Epiphany Trading Daily Blog

WED. MAR. 31- Home Loans And Equities

Several days ago, the federal government announced a plan to shrink home loans. Specifically, the aim of the government’s focus is to reduce the amount that many troubled borrowers would owe on their existing mortgages. The plan would ostensibly let people underwater on their mortgages (i.e. those who owe more on their mortgages than what their properties are worth) to get new loans with the full backing of the Federal Housing Administration (the agency that insures home loans against default). Furthermore, the mortgage companies backing the underwater loans would receive incentives to lower the principals hence the rush of banks in the last few days announcing that they’d be doing just that. According to Moody’s, there are currently about 4.5 million homeowners already in foreclosure proceedings or at least 90 days delinquent on their mortgages with an estimate of 10 million more homeowners who owe more than what their homes are worth. Finally, this plan also includes 3-6 months of temporary aid for borrowers who have lost their jobs. Now, there are all kinds of criticism. The government is taking on additional risk. Why should the government perhaps bail out someone who shouldn’t have had a mortgage in the first place versus helping the people who did what they were supposed to do in terms of paying off their mortgages even if they are struggling due to a cutback in salary or what not. The long-term problem won’t be solved as people without jobs still not able to pay their mortgages whether it is now or later. And so forth. This of course has been bullish for the stock market in the immediate-term. This seems counterintuitive to many, but the logic is actually quite simple. If banks cut their principal payments for mortgagees yet the government backs them, it’s a good thing in the here and now because the implication is that more mortgages will be repaid than originally thought with the banks incentivized by government tenets to do it. Thus, if X amount of money was expected to be recouped, that number becomes X plus Y which is better than originally thought. Will there be an inflection point? Probably. I don’t know. But I do know that the tape tells the story- not intellectualism.

Markets in Asia were generally lower overnight with prices down about 0.6% in Hong Kong. In Europe, markets were up but have gone negative by about ¼%. Oil and gold are sharply higher and the dollar is stronger overall as well. Futures are trading down on a weak ADP report. That ADP report is the main driver as the implication is that Friday’s jobs number will be below expectations. For today, look for a somewhat busy and weak morning and a busy late afternoon as it is the last day of the quarter ahead of what will be a four-day weekend for many. Focus on the relative strength plays, the small caps which will really move today (such as ARQL), and potential window dressing stocks that have moved a lot this quarter for follow through.


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

MCK- closed near a high

CNAM- closed near a high

RIMM- reversed after the rumored AAPL device news in closing near a high

WLK- closed near a high after a brokerage upgrade

SLXP- closed near a high

CSIQ- closed on a high

HON- raised earnings guidance

ITRI- mentioned on “Fast Money” last night

DCTH- closed near a high amid rumors of positive phase III buzz of its PHP technology

FSII- decent earnings

ARQL- reported positive phase II ARQ 197 trial results

ISIS- announced collaboration with GSK

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

ZOOM-poor earnings

SAI- poor earnings

ZZ- poor earnings

GS- was weak all day yesterday; closed near a low

CQB- sees 1Q European volume lower than expected

NWPX- closed near a low

ZSTN- closed near a low after releasing poor earnings

LNDC- poor earnings

HEAT- poor earnings

BTU- bid $3 billion for Australia’s Macarthur Coal; would be dilutive for BTU and Macarthur rejected bid implying BTU may need to raise its bid

ONP- offering three million shares at 8.25

AMN- poor earnings



Earnings:

WED MAR 31 BEFORE

APWR AYI BPZ

DG FUQI HEAT

WED MAR 31 AFTER

BLUD GPN MOS

RECN RIMM RINO

XRTX


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. APR. 1- Start of 2nd Quarter

Today is the first day of the 2nd quarter. April’s Fool Day typically plays out in one of two ways. First, the market can move very dramatically. The reason is that mutual fund managers and funds based on 401k’s become flushed with cash. At the beginning of each quarter, many factors come into play (calendar, computers, et al) which set aside monies into various people’s accounts and fund managers become flush with this money wanting to put it to work in some fashion. Furthermore, the flush of capital inflow may be a bit more exaggerated because of the fact that more Americans are on track to get a refund than in any year in history. What the average person does with that money- save the money, invest it, buy a big screen TV…that I am not bright enough to begin to guess. Thus, in bull market environments like the one we are in, the market can have a particularly big move on April 1 because of all of that tax money. Thus, I’ve seen exaggerated gains on this particular day in the past as well as exaggerated moves lower because if things don’t go immediately, the hedge fund managers start dumping stock due to failed expectations. Conversely, the day can be one of the most muted days of the year. It can come before Good Friday (as it does this year) during a holiday week in which people take off. There can be a sense of non-urgency…a pause before the spring earnings season on the first day of the 2nd quarter. So, which will it be today? If I knew answers like that with certainty, I’d have retired long ago! I do know that typically it is never an in-between…either it is very slow or very busy. Based on the recent trend and the fact that jobs data will be out early Friday as well as the upcoming four day closure of most European bourses for Easter,, my guess is that things (unfortunately) will be quite illiquid and slow. That is my loose notion heading into the session…but more than most days, things can become quite exaggerated so be ready.

