- closed near a low on its first day of trading as an IPO



Earnings:

THURS MAR 25 BEFORE

BBY CAAS CAG

LULU


THURS MAR 25 AFTER

ACN FINL ORCL

TIBX


Good luck today.


Epiphany Trading, LLC


www.epiphanytrading.com


Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
Joseph R. McCandless- Managing Partner
D. Timothy Seaquist- Managing Partner
 
I’ve discussed my methodology for exiting winning trades in this space in previous posts, but particularly in the last 3-6 months when I see people taking lots of small losses, I want to denote what I feel is the “right” time to exit a loser if using a timeframe of 1-10 minutes for doing a trade. There are certain distinct behaviors to trades which account for obvious exits (to me). First is the failed trade. For instance, say AAPL is in a general range of 222.50 to 222.95 for about 20 minutes, up 1 ½ to 2 points with a steady market. Suddenly, the market begins rallying. AAPL ticks to 223 with 100,000 shares on the offer. The offer begins to whittle down. I buy, say, 2000 at 223. A few seconds later, the 100,000 offer comes back and the market begins to downtick. I exit absolutely immediately for a 3-5 cent loss, no questions asked. I would have expected the stock to rally and it didn’t so I leave. A second type is the near success trade. Same AAPL example. I buy 2,000 AAPL at 223. It goes to 223.03 and pauses. It goes 223 bid again. I sell half. Suddenly, resistance is now support so I know it could still go, but it failed initially so I want to make sure. If it goes 223 offer again, I revert back to the previous example and I am out. A third type of situation is one that is totally different. It is one whereby someone cannot make 20 cents easily. If you aim to trade in a 1-10 minute time horizon, don’t expect to make any real money if you trade things that cannot move fast. If you do anyway every now and again, the thing to do is actually give it more breathing room. Oftentimes, a stock like an MBI will start and stop fairly quickly. Thus, it needs time and space to work. Ergo, if MBI is in a range of 6.57 to 6.60 for 15 minutes and you buy 6.61, you have to give it to 6.56 to fail. This is where most people mess up (certainly me in the past). If it goes 6.59 bid and I am long, say, 7,500 shares, I exit and lose m $150 rapidly. However, it is so slow to move, I have to give it time. This is precisely why I do not trade these types of stocks. I am terrified of it going to 6.55 and losing several hundred dollars so I accept the smaller loss- but one much more likely to occur. Bottom line, if you’re gonna trade 1-3 minute time horizons, you cannot trade stocks like this. Period. Finally, there’s the “buying/shorting on news” trade. Before doing this, you have to truly have a full feel for the news and let common sense dictate where a stock should be. For instance, Sprint (S) announced the roll out of a new 3G/4G Android phone on Tuesday afternoon. I loaded up on the stock at 3.87 (up 4 cents from the close when the news hit). I bought the stock around 4:58PM ET. I knew this would get positive buzz from the 5PM news and business shows. Yet the stock failed to initially launch and I questioned my own hypothesis. So, when the panelists on “Fast Money” began talking about it, I began to exit at the first whiff of buying in exiting for a 1 cent profit (which after tickets was a small loss). I let my own inane fears get in the way of the story and watched it rally 16 cents in the next few minutes- would have been decent money on 6,000 shares at 5:01PM. So, basically, be careful but not overly cautious. Trade things that can move. Be nimble. And if something begins moving against you in a manner in which you didn’t expect, just get out. It’s better to watch it snap back than to lose a week’s worth of work.

Markets in Asia were up nicely overnight with Tokyo ahead 1.6% and Hong Kong up
1.3%. European bourses are actually down modestly (about 0.2% on average). The commodities have bounced back a bit from yesterday’s sell-off in trading higher by about ½% to ¾%. The main impetus at this moment for Europe much less our rebound happens to be a deal reached last night at a meeting of European leaders to address the Greek debt crisis. It was good enough for short covering in the euro and futures are now higher because of it. Techs are particularly strong. Look for a quieter session than yesterday with a focus on techs and commodities stocks. The upside bias will likely be maintained pending the euro’s performance.


Reiterating-


If the whole story is not there -

If something is good, assume either a short thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified.

