Epiphany Trading Daily Blog

[erikrkolodny]

Whenever preparing meat for consumption, one does their best to cut out as much fat as possible before digesting it. In Corporate America, the analogy is the same. For a company which is trying to buffer itself in bad times, the first thing it does is to try to cut expenses. For instance, if every employee flew first class on a business trip, maybe the company will have them fly coach. In worse cases, some of those same employees are let go with the remaining employees picking up the slack at the company. The problem comes when a company cannot cut any more “fat” to enhance profitability. At that point, since gross margins are maximized, the only thing that a company can do to enhance profitability is to grow revenues. It is ostensibly at this juxtaposition that we happen to find ourselves at in Corporate America at the present time. With the S&P 500 up 70% from its March 2009 nadir, the expectation is now widely in place that the global economy is recovering. Thus, for earnings to grow, it is time for revenues to start expanding. In one of the young earnings season’s first examples, AA met earnings expectations on Monday night, but they missed revenue guidance. The stock traded down around 2% throughout the next day. A couple of quarters ago, merely meeting estimates of earnings would have been awesome because of the palpable fear out there but with higher prices comes higher expectations. So, as we look to our friends at earnings services such as First Call, realize that we cannot just look at whether a company is beating earnings guidance this quarter but also whether it is besting revenue guidance as well as raising future revenue guidance when day trading based on a company’s earnings report.

Markets were up slightly in Asia overnight with Hong Kong up 0.2% and Tokyo ahead 0.6%. In Europe, the bourses are flat. The dollar is stronger across the board with commodities generally slightly weaker. There have been numerous negative events overnight. The Thai stock market fell substantially after a crackdown by the military. The spreads on the Greek bonds widened out. China’s economic growth for last quarter was substantially higher than expected leading to speculation that the yuan will be revalued. Yet, UPS and FDX are sharply higher after UPS raised guidance, there is more merger activity, and a number of microcaps are higher. This is all leading to a small downtick in the market overall. For the day, look for a lot of choppiness with muted movements in between the choppiness. Keep an eye on the euro. Focus on the microcaps and any relative strength plays particularly early in 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

UPS, FDX, AMZN- UPS pre-announced earnings to the upside; FDX and AMZN may move with it

AAPL- closed near a high

RDN- closed near a high

BCSI- closed near a high

AUXL- closed near a high

VECO- closed near a high

ENTG- closed near a high

HXM- closed near a high

EOG- closed near a high

JOYG- closed near a high

LSTR- good earnings

JBHT- decent earnings

CCRT- announced Dutch auction plan to purchase stock at 7

INTC, CSCO, BALT- mentioned on “Mad Money” last night

DVAX- hepatitis B Vaccine showed promise in kidney disease in a phase II study

RMBS- closed near a high amid rumors of a deal with AAPL

CLF- closed near a high

CSX- closed near a high after posting good earnings

FSLR- closed near a high

PNX- closed near a high

ME- being acquired by APA for 7.80 in cash plus 0.17043 APA shares

CXDC- good earnings guidance

IDIX- positive results with IDX184 from interim analysis of phase IIa Hepatitis C study

IOC- signed preliminary works joint venture agreement with Mitsui

ANDS- positive phase II study of Hepatitis C treatment

IMGN- announced favorable update provided by Roche related to its Trastuzumab-DM1 regulatory plans

MDVN- reported positive results from phase 1-2 trial of MDV3100

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

MGM, LVS, WYNN- MGM warned on earnings and announced a notes offering

SNTS- announced timing of launch of its generic Zegerid is now uncertain due to a patent lawsuit loss

MAC- share offering

KRC- share offering

WHI- closed near a low

FCS- poor earnings






Earnings:

THURS APR 15 BEFORE

BTU FCS FUQI

PPG SCHW


THURS APR 15 AFTER

AMD CBST GOOG

ISRG PBCT


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

 

[erikrkolodny]

Fri. Apr. 16- Three Factors To Watch

Yesterday, I made passing reference to three distinct events which bear watching. First, the Greek bond situation continues to worsen. As of this morning, the difference between the 10-year Greek bonds and the 10-year German bund is at its highest point since the crisis started despite what seem to be fruitless efforts by the Greek government to sell bonds to investors with the backing of the EU and IMF in the ready. Second, the Chinese economy had an enormous 11.9% rate of growth from a year earlier in the first quarter of 2010…but it actually did so with a slowdown in inflation. Their CPI rose less than was expected- only up 2.4% in March. Yet, the government announced measures such as investors being required to put down at least half of the value of a 2nd home to speculate in real estate as the Chinese housing market had a record increase in March. About 2/3 of the economists asked by Bloomberg news indicated they thought that interest rates would rise in China by June. Finally, there have been numerous clashes between the Thai army and anti-government protesters which have resulted in about 25 deaths thus far and are destroying economic growth of Thailand. There have been Thai security forces in place throughout Bangkok for a month which has resulted in once-in-a-generation violence. While none of these geopolitical and economic events have had any impact on world markets, they all bear watching as we head into a very busy earnings season at a perilous point for all three aforementioned situations. Don’t get me wrong: earnings should be the driver for the markets these next few weeks, but any of these extraneous events can add an exciting element of chaos to the mix.