Markets overnight rose sharply throughout the world with Tokyo and Hong Kong both ahead 1.4% and the bourses up about 3/4% in Europe. The dollar is quiet with commodities generally higher across the board. The main trigger for the pre-Easter rally seems to be positive economic reports out of China and Europe. State-side, futures are higher as well with tech relatively weak due to the RIMM numbers. As noted above, look for a somewhat slow pre-holiday session, but one in which the upside bias should be maintained. Focus definitely on relative weakness in techs as well as the myriad of smaller companies in the news as well as those which reported earnings.

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

RDEA- positive phase IIb study data of treatment of hyperuricemia in gout patients

LIHR- received takeover bid from Newcrest Mining of Australia

BGP- good earnings and was able to receive a new term loan

LNG- announced joint partnership with JPM to boost their business

GPN- good earnings

RMBS- received a renewal of partnership with AMD

MU- decent earnings

XRTX- good earnings

CNAM- good earnings

ATSG- closed near a high after announcing a new long-term agreement with DHL

PRI- announced pricing of 21.36 million share IPO at 15, above expected 12-14 range

AMAG- announced collaboration with Takeda Pharma for Feraheme in various European nations

KMX- good earnings

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

RIMM- poor earnings

ARQL- island reversal after reporting positive phase II data

RINO- poor earnings

GRRF- terrible earnings






Earnings:

THURS APR 1 BEFORE

KMX

THURS APR 1 AFTER

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
 
MON APR. 5 - Out Of The Norm

One of the major obvious factors in determining whether to do a trade is the immediate-term direction of the stock market. That sounds very obvious and even the newest of the newbie traders understands that it’s a lot easier to earn money from buying a stock in a market that is rising or shorting a stock in a market that is falling rather than vice versa. With that in mind, there are certain types of plays and stocks that as long as the market is generally flat when one takes a step back that can be trades regardless of market direction from minute-to-minute. For instance, if on the same day that the Dow was up 200 points, a company (with a stock that closed at a brand new high the day before) warned on its earnings, announced its chief auditing firm had resigned, announced the CEO resigned, and noted it’d have to restate its earnings, it’s a pretty good bet that the stock of the company being discussed would decline anyway. I mean, just because everything is getting better for everyone else, it doesn’t mean that a stock of a company with all that horrible news is going to go along with the upward tide. The same is true of individual stocks/trades. Such an example occurred on Thursday March 11th when AIG after a huge run-up and a story out of Taiwan indicating another unit was about to be sold began giving way intra-day and got negative. AIG was in its own cocoon at that point. The market was grinding higher but not only was AIG relatively weak, it was so disparate from the market that it went anyway. I bring this up only because we are beginning to see more of these types of trades with more speculation going back into the market. Exaggerated moves can take place in select issues which have little if anything to do with the overall tape. I certainly don’t advocate seeking these plays out, but when one comes up, don’t be afraid to push the button.

Markets were higher across the world on Friday on the heels of a decent jobs report. The government released the numbers early Friday; bonds immediately declined with the 10-year yield racing towards 3.95%. This morning, Tokyo was up about 0.5%, but most of the rest of Asia and all of Europe was closed for various holidays. Futures are higher across the board state-side. With the weather absolutely beautiful and a dearth of participants with many gone for vacations and Europe shut down, look for a very slow day. Prices likely stick to the upside albeit on anemic volume. Focus only on stocks in the news big-cap wise (track AAPL’s numbers from their product launch over the weekend) as well as several small caps with news as well as relative strength/weakness plays otherwise if you’re gonna be at your desk, keep one eye to the markets but the other to busywork you can do to keep yourself from scalping.