If something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified-


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

TIBX- decent earnings

FINL- good earnings

SMOD- great earnings

TRIT- closed near a high after posting earnings

VIT- closed on a high after a brokerage upgrade

CPWM- good earnings

CKEC- closed near a high after an upgrade from Merriman

FHN- featured on “Mad Money” last night

HTHT- 9 million share IPO priced at 12.25 at upper end of 10.25-12.25 expected range

RSH- exploring sale and share buyback options according to “New York Post”

RIMM- upgraded by JP Morgan

EAT- raised earnings guidance and increased stock buyback program

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

ORCL- lukewarm earnings

A.CN- poor earnings

ATAC- terrible earnings

GENZ- closed near a low after a brokerage downgrade

CLF- closed near a low in an intra-day reversal

FCX- closed near a low in an intra-day reversal

TIE- closed near a low in an intra-day reversal

POT- closed near a low in an intra-day reversal

MON- closed near a low in an intra-day reversal

BBY- closed near a low in an intra-day reversal after posting earnings

RDN- closed near a low in an intra-day reversal

WYNN, LVS- closed near a low in an intra-day reversal

WLT- closed near a low in an intra-day reversal

X- closed near a low in an intra-day reversal

AAPL- closed near a low in an intra-day reversal

SLXP- closed near a low in an intra-day reversal after posting positive drug news

APP- poor earnings

PVG- share offering

VITC, VSI- featured in “Sell Block” on “Mad Money” last night

TRGL- closed near a low

OSG- closed near a low

CNX- closed near a low; 38.5 million share offering priced at 42.50

BTM/C- closed near a low

SOMX- 6 million share offering price at 8.25






Earnings:

FRI MAR 26 BEFORE

FUQI


Good luck today.


Epiphany Trading, LLC


www.epiphanytrading.com


Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
Joseph R. McCandless- Managing Partner
D. Timothy Seaquist- Managing Partner
 
MON. MAR. 29- Tentative Greek Solution?

On Thursday night, a consortium of European leaders reached yet one more deal in an attempt to alleviate if not halt the government debt crisis that is completely undermining Europe’s currency union. The joint Eurozone and IMF program actually comes with very stringent conditions. The most notable condition is that no money is being made available to Greece at the present time. In fact, the monies can only be tapped if Greece and/or other financially strapped Eurozone members such as Italy cannot raise needed funds from financial markets. Furthermore, this action would require the unanimous consent of all 16 Eurozone nations to release the loan monies. This was ostensibly the exact deal that German Chancellor Angela Merkel sought to broker as she didn’t feel that the German government should be the de facto agent to bail out the Greek government. Besides the inherent unfairness of that situation for the German people, where would it end, i.e. what if other European nations had problems? But the net of all of it is that a backstop would truly be a last resort when all other options have failed and the International Monetary Fund must be included. The French and European Central Bank were against turning to the IMF out of fear that it’d damage the euro’s name and prestige. To date, the Eurozone has never turned to the IMF…then again, there has not been a situation such as the one Greece is in. What is notable for the markets is that the European consortium sought to stabilize the euro and provided some temporary stability to the tenuous situation which is why the euro rallied on Friday. Thus, if nothing else, time has been bought for Greece to exhaust all options and the –what-will-Europe-do conversation has been taken off of the table. But this is a situation that is nowhere close to being open. Europe will not collapse or soar overnight over Greece…but it’ll take quite some time to sort out. For day traders, one must monitor any of the latest developments, but particularly in a holiday week as the one we’re about to undergo, attention will likely be focused off of the euro for the first time in awhile due to the aforementioned tentative stability constructed- artificially or otherwise- on Thursday night.

Markets in Asia were mixed overnight with Tokyo flat but Hong Kong up just shy of 1%. Markets in Europe are generally higher with Germany up about 0.7%, but London and Paris flat. The euro is slightly stronger with commodities nicely higher across the board. Futures are stronger as well as the end of the quarter approaches. The past two days have notably featured reversals so there will likely be a little selling into the strength but it looks like all systems go for this one. Focus on big cap tech and financials along with relative strength plays. Volume will likely be light as it’s a holiday week for many so be weary of illiquidity.

Reiterating-


If the whole story is not there -

If something is good, assume either a short thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified.

If something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified-


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

ABIO- closed near a high after receiving a patent for treating heart failure patients with Bucindolol

FINL- closed near a high after posting great earnings

CKXE- near a takeover deal with CEO Sillerman and one One Equity Partners for $6/share

ITT- mentioned in “Barron’s” over the weekend

CALM- good earnings

APOL- good earnings

SORL- good earnings

VTIV- has retained Goldman Sachs as an advisor to be potentially bought out


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

ATAC- closed near a low after posting terrible earnings

MDVN- closed near yet another trend low

AIB- in talks with the Irish financial regulator in order to attempt to meet its capital requirements










Earnings:

MON MAR 29 BEFORE

APOL

MON MAR 29 AFTER

none

Good luck today.