Markets in Asia were down about 1.4% on average after the Chinese measures on real estate. In Europe, markets are straddling unchanged. Commodities are lower with oil and gold notably weaker. Futures are weaker on the GOOG news as well as some comments coming out of the GE conference call. Look for a downside bias all day today. The benchmarks will be GE, BAC, and GOOG. Focus on big cap tech, big cap financials, the microcaps, 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

BSX- resuming U.S. sales of key defibrillators

LGF- Carl Icahn boosted his bid for company and Mark Cuban purchased a stake as well

XNPT- received favorable patent ruling from European Patent Office

SIMO- good earnings guidance

CELM- mentioned positively in a newsletter

ATR- decent earnings guidance

IMGN- mentioned positively on “Mad Money” last night

CKEC- mentioned on “Fast Money” last night

BAC- good earnings

GE- good earnings

MAT- good earnings

PFWD- bought out by ORCL for 17

GCI- good earnings


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

GOOG- good earnings, but the CEO bizarrely announced he would not be on the conference calls anymore

AMD- poor earnings guidance

MEE- closed near a low

IOC- near island reversal in closing near a low despite announcing a deal yesterday morning

X- closed near a low

ISRG- poor earnings data from conference call

PSUN- mentioned negatively on “Mad Money” last night

IMAX- traded down after-hours despite announcing press release about its showings of “Avatar”

NPSP- share offering

CBST- poor earnings

PBCT- poor earnings

VMI- poor earnings

CF- 11.23 million share offering priced at 89




Earnings:

FRI APR 16 BEFORE

BAC FHN GCI

GE GPC MAT


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

 

[erikrkolodny]

MON APR. 19 - Trouble At Goldman

So what exactly happened in the middle of the morning on Friday? Well, first, we have to back up. During our morning call, I noted that not only was GOOG down on earnings, BAC and GE despite their wonderful earnings had slipped into negative territory. That was a warning sign and there was pressure all morning long on stocks. Then, Goldman Sachs (GS) announced it was being sued by U.S. regulators for fraud tied to collateralized debt obligations (CDO’s). It is alleged that GS created and sold CDO’s tied to subprime mortgages in 2007 without disclosing that hedge fund Paulson & Co. helped to actually select underlying instruments used to bet against the CDO’s. Thus, GS supposedly allowed a client that was betting against the mortgage market to decide which mortgage securities to include in an investment basket while telling other investors that the financial conduits were actually selected by an independent third party. For its part in the soap opera, GS actually said that it lost almost $100 million because it had in investment in the deal which was substantially more than the $15 million it made in fees. From all of this comes a few thoughts: a)I don’t know exactly how this will turn out, b)Washington wants regulation right now so the timing of this announcement is rather prescient, c)faith in all firms will be undermined a bit as people wonder if there is anybody “next,” and d)what matters in the long-run to the stock market is earnings. So, for day traders, tenets b and c above are what are going to matter. Not only will a few more firms get hit with news like this, there will be many rumors over the next few days and weeks as to who could be next. What is important to monitor is how the stock of GS reacts over the next few days with its vehement denials and to realize that combined with earnings season in full force these next few weeks, we day traders should see a notable pick-up in volatility (which notably began early last week). This is what we want. It’s time to really go to work as it is periods like these which provide chunks of annual income for prepared and diligent traders.

Markets in Asia were down sharply overnight with most markets down about 2%. The European markets are down about ¾% on average. Gold is down slightly, but oil is down 3%. The euro is also slightly weaker. Futures are correspondingly weaker as well. For the day, look for a continuation of the choppiness from Friday with a notable downside bias. Keep your eyes on every GS development, the performance of C and pay particular attention to the stocks with earnings as well as anything performing relatively strong to the market for potential rapid day trades. Also, if things get fast like they were on Friday, be ready to compress your time horizon for your trades.