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

CRAY- awarded $45 million supercomputer contract from National Nuclear Security Administration

FCX- closed near a high

HWG- closed near a high after posting great earnings

GPOR- closed near a high

ARD- received takeover over from SD for $2.50 in cash plus 4.7771 shares of SD

RPRX- requested a lift of clinical hold on its Proellex


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

UEPS- closed near a low

GPN- total reversal after reporting earnings; closed near a low

RINO- closed near a low after reporting earnings

APWR- closed near a low

RIMM- closed near a low after reporting earnings

ENCO- delaying the filing of its 10-K

CCME- closed on a low

TASR- poor earnings guidance

SCR- China’s State Food and Drug Administration found various asundry activities took place at a SCR facility



Earnings:

MON APR 5 BEFORE

none

MON APR 5 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. APR. 6- The VWAP

One of the terms tossed around the chatroom is “ VWAP.” But most people don’t know what that means or what the ramifications of the VWAP is. “VWAP” stands for “Volume weighted average price.” Even more specifically, the VWAP is a mathematical figure for the average price that a stock traded at over a period of time but also based on trading volume as well. If XYZ traded 500 shares at 10, 200 shares at 10.05, and 500 shares at 10.20 in a given day, the VWAP would be 10.0917 ((500*10)+(200*10.05)+(500*10.20))/1200 total shares. The VWAP tends to be used as a moving target for investors with a goal to remain relatively passive in their trade executions. Pension funds tend to be the biggest users of the VWAP in their strategy. It’s also used in algorithmic trading in which a broker may guarantee an execution at the VWAP of a particular order and then have a computer program to place the orders in order to earn a commission if not a small profit as well. But the overall goal of using the VWAP is to attempt to guarantee that a trader executing a particular order does as such in-line with the prevailing market because it tends to minimize market impact on a given transaction. For those that trade stocks with constant movement and/or relative illiquidity, the VWAP tends not to matter as much. However, in a relatively quiet market in a relatively non-volatile albeit active stock, the VWAP can very much come into play as entities tend to do their best to buy stock below the VWOP and sell above it. As was posted in our chat room on Thursday, “A large cap stock has a tendency to trade back towards the VWAP at the end of the day. If it trades near or on the VWAP most of the day, the stock tends not to move much. This is not a constant but a tendency.” I think that is a pretty good summary. So, be aware of the VWOP, do not necessarily rely exclusively on the VWOP but follow it particularly in hyperliquid stocks as the day progresses in a placid market environment.

Markets in Asia were generally lower overnight with Tokyo down 0.5%. In Europe, markets are generally slightly higher in a catch-up from yesterday, but gains are thinning as we approach the open with the bourses actually mixed as I write this. Commodities are giving a little back with bonds modestly stronger. The major story this morning is renewed worries about Greek debt on a rumor that the Greek government was looking to raise $5 billion to $10 billion from U.S. other investors to help cover its May borrowing requirement. The euro is getting hit fairly hard in leading futures lower. Look for another relatively quiet day with no major earnings of note out as well as relatively low newsflow plus many schools are still closed for the holidays. Watch out for the notes from last months Fed meeting to be released at 2PM ET. Follow through will likely be pretty good on moves just as it was yesterday so don’t overly trade, but things can work particularly nicely if right as there’s a little more emotion in the market. Focus on big cap tech as well as the stocks in the news.

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

AAPL- closed near a high after announcing iPad sales data

AUXL- closed near a high after positive comments from Cowen

DNDN- mentioned on “Fast Money” last night

COST, PVH- mentioned on “Mad Money” last night

ROG- positive earnings guidance

X- closed near a high

BW- closed near a high after posting earnings

HOG- closed near a high

CREE- closed near a high after a brokerage upgrade

CLF- closed near a high

WYNN, LVS, MGM- closed near highs

GS- closed near a high

PMI, MTG, RDN, MBI- closed near their highs

BUCY, JOYG- closed near highs

ATHR- closed near a high

NFLX- closed near a high

VECO- closed near a high

AVT- closed near a high

VHI- closed near a high

BRY- closed near a high

CPBY- selected by State Grid Corporation of China as the sole domestic GIS provider for Smart Grid

MTH- pre-announced revenues to the upside



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

MEE- several killed in an MEE mine blast last night

BYI- warned on earnings guidance

BUSE- traded down sharply after-hours last night on no apparent news

TNK- share offering

BEXP- share offering

RDEA- stock offering

AAPL- mentioned negatively on “Mad Money” last night

CA- poor earnings guidance




Earnings:

TUES APR 6 BEFORE

none

TUES APR 6 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
 
WED. APR. 7 - Suspending Disbelief

Every so often, there is a trade so strange that it takes some degree of time to understand and comprehend. Such was the case on the first trading day this year in share of Alcon (ACL). At 1:28AM on Monday morning on the first trading day of the year, there was a press release on the Dow Jones wire regarding a takeover of ACL. The headline read as such: “Novartis To Acquire Majority Control Of Alcon, A Global Leader In Eye Care, And Proposes Merger For Full Ownership.” In the press release, NVS reiterated its April 2008 proposal in exercising its call option to purchase an additional 52% stake from Nestle for 180/share which averaged its 77% stake to 168 after originally purchasing 25% for 143 in April 2008. With me so far? NVS owned 25% at 143 and want to buy 52% more from Nestle for 180. Then, in a “proposal for subsequent all-share direct merger of Alcon into Novartis to avoid uncertainty and speculation on Alcon's future in interest of all stakeholders, they offered to purchase the remaining 23% stake in the company from people like you and I (aka average shareholders) for “a fixed exchange ratio proposal of 2.80 Novartis shares for each remaining Alcon share, a 12% premium to unaffected Alcon share price of USD 137 implying a “cost for 23% minority stake of USD 11.2 billion, or USD 153 per Alcon share.” If it’s confusing, that’s because, well, it’s confusing until you read it a few times because it seems so outlandish! Despite the ornate language used, what it comes down to is that if you’re a Nestle stake holder in ACL, you get 180 but if you are an ordinary shareholder you get 153. Awesome. Well, early on that Monday morning, the stock was at 169, up 4 1/2. The only rhyme or reason for it was the “how can NVS do this” argument. Sure enough, the stock trickled in the 4 ½ points to unchanged by about 7:45AM on anemic volume. A buyer floated around 164.50 for half an hour and when the entity left, the stock broke almost seven points in 10 minutes. For day traders, the reality was stark. Sometimes one must suspend all sense of disbelief to do this type of trade. The math was there. While it certainly is/was true that NVS may raise its price in time, the fact was that if I was a ACL shareholder and I was being given a gift 12 points or so over prevailing logic, I’d probably sell my shares particularly on the first trading morning of the year. Trading is not about “fairness” or “what is right.” In this specific case, NVS could offer 27 points less to ordinary shareholders than to the Nestle group- this is what they did and eventually the market realized that offer was for real making this play what may have been the best trade of the month.



Markets overnight were higher in Asia with Tokyo up slightly but Hong Kong ahead
1.8%. European markets are down slightly between 0.1% and 0.3%. Oil is off a little with gold flat. But the notable feature again is the weakness of the European currencies with the dollar gaining half a euro and the British pound very weak. Futures are modestly lower, but the weakness is notably broad with commodity stocks, financials, techs, and casinos are all down a bit. Keep an eye on the euro all day; if things remain stable, the market will likely try to rally anew but it seems like the strength will be capped. If the euro move is exacerbated, the weakness can become exacerbated. The pace of trading will likely remain slow on what looks to be an 85 degree sunny day in Manhattan so don’t be quite as aggressive as the last couple of days.


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

CAR- closed near a high

BIDU- closed at a high

OZM- mentioned on “Fast Money” last night

HAIN, SPF, LEN, KBH, TGI- mentioned on “Mad Money” last night

LLEN- closed near a high

FDO- decent earnings

EOG- announced crude oil discoveries and divestiture of some assets

TSCO- boosted earnings guidance

JASO- raised shipment guidance


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

AMB- announced share offering

CLF- reversed in closing near a low

MEE- closed near a low after the horrific accident at one of its mines

ZANE- convertible stock offering

ALGN- closed near a low after being downgraded



Earnings:

WED APR 7 BEFORE

FDO MON

WED APR 7 AFTER

BBBY LWSN MDRX

PBY RT SCHN


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. APR. 8 - Broadening Moves

In the last three days, I for one have seen a very welcome return to something that has been absent for a few weeks intra-day anyway in the equity markets- follow through on moves for traders honed in on 1-5 minute timeframe-based trades. What has occurred since around President’s Day for the most part is that it’s a matter of 35 steps forward and 34 back (seemingly) if right and an immediate crushing (again, seemingly) if wrong. Now, I use the word “seemingly,” but in reality based on my trading as well as the anecdotes of fellow traders, this type of action has indeed moreso been the norm than not. Don’t get me wrong; there have definitely been things to do at times (particularly between 7:30AM ET and 10AM ET). Furthermore, if you’ve been a longer-term trader much mess an investor, it has been a good market for all of you and I wholeheartedly applaud your patience. With this said, the moves have been broader, more frequent, and much bigger in depth in the last three days. With the positive jobs data combined with the continued bull market brought back a bit of greed this week as people (right or wrong) are definitely gaining more confidence (as a whole) in the markets. And by the way, when things don’t go quite right, stocks are moving rapidly the other way as well. Thus, what has set up are a number of things that have moved rapidly on any news or strong market intra-day move. The only issue has been that it has been a bit harder to get significant size in some of these things as prices are moving. Just to pick out a couple of plays, this was one from Tuesday morning (I tried for 1000 in MEE, 5000 in ZANE, and 2000 in AAPL):