Epiphany Trading, LLC


www.epiphanytrading.com


Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
Joseph R. McCandless- Managing Partner
D. Timothy Seaquist- Managing Partner
 
TUES. MAR. 30- Expecting To Be Right But Preparing To Be Wrong

A few days ago, someone told me that he was trading a lot of the more aggressive stocks such as FCX, AAPL, and GS. But he consistently found that he was losing small net-net whenever he did so. I asked him to think about why this was. He responded by telling me he was not scared to trade volatile stocks. So, I asked him again to really think about it. His exact response was: “when (a stock) breaks a level, that's usually where we enter, I panic whenever it bounces back just above the entry point.” This response led me to having two distinct thoughts. First, most people don’t hold positions because they are afraid to do so. They would much rather do comparably ‘safer’ plays, but of course what happens with the stocks like CSCO and MSFT is that if they don’t hold them for longer than a few minutes, they tend to lose because the stock isn’t doing what they thought it’d do. Thus tedium and wonderment about the slow moving stock creep in mentally which leads to them exiting the position. I know. I learned the hard way because I used to flip 10000-15000 share blocks of slow movers in trying to capture a tiny profit when the markets were calm and found that I was unable to do it. I also know most electronic day traders are programmed to push buttons so I suffered the same fate most of them did when trying this strategy- small losses. Thus, for my typical 1-5 minute trades, I have to stick to the fast movers. I realized that Michael Jordan quite admittedly had a great deal of basketball ability. But made him so great was that he was confident in himself that he could use that ability anytime he wanted to do so. I also know if I cannot make money in a compressed time horizon, I have to do something different. So, after doing a few trades of the bigger ones and making money consistently, I knew I could do it- if for no other reason than trading ‘safe’ was not going to pay my mortgage. So, what I typically do when entering a trade is to know exactly where I am wrong and stick to it. Here's a real -life example...on last Friday, a 217.65 bid on AAPL was refreshing with it consolidating in a narrow band sharply higher on the day. The high to that point was 217.70. I bought it as the market was upticking with the AAPL 217.65 refreshing, i.e. a recurring buyer was present just above the bid at re (217.66) at 10:52:31AM. If 217.70 refreshed on the offer when it got there, I'd take have taken half off immediately. I also knew if 217.65 was refreshing with the stock near high of day, it should not go below the 65 level. So if it did, I was cued up at 60 and would have been out immediately. Thus, I'd have sold the 1st half at 65-67 and the balance between 60-63. So, averaging say 66 and 62 to make it 64, I'd have lost two cents or so. And if right, look where AAPL could have gone. So I mentally know I'd lose 2 cents probably if wrong (6 cents worst case) and have the potential to make at least 20 easily...and thought there was a significant chance with the market aiding me that I'd be right. By using logic and preparation, I had a reasonable battle plan so…fear…was taken out of the equation. I resigned myself to the fact that if I was wrong, I’d lose 2-6 cents and was prepared mechanically (and mentally) to do so. So, by being prepared to be wrong while expecting to win, you take as much emotion out of the mix as possible while maximizing your chances to make money in a stock…or a career for that matter.

Markets in Asia were ahead nicely overnight with Tokyo up 1% and Hong Kong 0.7%. But everything else is very placid worldwide with Europe flat, currencies are unchanged, and commodities are up slightly. Futures are ahead nicely on the heels of a sizable gain in AAPL in the early going. For the day, no reason for anything major to change. The weather is horrible in the NYC Metro area; combined with many people off for the week, it is going to likely be quiet with the modest upside bias reasserting itself. Focus on the smaller cap stories and any relative strength play you see, but remain nimble as liquidity will likely remain low.



Reiterating-


If the whole story is not there -

If something is good, assume either a short thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified.

If something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified-


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

DHR- boosted earnings guidance

WHRT- closed near a high after it received positive words from Wedbush Morgan

KID- closed near a high after posting great earnings

CYD- closed near a high after a positive mention in “Barron’s”

AAPL, VZ- “WSJ” reported AAPL is working on a Verizon friendly CDMA iPhone; QCOM may move with these two

FCX, MEE, SWN, CLR- among the commodities stocks closing near their highs

BIOF- decent earnings

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

CEPH- FDA questioning CEPH’s narcolepsy drug data

MYGN- lost a patent case relating to a series of patents covering two human genes which relate to breast or ovarian cancer

CNQR- convertible offering and in-line earnings guidance

SAFM- share offering

OXM- poor earnings

RIMM- traded sharply lower after-hours following the aforementioned AAPL report

ABIO- closed near a low in reversing Friday’s action after a report came out from TheStreet.Com which bashed the stock

AONE- closed near a new trend low

LDK- poor earnings

GNVC- phase III trial of TNFerade discontinued










Earnings:

TUES MAR 30 BEFORE

LDK

TUES MAR 30 AFTER

ZZ


Good luck today.


Epiphany Trading, LLC


www.epiphanytrading.com


Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
Joseph R. McCandless- Managing Partner
D. Timothy Seaquist- Managing Partner
 
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