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

RDCM- closed near a high

MBHIP- closed near a high

IMGN- closed near a high after being mentioned on “Mad Money” last night

YMI- announced preclinical efficacy data for JAK ½ inhibitor

MEE- FBR Capital says MEE worth about 58 in a takeover

CRN- being acquired for 1.3 shares of GEO or a share of GEO plus 6 in cash

HAS- decent earnings

IDSA- decent earnings


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

AIG- closed near a low

HSP- got warning letter from FDA for two facilities

GOOG- closed near a low after posting earnings

GPC- closed near a low after posting earnings

FCX, TCK- closed near lows in a weak copper group

ISRG- closed near a low after posting earnings

CLF- closed near a low

EOG- closed near a low

HGSI- announced withdrawal of marketing application of hepatitis C treatment in Europe

LLY- poor earnings

HAL- poor earnings

ACI- poor earnings







Earnings:

MON APR 19 BEFORE

ACI AMLN C

HAL HAS LLY

MMR SPF



MON APR 19 AFTER

ATHR CCK CR

IBM LNCR PKG

STLD VLTR WERN

ZION



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

 

[erikrkolodny]

TUES. APR. 20- Taking It All In

For those who have not been actively watching the story, the volcano in southern Iceland's Eyjafjallajokull glacier has continually sent ash into the air for several days. The eruption under the Eyjafjallajokull glacier in Iceland has thrown up a several mile high plume of ash which has ebbed and flowed yet not totally abated after more than two weeks of volcanic activity. It is located under Iceland's fifth largest glacier and has erupted only five times since the area was settled in the 9th century. Eyjafjallajokull has a 2.5 km-wide volcanic crater which is completely covered in ice. Quoting from a Reuters story, "Fissure-fed lava flows occur on its eastern and western flanks of the so-called stratovolcano, which is built up from alternating layers of ash, lava and rocks ejected by earlier eruptions. When the volcano began erupting in late March it opened a 500-m fissure producing lava fountains along the vent. The ash cloud has been formed through a process called fragmentation which occurs in several stages. First, magma travelling under pressure through underground conduits is broken up into pieces by expanding gases. As pressure decreases closer to the surface, the magma turns into fine volcanic ash which breaks into even smaller particles when it makes contact with glacial ice on the surface of the crater. The fine dust melds with steam rising from the crater to form a dark, billowing plume. "It's like a soda bottle when you take the top off," said Icelandic vulcanologist Armann Hoskuldsson, describing what happens to magma as it travels to the surface." Now, there are two main over and above the fact that this type of thing is fascinating that I bring up this matter much less quote the process for exactly what is occurring scientifically at the present time. First, many potential business stories don't actually appear in the business section of the newspaper. Instead, stories such as this tend to be buried on page C12 of many newspapers (or not in the top 50 stories in the news on Google News) when they first happen or hopefully get a mention in the Science section of some of the major papers. Yet, what has occurred has been a complete halt in air travel for northern Europe for many days now. After a few highly publicized plane interactions with ash plumes in the 1980s, airlines have generally agreed that the most prescient course of action regarding ash plumes is to stay far away from them. For instance, all four engines of a British Airways flight shut down when flying though the ash of an Indonesian eruption in 1982. In 1989, a KLM jet flew through a cloud of ash in Alaska and suffered the same fate. Both flights were able to restart their engines, but only after losing more than 10,000 feet of altitude else many people would have perished. Well, the wind patterns have taken the ash high into the sky throughout northern Europe resulting in a stream of almost invisible particles and rocks which has hated air travel. The estimated cost is over $200 million a day according to many news outlets and this could go on for awhile. This type of action is not factored in to broader markets so this and other types of events can cause issues for the equity markets. Second, day traders have a way of finding stocks to trade on based on disasters. For instance, many avian flu companies became very active stocks during the avian flu scare as did the stocks of companies which made anthrax anecdotes several years back. So, while this is not a domestic issue, if it was, shares of environmental-based businesses as well as clean-up stocks much less airlines would be active. Thus, as you skim through the news report (or newspaper), don't just check the score of the Yankees game as well as the business news...read the whole paper/news site because you just may find something that can help your trading.

Markets in Asia were generally higher overnight with Hong Kong up 1%. European bourses also had a nice bounce after Wall Street’s rally with most indexes up about 1%. Commodities are coming back too with oil and gold notching nice gains. Currencies are quiet. Futures are nicely higher state-side on the heels of a good report from GS. For today, look for the strength to maintain itself as GS continues to shake the cobwebs off. Focus on the myriad of earnings play as well as 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

ZION- decent earnings

ARRY- joint project announced with NVS

UNIS, WYNN- featured on “Mad Money” last night

ATHR- good earnings

STLD- decent earnings

MEE- closed near a high after a brokerage upgrade

MON- closed near a high after accelerating its share buyback

CADX- closed near a high

PRK- closed near a high

UNH- decent earnings

COH- decent earnings

GS- good earnings

HOG- good earnings

OMC- good earnings

ETN- good earnings

APH- decent earnings

ITW- decent earnings






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

IBM- poor earnings

PKG- poor earnings

WERN- poor earnings

ICUI- poor earnings

MMR- closed near a low after posting earnings

IOC- closed near a low

EAT- poor earnings

KO- poor earnings

NTRS- poor earnings

JNJ- poor earnings

MTG- earnings and shelf offering

FRX- poor earnings

SVU- poor earnings

HGSI- poor phase 3 trial results of Benlysta



Earnings:

TUES APR 20 BEFORE

AKS AMTD APH

BIIB BJS BK

COH DAL EAT

EDU ETN FRX

GS HOG ITW

JEF JNJ KCI

KO LAB LXK

MI MTB NTRS

OMC PCAR PH

RF STT SVU

UAUA UNH USB

USG WFT


TUES APR 20 AFTER

AAPL ALTR CREE

EW GILD JNPR

NBR NUVA OFG

SNV STX SYK

TPX TSS TUP

VMW YHOO




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

 

[erikrkolodny]

WED. APR. 21- Probing

For those people who despise buying a car, one of the only enjoyable parts for those individuals tends to be test driving. I mean, most people tend to know what they want when they go into a dealership car-wise. They may not know if they want a Honda or a Ford or a Toyota, but they do know if they want a smaller car like a Honda Civic or a minivan like the Toyota Sienna. Thus, people will go from place to place in trying out the cars because how else will they know if they actually like the piece of machinery they’ll be spending way too much of their lives in for the next several years? So what happens is that before even commencing serious negotiations, most individuals at least will know what it is they want to target. I mean, why spend time negotiating seriously if you have no intention of buying a particular car because you didn’t like the interior, how it drove, or any of many other factors that go in to the test drive phase? I rattled on a bit on this on purpose because I am trying to subliminally hammer home the idea that this same principle applies to trading. There is very rarely “nothing” going on in the markets. Most of the time, in fact, the only way to try to figure out a move is to play with it very small. For instance, all last weekend I tracked the estimates of iPads. I heard estimates as high as 700,000 units. With the stock trading slightly higher about half an hour after I got to work, I decided to test my hypothesis:

04/05/10 07:02:10 AAPL BOT 400 236.6 EPIPHANY18 ARCA
04/05/10 07:02:38 AAPL SLD 131 236.49 EPIPHANY18 ARCA
04/05/10 07:02:52 AAPL SLD 50 236.2 EPIPHANY18 ARCA
04/05/10 07:02:52 AAPL SLD 219 236.18 EPIPHANY18 ARCA

That didn’t go so well. It indicated to me there was some weakness in the stock because it just wasn’t acting as I internalized it would. I tested that too:

04/05/10 07:04:04 AAPL SLD SHRT 125 235.5 EPIPHANY18 ARCA
04/05/10 07:04:44 AAPL BOT 125 234.9 EPIPHANY18 NSDQSTGY

So now I knew that my bias on the news was to be to the sell side because the stock was acting a lot worse than I thought it would…and I’d lost small money being long and made small money being right. I knew there’d be an 8:30AM press release and was totally ready for it after the stock had rallied a bit on people coming into the door trying to play the same game I tried 1 1./2 hours prior. When the headline came out that they had “over 300,000” units sold, those early trades combined with the news enabled me to be highly confident in being as aggressive as possible about it (I wanted 2500 shares, but despite trying to hit a bid 25 cents below prevailing market, the stock was going so fast that I couldn’t get it all unfortunately):


04/05/10 08:30:38 AAPL SLD SHRT 1200 236.25 EPIPHANY18 NSDQSTGY
04/05/10 08:30:57 AAPL BOT 200 236 EPIPHANY18 NSDQSTGY
04/05/10 08:30:57 AAPL BOT 250 236 EPIPHANY18 NSDQSTGY
04/05/10 08:30:57 AAPL BOT 150 236 EPIPHANY18 NSDQSTGY
04/05/10 08:31:13 AAPL BOT 200 235.9 EPIPHANY18 NSDQSTGY
04/05/10 08:32:22 AAPL BOT 200 234.3 EPIPHANY18 NSDQSTGY
04/05/10 08:33:15 AAPL BOT 180 234.2 EPIPHANY18 NSDQSTGY
04/05/10 08:33:15 AAPL BOT 20 234.2 EPIPHANY18 NSDQSTGY

The point here is that the only way to test my original hypothesis (proven incorrect) was to go to the trading lab. Then I tested it anew the opposite it way and confirmed my original hypothesis was incorrect by making money in doing the opposite of what I thought I should do on my drive into the office. So, when the real trade came, I was as ready as I could be. During the day, I “probe” all the time in trying to figure things out because if I don’t test drive a major idea as I would a car, how can I know with as much confidence as possible that something will work?



Markets overnight were mixed. Very mixed. Tokyo was up 1.7% on the heel of AAPL gains yet Hong Kong was down 1.2% on Chinese currency rumors. London is down 1%% on worries about the economic impact from the volcano while Frankfurt is about flat. Commodities are slightly higher. The euro is weaker as the Greek bond-German bund spread continues to widen. Stateside, S&P’s are flat while the techs are higher. All of this leads to a very jagged picture for Wall Street today. Look for choppiness and rumor driven trading with no real direction- unless the euro weakens in which case the selling pressure will increase overall. Focus on big cap techs and financials with relative strength/weakness plays at the forefront along with the huge amount of entities releasing earnings today.