07:30:37 MEE BOT 200 51 EPIPHANY18 NSDQSTGY
07:26:42 MEE SLD SHRT 200 51.7 EPIPHANY18 NSDQSTGY

Or:
09:34:12 ZANE SLD 200 2.75 EPIPHANY18 NSDQSTGY
09:33:42 ZANE SLD 300 2.74 EPIPHANY18 NSDQSTGY
09:33:09 ZANE SLD 764 2.65 EPIPHANY18 NSDQSTGY
09:32:40 ZANE BOT 264 2.51 EPIPHANY18 NSDQSTGY
09:32:40 ZANE BOT 1000 2.51 EPIPHANY18 NSDQSTGY

Or:
11:30:21 AAPL SLD 100 238.6 EPIPHANY18 NSDQSTGY
11:30:21 AAPL SLD 100 238.6 EPIPHANY18 NSDQSTGY
11:29:05 AAPL SLD 200 238.69 EPIPHANY18 NSDQSTGY
11:26:32 AAPL SLD 400 238.75 EPIPHANY18 NSDQSTGY
11:25:22 AAPL BOT 396 238.53 EPIPHANY18 NSDQSTGY
11:25:22 AAPL BOT 100 238.53 EPIPHANY18 NSDQSTGY
11:25:22 AAPL BOT 304 238.53 EPIPHANY18 NSDQSTGY

So, none of these were particularly massive trades nor did I come close to maxing out the profitability. MEE declined 2 ½ more, ZANE rallied another point (36%) more in minutes, and AAPL traded ahead another 1 ½ more in a couple of hours. However, when I get into a stock, I try to buy or short something that I feel I can make at least 20 cents easily in. It won’t happen all the time, but I only want situations whereby the odds are stacked in my favor. The fact that these things keep going admittedly bothers me more than a little. But the idea here is that I could post about 15 more of these examples from yesterday alone. Even if one cannot capture every dollar in a trade (who can?), one can still do fairly well when numerous stocks are moving. Thus, one never knows how long this will last; with earnings season coming up, this is hopefully the beginning of a period of some decent (rapid) intra-day movement within a bullish albeit quiet market. Closing on point, it is weeks like this one when one can really earn a decent living; make sure you’re cognizant of the market as it changes before your eyes and be there to take advantage of it.


Markets in Asia were down significantly overnight with Tokyo off 1.1%. In Europe, the losses were even deeper with the bourses down about 1 ¼% on average. Oil is down slightly and gold up slightly. The euro is a bit weaker. The main news event all night is something I’ve harped on in this space for awhile: the spread between the German bund and Greek debt ballooned overnight. The implication is that confidence is waning rapidly that the Greeks will be able to fix their financial straits. Futures state-side are down a bit also in padding on to yesterday’s losses. For today, things could get rather interesting if the bond spread continues to widen; that is the key feature for sure today. So watch for that number as well as the performance of the euro. Focus on the airlines, the relative strength (and weakness) plays, and the myriad of small caps with news out. Trading will be busy this morning, but will likely pause early afternoon as the Master’s gets into gear with the most awaited tee time (1:42PM) for Tiger Woods being quite anticipatory and stock trading suppressing before action picks up again into the close.


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

LCC, UAUA, DAL, JBLU, AMR, LUV, AAI, ALK- LCC rumored to be in acquisition talks of UAUA; entire sector should be strong today

BBBY- good earnings

MDRX- decent earnings

SMSC- good earnings

AIG- closed near a high

FSLR- closed near a high after a brokerage upgrade

HOTT- great earnings

WDFC- good earnings

HUSA- got crushed on an Internet posting, but after the close, the company called the posting “unwarranted and outrageous”

MG- decent earnings

STRM- decent earnings

AMT- featured on “Fast Money” last night

CVBF, CYN- featured on “Mad Money” last night

IOC- closed near a high

PALM- closed near a high on vague takeover rumors

NAV- raised earnings guidance

TJX- good guidance

ARO- good guidance

KSS- decent earnings guidance




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

MEE- closed near a low on continued horrible reports from the West Virginia mine disaster

CML- awful earnings

FRX- FDA panel voted against approval of its lung drug Daxas

PNW- share offering

DISH- closed near a low as some buyout fervor ebbed

SLG- closed near a low

HOC- closed near a low

VHC- auditor announced “going concern” qualification

DGIT- filed for share offering

X- closed near a low

AEO- poor earnings guidance

GYMB- poor earnings guidance

ATK- poor earnings guidance

JCP- poor earnings guidance












Earnings:


THURS APR 8 BEFORE

FUQI PIR

THURS APR 8 AFTER

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
 
Following up on a bit of a different tack from the self-analysis piece written recently, I want to go over what precisely sparked the entire dialogue about looking over one’s trades. In a conversation I was having with a fellow trader, he was very disappointed in himself because he’d lost money on the day and I’d ask him to see what it is he’d done wrong in his worst trade of the session. Well, as it turned out, had he not done the trade, he’d have been profitable. He purchased HGSI at 30.30 (the high of the day) when the stock had just run 25 cents on low liquidity on no news in a neutral market. So, he did not wait for stagnation, he had no trigger to buy the stock other than hope, and if wrong he could not exit very easily if he had a sizable amount of shares. Putting aside all that, he held the stock for over 20 minutes and ended up taking a 21 cent a share loss on average. As I told him, the only thing that basketball, baseball, and football have in common is that they have a ball; running with the ball in basketball is an infraction, but is encouraged in football. Same in the financial world. Many people never understand that trading and investing are entirely different. Within the trading realm, there are subsets of trading such as swing trading to day trading to microtrading. No matter which style of trading one chooses, one must abide by the rules of that style. Well, if one holds winners for 2-3 minutes on average, but will hold losers for 20 minutes on average, that will cause that person to lose time and again overall. Thus, if one is to use the style of trading I employ (using what I do as an example because it is the style I know the best), one must not only take profits on winners, but takes their quick lumps on their losers. Amazingly enough, this is not even my focus here. Instead, I have a two-pronged thought. First, it is not the hard mistakes that tend to get us. The esoteric mistakes that tend to be hard to figure out and are one-off events usually don’t hurt us over time. However, the easy mistakes- things like not following self-imposed rules, things like leaving two minutes after the close routinely in not doing some self-analysis of trades done, things like not doing basic preparation- those are the easily repeatable behavior patterns that can destroy traders when not rectified. And it’s shameful when things like that are not rectified because those behaviors are so simple to correct. Second, it’s not a matter of trading massive size on any one stock or trading a lot of stocks which gives most traders success. Rather what tends to work for successful traders is doing fewer trades but doing those trades in some degree of size. If I love an idea and there is plenty of liquidity present, why would I take a tiny position in it? So, I take size in the trade ideas I love and rarely do much of anything else at any time. It’s a matter of stepping up to the plate when right…not scrambling to do this aforementioned abominable HGSI trade and hope for the best. So, when analyzing your trades, sometimes you will not be able to figure out what you did right or wrong. But, if there is a pattern there in which you consistently are making the same mistake or doing the same thing right, learn from it, drill it into your head, and apply it to your future trading.

Markets overseas were nicely higher overnight with Tokyo up 0.5%,m Hong Kong 1.6%, and the European bourses ¾% to 1% across the board. Commodities are higher anew as well with gold up 0.5% and oil surging another 1% or so. The euro is notably stronger on vague rumors of a Greek bailout as well as stringent comments coming out from Greek officials as well as various economists. Futures as well as big caps are showing a lot of resiliency in the early going which will likely lead to a positive open. Look for the strength to hold if not feed on itself a little all day on quiet volume. Look for relative weakness plays as well as distinct A-B-A2 plays in big caps particularly if there are any rumblings of a solution to the Greek problem.

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

AMZN- closed near a high

DGIT- closed near a high despite announcing a share offering

WYNN, LVS, MGM, BYD- closed just off of highs, but entire sector was very strong

PIR- closed near a high after announcing earnings

FUQI- closed near a high

CEDC- sold Polish distribution business to Eurocash SA

CVX- sees 1st quarter earnings above 4th quarter earnings

SLM- closed near a high

EK- closed near a high

DCTH- closed near a high

USEG- closed near a high

ABK- great earnings

PALM- takeover rumors from a Chinese website that HTC may acquire the company

TIVO, NFLX- NFLX announced strategic distribution agreement with 20th Century Fox

LIWA- announced share offering at 8.05, but will use proceeds in immediate-term to build a new smelter

MEE- claims the West Virginia mine is self-insured

BTH- great earnings




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

HUSA- closed near a low in a complete reversal despite denying all charges posted on an Internet website on Wednesday

CRZO- announced growth strategy, but share offering as well

FRX- closed on a low after the FDA voted against its lung drug

AIG- closed near a low

JCP- closed on a low after posting same-store sales

ZEP- closed near a low

JOEZ- poor earnings

STZ- poor earnings





Earnings:


FRI APR 9 BEFORE

STZ

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
 
Late yesterday afternoon, the major governments of the EU nations offered troubled Greece a lifeline package. The package is valued around $61 billion- at below-market interest rates in an attempt to slow if not halt the Greek financial crisis- and of course to attempt to keep the euro from being the punching back of 2010. Last week, Greek borrowing costs exploded to an 11-year high. This adverse interest rate rise ostensibly forced the hand of euro-region finance ministers. The European governments as a result will offer Greece three-year loans in 2010 at a rate of about 5%- about 200 basis points below prevailing three-year rates in Greece. Approximately 2/3 of the funds will come from Europe with the remaining third from the International Monetary Fund. Basically, this is an out-an-out bailout at least in the short-term thus the value of Greek assets in particular much less all of Europe suddenly become more as the situation stabilizes. At the moment, the Greeks are holding off from utilizing this lifeline in the hopes that planned debt sales by the Greek government will go smoothly. One can be as skeptical or as optimistic as one wants to be on this whole mess. I personally question whether the same thing can and will be done for others who may need the help much less the effectiveness of it. Yet, perception oftentimes becomes reality and this is one of those cases. If things seem more placid, they become more smooth and placid. Thus, all of this may hold and it all may unravel in 2012 or sooner (or later...I don't even pretend to know). But I do know that people who thought the worst in Greece was going to happen and had short positions in Greek assets are nervous. I know hedge funds short the euro are nervous. And I know the domestic stock market has shaken all of this off for months on end. Thus, as we prepare to trade today as well as the next few days if not weeks, don't think about whether this can hold over the long-run. Realize that most savvy market-watchers have long expected this package to come about yet a lot of people and entities are aggressively short euro-related assets. Therefore be ready for some wilder than normal swings in all asset classes with the corollary that if it’s slow out of the gate, it’ll indicate that everything is factored in making for a very slow day.

Markets in Asia were mixed overnight with Tokyo up 0.4% and Hong Kong down 0.3%. European bourses are generally flat. Oil and gold are both down slightly with the dollar slightly stronger. Thus, despite my little educational novella above, we may well be setting ourselves up for a somewhat slow day pending how much hedge funds push things around (or get pushed around). The bias still seems to be to the upside with big cap techs and financials strong. Trade very nimbly today regardless of whether it gets volatile later as this seems to be the calm before the earnings storm right now and there aren't a ton of news stories or exaggerated moves.

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

AAPL- closed on a high

HUSA- nice reversal in closing near a high

FRO- closed near a high in a strong tanker group

CRL- closed near a high on vague takeover rumors

CEDC- closed near a high after announcing it is going to sell its Polish distribution business

ATLS- closed near a high after announcing the acquisition of a unit from Reliant

LIWA- closed near a high

PRI- closed near a high

MDRX- closed near a high

CPKI- “WSJ” reported CPKI is looking for buyers

PRGO, BJRI- mentioned on “Mad Money” on Friday night

MIR, RRI- MIR shareholders to receive 2.835 shares of RRI for each MIR share owned

PALM- rumored to have hired Goldman Sachs to find a buyer

GNVC- positive phase I/2a trial on a preclinical malaria vaccine data was presented at a symposium over the weekend

AIG- according to “WSJ,” AIG and GS unwound soured trades leaving AIG with a loss of about $2 billion

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

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

VCLK- CEO resigned; also, guided first quarter revenues below estimates

EOG- closed near a low

FSLR- closed near a low

MEE- near island reversal in closing near a low after trying to reverse from recent weakness

MUSA- closed near a low

KMGB- closed near a low




Earnings:

MON APR 12 BEFORE

none

MON APR 12 AFTER

AA

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. APR. 13- Don't Overthink Rate this Entry
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According to Yahoo Finance, “Houston American Energy Corp. (HUSA) engages in the exploration, development, and production of natural gas, crude oil, and condensate. It primarily focuses on properties located in the U.S. onshore Gulf Coast Region, principally Texas and Louisiana, as well as focuses on the development of concessions in the South American country of Colombia. The company was founded in 1981 and is based in Houston, Texas.” The company has a market cap of about $450 million. It also had a whopping $8 million in revenues last year yet the stock is still up 600% in the last 52 weeks despite last week’s sell-off. And what caused the stock to go from 20 to 14 last Wednesday? This: http://seekingalpha.com/instablog/19...for-perfection

The authors of the piece (Shareholders’ Unite) cited an oil exploration project as the trigger for the stock’s performance. According to them, the company only had one well planned this year for production, cited several arguments to statements that HUSA made, as well as claimed that the company’s principal asset was just worth $15 million and the company has just three employees. Wednesday after the close, HUSA called the posting’s claims “unwarranted and outrageous.” I am not an HUSA analyst nor do I play one on TV. Rather, I try to focus on good set-ups. So, to me, there was but one trade here: “shorting it thru unchanged.” You see, if there is a horrible rumor regarding a corporation, the company denies it after its stock price has fallen over 20% in a day, and the stock opens higher but cannot stay positive the next day…it’s a bad thing. If I manage an institution’s monies and I had part of my funds in there as a HUSA shareholder *and* the stock couldn’t rally the next day after the stock classified the story as patently false, I know I’d be nervous. Thus, one gets a punch through unchanged on the trading session in a case like this. The overall point is to not over think these things in utilizing whatever common sense one can muster when trading- always. Don’t think that just because a company denies a story that the stock can’t go against the obvious. Finally, when the ‘opposite’ move of what you’d expect is occurring, don’t think the move cannot become exaggerated- and fast at that.