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- great earnings

VMW- decent earnings

PVH- decent earnings projections, but planning stock offering

SYK- decent earnings

PNRA- decent earnings guidance

DEAR- great earnings

STX- good earnings

ALTR- great earnings

TPX- great earnings

TCK- good earnings

TSS- good earnings

TUP- good earnings

CIEN, PIR- on “Mad Money” last night

AIG- closed near a high

BIDU- closed on a high

V- closed near a high

CPY- closed near a high after posting great earnings

SCL- closed near a high after posting great earnings

HGSI- good reversal in closing near a high after posting poor drug data

BNVI- announced that the US Patent and Trademark Office has issued a patent covering a method of using BNVI's proprietary drug candidate Bezielle for the treatment of metastatic breast cancer

CUR- closed near a high

CAGC- closed near a high

WYNN- closed near a high

ZION- closed near a high after posting earnings

HBAN- decent earnings

KEY- decent earnings

ZLC- selling minority stake to Golden Gate Capital

MS- good earnings

ECA- decent earnings

MAN- decent earnings

STJ- decent earnings

GS- SEC has testimony that seems to contradict facts of case


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

CREE- poor earnings

GILD- poor earnings

JNPR- terrible earnings

YHOO- poor earnings

EW- poor earnings

CSIQ- terrible unit guidance

NUVA- poor earnings

SNV- poor earnings

DRYS- share offering

TSFG- poor earnings and announced need for capital

ACUR- reversed massive intra-day gain in closing near a low after indicating the FDA needs additional data on one of its drugs

GMCR- closed near a low

JEF- closed near a low on poor earnings

FCX- closed near a low

ALGT- closed near a low after posting poor earnings

ETN- closed near a low after posting earnings

NTRS- closed near a low after posting earnings

COV- poor earnings

DGX- poor earnings

LH- poor earnings

ABT- poor earnings

V- acquiring CYBS

WFC- poor earnings

FCX- poor earnings

CHRW- poor earnings

CMA- poor earnings

UTX- poor earnings



Earnings:

WED APR 21 BEFORE

AAI ABT AMB

BA BPOP CMA

COV DGX ECA

ELN EMC GENZ

HBAN KEY LH

LMT MAN MCD

MCO MO MS

NITE NYB R

STI STJ T

TIN UTX WFC

WED APR 21 AFTER

ACF ADS AMGN

CMG CTXS CYH

EBAY EQIX FFIV

FNF HCBK ISIL

KMP LEG LRCX

MEE NE NFLX

NVLS PLCM PTV

QCOM SBUX SLM

SNDK TER TEX

TSCO VRTX




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

 

[erikrkolodny]

THURS. APR. 22- Index Trading

A few months ago, the stock of Roper Industries (ROP) went into the S&P 500. On the day of the announcement, the stock rallied about 4% and bounced around for the next few days. Two days before entering the esteemed index, the company announced it was going to undertake a share offering to coincide with the influx of demand from index fund managers. Going into the close on the day the stock went into the index (Tuesday December 22), there was a net imbalance of about a million shares to buy as index managers placed their orders to have proper weightings in their various funds. Yet, the stock plunged on the closing bell. Nobody is allowed to add to the side that the imbalance is published upon with market on close orders, i.e. after 3:45PM, nobody could place a market on close buy order in ROP, but people were still allowed to place sell on close orders. So, what likely happened is that someone (maybe the underwriters for the offering?) placed an order to sell the stock a couple of minutes before the 4PM ET NYSE close. This shifted the situation to a net sell imbalance with no notice. The stock plunged over a dollar on the close with the move resulting in a very profitable trade for many traders. The takeaway is quite important. First, be aware of which stocks and which days that stocks are going into and out of the indexes. I typically publish the list a few minutes before the close, but the information is readily available days to weeks in advance. Second, when playing index moves, always place buy and sell orders on the close well away from the last prevailing price because anything can happen at any time- and often does. As we all know, trading is hard. Thus, one must always be on guard for any potential opportunities- they can and do exist and can occur at any time.

Markets in Asia were down overnight with Tokyo leading the way down 1.3%. In Europe, the bourses are down ¾% to 1% across the board. The euro is relatively weak anew with commodities broadly lower as well about 0.5%. Futures are broadly lower as well on weakness in Greece as well as a series of poor earnings reports in the like of EBAY and QCOM. Look for widespread weakness overall today although the losses should be contained pending what the euro does. Focus on the very liquid earnings plays in particular along with relative strength plays as short covering will be rampant in select equities should they not fall with the market this morning.