Markets overseas were weaker overall with Tokyo down 0.8% and Europe down about 1/3% across the board. Currencies are flat with oil little changed as well and gold down slightly. Futures are down slightly largely because of AA as Alcoa’s revenue estimates missed guidance. I hope I’m wrong, but look for more malaise today with a slight downside bias for the markets. The focus is on revenue expansion on earnings and AA put a damper on things in the immediate-term. Look for a very quiet day overall with a focus on microcaps for trading.


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

MIPI- announced results from a completed phase II clinical trial of Onalta

SUN- mentioned on “Mad Money” last night

TNC- boosted earnings guidance

ABK– closed near a high

CPRX- closed near a high after announcing positive clinical trial data

KERX- closed near a high

RNN- announced yesterday that the CEO would make a presentation at the NASDAQ Marketsite at 12:15PM today causing it to close near a high yesterday

INFY- decent earnings

TLB- decent earnings

HK- announced 340 million barrel resource potential in Eagle Ford Shale

ENMD- initiated phase II trial for ENMD-2076 in ovarian cancer

XOMA- granted two new U.S. patents for methods of treating type 2 diabetes using Interleukin-1 beta antibodies

FAST- good earnings

TLB- decent earnings




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

NYNY- received judgment from the Supreme Court of the State of New York indicating the company is in default to convertible notes

AA- missed revenue guidance

CF- share offering

EPD- share offering

DG- share offering

LZ- closed near a low






Earnings:

TUES APR 13 BEFORE

FAST INFY TLB

TUES APR 13 AFTER

ADTN CSX INTC

LLTC

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
 
The other day, someone asked me about something I’ve never addressed in this space. The question was how many trades per day do I do on an average day? The answer is going to sound like a really obvious answer to some, but for me, it wasn’t so obvious until about 10 years into my career. The answer is this: the number of trades I do on any given day depends on the level of the action in the markets. When I was younger, I felt like I had to capture every minute move that could ever exist. Consequently, I found that particularly on very low volatility days, I’d chop myself into the oblivion and into a place called Losing Land- a place no trader ever wants to visit. So on a slow when the NASDAQ trades in a band of less than 10 points, I only do two or three major trades on the day with about 10-15 much smaller trades in prepping for the bigger ones. But you know what? That is a good day when next to nothing is going on and I’ll take it over trying to do more with nothing. Conversely, when the market is quite busy, I will do 200 trades a day if not more. When things are busy, that is when it is really time to go to work and do whatever is possible action-wise. I of course realize these numbers are low compared to some of you, but that’s the answer…I know my limits intellectually much less physically so I push it as much as possible when busy without breaking myself and don’t push it at all when there’s nothing to do because, really, there is absolutely no point. So, there’s no definite answer I can give anyone except to base your activity based on the market- do not overtrade when it is pointless, but trade as actively as possible when the opportunities are there. And for those of you rolling your eyes as I would have done for 10 years or so upon reading something like this, I hope you discovered the context of this entire post in much less time than I did and invite anyone out there to opine further.

Markets in Asia were up fractionally with Tokyo up 0.4%. The European bourses were up 0.5% on average. Commodities are broadly higher across the board to the tune of about ¾%. Futures are sharply higher after positive earnings data from JPM and INTC as well as good CPI data. Look for strong gains today on good volume with INTC and JPM as the benchmarks. Focus on A-B-A2 plays to the upside and relative weakness plays as well as all of the stocks in the news and the microcaps as things will be moving this morning in particular.

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

CSX- decent earnings

INTC- great earnings

LLTC- good earnings

ESI- closed near a high on rumors of positive regulation draft reports

VRS- closed near a high after a brokerage upgrade

HOTT, SFY- on “Mad Money” last night

KLIC- fantastic earnings guidance

JPM- good earnings

MAPP- announced potential of Levadex to treat patients with migraines

AEN- positive phase I study results of its Alzheimer’s product results

ITMN- positive top line results from its phase 2B study of Danoprevir

CRXX- announced the publication of new preclinical data in a hematology magazine

AAPL- positive iPad comments

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


ABK- complete utter total reversal in falling 50% from its high to close on an intra-day low after JPM reiterated that they believe the shares still have “no value”

RNN- reversed dramatically in closing near a low

RPC- closed near a low and announced convertible offering after the close

AVP- closed near a low after confirmation of a bribery scandal in the executive room at the company

EXAS- share offering

BMR- share offering

CKSW- share offering

ASML- poor earnings

POT, MOS- downgraded by Goldman Sachs

GWW- poor earnings







Earnings:

WED APR 14 BEFORE

ASML GWW JPM

PGR


WED APR 14 AFTER

JBHT LSTR YUM

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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