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

DCTH- phase III trial exceeded primary endpoint expectations

NFLX- good earnings

SNDK- good earnings

CMG- good earnings

NE- good earnings

TER- good earnings

VRTX- good earnings

LEG- good earnings

CYBE- good earnings

STR- mulling spin-off of its natural gas and oil exploration production operations

S, ITRI, SHAW- featured on “Mad Money” last night

VMW- closed near a high after posting good earnings

UTX- closed near a high after posting good earnings

BA- closed near a high after posting good earnings

TUP- closed near a high after posting good earnings

PVH- closed near a high after posting good earnings

TPX- closed near a high after posting good earnings

CAS- closed near a high

CTT- closed near a high

ESV- decent earnings

HSY- decent earnings

MAR- decent earnings

Q- being bought out by CTL for .1664 shares of CTL in a stock-swap deal

CY- decent earnings

PNC- good earnings


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

EBAY- poor earnings

QCOM- poor earnings

AMGN- poor earnings

MEE- poor earnings

CTXS- poor earnings

NVLS- poor earnings

ACF- poor earnings

ISIL- poor earnings

CYH- poor earnings

PTV- poor earnings

HCBK- poor earnings

FFIV- poor earnings

FNF- poor earnings

LRCX- poor earnings

ADS- poor earnings

TEX- poor earnings

TSCO- poor earnings

GHL- poor earnings

LHO- poor earnings

BAX- terrible earnings

DO- bad earnings

KMB- poor earnings

NOK- terrible earnings

VZ- poor earnings

PM- poor earnings

BTU- poor earnings

PLD- poor earnings






Earnings:

THURS APR 22 BEFORE

ABC ALK ALXN

AN APD BAX

BBT BGG BTU

BX CAL CBE

CLS CY DHR

DO ESI ESV

FITB GNTX GR

HSY JNS KMB

LLL LTM LUV

MAR MNI NOK

NUE NYT PENN

PEP PLD PM

PNC RCL RS

RTN SHW SY

TASR TXT UNP

VZ ZMH


THURS APR 22 AFTER

ALGN AMZN AXP

BCR BUCY CAKE

CB CF COF

CYMI CYT DDR

DECK DOX EMN

FII IGT MSFT

NCR OSIP PMCS

RMBS RVBD STM

SYNA TCO TQNT

WDC


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

 

[erikrkolodny]

FRI. APR. 23- Relative Strength In A Strong Market

When the market is moving, relative strength plays and relative weakness plays can really be good. When there is a news event involved in an individual stock vastly outperforming or underperforming the market, relative strength plays and relative weakness plays can really really be good. When there is a news event involved in an individual stock vastly outperforming or underperforming the market on a given day with the market having a counter-trend day of its own, relative strength plays and relative weakness plays can really really really be good. This apex of a counter-trend day amidst a strong trend is a very powerful spot for trades- and a very rare thing at that. A number of conditions need to be present with the two main ones being a very powerful market and a very powerful counter-trend day on news. The reason this can become a ripe environment for traders is that emotions are higher than normal and if something doesn’t move on the counter-trend day, ‘real’ trend moves can become quite exaggerated. Yesterday was such a session. The broader tape has shaken everything off from Greece to the volcano to downright worries about the financial system. Yet the market was pounded yesterday morning on worries about the Greek situation as well as a number of earnings misses. Because of this, a number of stocks (particularly stocks with good earnings announced) opened weaker but trekked their way back toward unchanged on the session. Now here’s the thing- once these stocks got to unchanged- with the good news- it no longer really mattered what the market did because so many people were short them that they scrambled to cover once the stocks got positive. A partial list of these stocks that you can peruse at your leisure include: SHW, FFIV, MAR, ADS, and GR. Furthermore, stocks that have been strong got much stronger as the session progressed due to the sheer emotion of the shorts; some of these include AAPL, AMZN, WYNN, CREE, SNDK, BIDU, and CMG. The markets may have seemed quiet overall yesterday, but there was a tremendous amount of action underneath the surface. To participate in the action, it is so important to be aware of the newsflow out there…and to make sure that you pay attention to each of the sub-stories/stocks in addition to the overall market to get a picture of the relative strength of some of these beasts particularly in this environment.

Markets in Asia were down overnight with Hong Kong down 1%. However, as Greece agreed to take aid from their EU compatriots, things shifted in Europe with the bourses up from 0.8% in London to just over 1% in Frankfurt. The dollar is stronger against the yen, but surprisingly flat against the euro. That is the feature that will lead the way today as questions become raised about potential contagion effect in Europe as well as exactly what will happen next with the aid package. Futures are positive across the board on follow through from yesterday along with strength in some of the key financials. For today, follow the euro and follow the reactions of the earnings plays to their actual earnings. Track the stocks which had rampant short covering yesterday (many of which are highlighted below). From there, be very nimble but particularly play the stocks with earnings and relative strength/weakness albeit with smaller size than normal as stocks are gonna be moving.

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

AIG- closed near a high

AAPL- closed near a high

SHW- closed near a high after posting great earnings

WYNN- closed near a high

FFIV- closed near a high after posting great earnings

MAR- closed near a high after posting great earnings

CREE- reversed in closing near a high

SNDK- closed near a high after posting great earnings

BIDU- closed near a high

V- closed near a high

ADS- closed near a high after posting great earnings

NFLX- closed near a high after posting great earnings

GR- closed near a high after posting great earnings

CMG- closed near a high after posting great earnings

TXT- closed near a high after posting great earnings

SCSS- closed near a high after posting great earnings

URI- closed near a high after posting great earnings

MKSI- closed near a high after posting great earnings

ISLN- closed near a high after posting great earnings

DHRM- closed near a high as an IPO

TCK- closed near a high

MOS- closed near a high

BUCY- closed near a high

IOC- closed near a high

WDC- decent earnings

AXP- good earnings

COF- great earnings

SYNA- great earnings

RMBS- good earnings

RVBD- good earnings

CYT- good earnings

EMN- great earnings

ACTG- great earnings

CSTR- set deal with Universal and Fox to offer DVD’s 28 days after release

APWR- announced press conference for its Texas and Nevada facilities

JCI- decent earnings

PCX- decent earnings

ERIC- good earnings




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

QCOM- closed near a low after posting terrible earnings

DCTH- island reversal in closing near a low despite announcing positive drug data

SPSC- closed near a low as an IPO

ACUR- FDA Panel rejected ACUR’s Acurox

AMZN- poor earnings

MSFT- poor earnings

NCR- poor earnings

CYMI- poor earnings

PMCS- poor earnings

CAKE- poor earnings

FII- poor earnings

DV- poor earnings

BCR- poor earnings

STM- poor earnings

DDR- poor earnings

BUCY- poor earnings

ABFS- poor earnings

TRV- poor earnings

IR- poor earnings

WL- poor earnings






Earnings:

FRI APR 23 BEFORE

ABFS CMS COL

DOV ERIC EXC

FLIR HON IR

JCI PCX SLB

TASR TROW TRV

WL XRX



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

 

[erikrkolodny]

MON. APR. 26- The Strong Economy

I am as guilty as anyone of being a worrywart about many things. In the business world, I like many day traders have kept an eye on the Greek situation, geopolitics, and don’t understand how a nation having more debt than my little brain can comprehend is good for anything or anyone over the longer-run. Yet, the stock market continues to ramp higher. Most people are missing the basic picture. Let’s put aside the notion that the United States markets are a “bastion” for Asian investors worried about the Chinese property market or Europeans not know where to put money (which by the way is a two-pronged truism for what is occurring as foreigners are putting money into American markets). The fact of the matter is that in the immediate-term, the economy is improving. On Friday, we got data which showed that sales of new homes were up 27% in March (the biggest gain in 47 years) and orders for durable goods ramped higher as well. Now sure, I am well aware that the ending of a government tax credit on April 30 is helping to spur a rush into homes and do not deny the existence of the artificial jump but also know that the jump did indeed occur. But bookings for long-term owned things like industrial computers climbed 3%. Total orders did drop slightly, but was because of an artificial decline in commercial aircraft yet demand for things like car and truck parts rose sharply. So, ‘artificial” or not, the fact of the matter is that there is growth in the economy in the immediate-term (which is expanding). Thus, the markets haven’t cared whether it is government stimulated or not thus the sustained rise in stock prices for the past year.

Markets were strong overnight with the major Asian markets up around 2% (2.3% in Tokyo, 1.7% in Hong Kong). In Europe, markets are higher as well to the tune of about ¾% on average. Oil is up a bit over and above 85 a barrel with the euro a tinge weaker. Futures are quiet, but slightly higher. Big cap financials are mixed, but techs are stronger. For the day, look for a maintenance of the strength in somewhat quiet overall trading. But there will be tremendous action underneath the surface on some decent earnings flow (most companies reported good results), lots of merger activity, and some microcaps on the move once again.

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

MRK- closed near a high after announcing intra-day information of U.S. health care reform legislation

CHCI- among the small-cap homebuilders which closed near a high

SII- closed near a high

NFX- closed near a high

WFT- closed near a high

SLB- closed near a high after posting great earnings

DEAR, FMBI, STSA, FPBI, BAYN- among the small regional bank stocks closing near a high

WDC- closed near a high after posting earnings

UAUA- closed near a high

SLXP- closed near a high

CSNT- closed near a high

SOHU- decent earnings

HUM- decent earnings

WHR- great earnings

DRAD- received 510(k) clearance from the U.S. Food and Drug Administration (FDA), enabling the Company to market and distribute its ergo large field-of-view, general-purpose portable imaging system.

WX- being bought out for $21.25- 11.25 in cash and 10 in CRL stock

DTG- being bought out by HTZ for 41 including a cash dividend of 6.88, 25.92 in ash on close, and .6366 shares of HTZ

CAT- good earnings guidance

CRNT- decent earnings

DNDN- announced presentation of additional data from phase 3 IMPACT data

CHKP- decent earnings



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

BCR- closed near a low in an island reversal after posting earnings

AMZN- closed near a low after posting earnings

GS- closed near a low

CRL- buying out WX and poor earnings

RMBS- negative article in “Barron’s”






Earnings:

MON APR 26 BEFORE

ACV BLK CAT

CHKP EXP HUM

LO OSIS ROP

SOHU WHR


MON APR 26 AFTER

ACL AMP BSX

CNI ELX HMA

JEC MAS OMI

PCL PPDI RCII

SANM SLG TXN

UHS VECO WMS



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

 

[erikrkolodny]

TUES. APR. 27- Keeping Yourself In Check

As any person with any degree of intelligence, reason, logic, and some degree of wealth knows, going to Las Vegas or Atlantic City can be a pleasurable experience- win or lose. Both the Las Vegas Strip as well as the Boardwalk have been gentrified somewhat over the last few years, the restaurants and hotels have fine amenities if at the right place, and oh by the way- there are casinos. For those that love gambling, this is real paradise. But the main way to keep the average person from losing a tremendous amount of money much less ruining his/her vacation (or life for that matter) is to go into a casino expecting to win yet being well aware of how much money one is willing to lose if things go awry- and stick to it. I am loathe to compare day trading to any form of gambling because if one knows what one is doing, one can and will make money over time (which in fairness is true in gambling as well in games such as poker). With that in mind, even the experienced traders among us (certainly including me) are going to have a dreadful trading session every now and again. Just as with the Vegas analogy, one must go into each trading day knowing how much one is willing to lose- and stick to it so as not to blow out one’s account in one day much less one trade. I had a particularly bad day a week or so ago in which almost everything I picked out did indeed move…but not until I exited for a small loss yet on the three positions I held a little longer, they kept going against me. To my credit, I kept trying to fight it in thinking that I’d come back if I kept plugging away, but it was not to be. I hit my personal loss limit (something that happens on average two times a year) and stopped. I then paper-traded to keep myself fresh and build up a little rhythm for the next day (a day in which I gained back about half of what I lost- and all of it and more in two days). Had I kept trading on that losing day though, I don’t know what would have happened. And I don’t want to know. Thus, realize no matter what you do, sometimes things just won’t go your way; when that is the case, have a mental loss number and stick to it. Over the long run, you’ll save yourself a lot of mental anguish much less money.

Markets in Asia were mixed overnight with Tokyo up 0.4%, but Hong Kong and China both down about 2%. In Europe, the tone is decidedly negative as Wall Street failed to rally yesterday plus Greek and now Portuguese worries are on the front burner. The euro is decidedly weaker in danger of breaching 1.33 with oil off 1%. Futures are lower as well with earnings plays like TXN offered lower. Bellwethers GS and AAPL are also down again. Look for the weakness to maintain (and contain) itself unless euro weakness gets exacerbated. Trading will likely be slower than yesterday as people will be listening to the GS hearings starting at 10AM ET. Trade less frequently in quantity of trades today than in the last couple of days, but there will be opportunities so hit them as best as possible when you can.

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

RIMM- closed near a high after announcing they’ll be updating their web browsers for their new Blackberry OS

ASFN- closed near a high

FNSC- closed near a high

PPHM- closed near a high

LNY- closed near a high

RSH- decent earnings

TXN- decent earnings

CAVM- good earnings

SOA- decent earnings

PPDI- decent earnings

RCII- decent earnings

VECO- decent earnings

HMA- decent earnings

HMA- decent earnings

ICE, WFT- mentioned on “Mad Money” last night

CIT- good earnings

CMI- good earnings

DD- good earnings

KCI- good earnings

LXK- good earnings

MMM- good earnings

SWK- good earnings

TLAB- good earnings

UA- good earnings

WU- decent earnings


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

GS- closed near a low

CRL- closed near a low after announcing WX acquisition and posting poor earnings

PCBC- closed near a low

BANR- closed near a low

WHI- closed near a low

CSR- closed near a low after posting earnings

GOOG- removed from Recommendation List at Goldman Sachs

ELX- poor earnings

BSX- poor earnings

MAS- poor earnings

SANM- poor earnings

WMS- bad earnings

SWI- terrible earnings

AIG- rating cut by KBR with a price target of 6

AMED- poor earnings

EL- poor earnings

F- beat earnings estimates, but missed revenue estimates

KCI- poor earnings

NTY- poor earnings

UPS- poor earnings

ODP- poor earnings

TYC- poor earnings




Earnings:

TUES APR 27 BEFORE

ADP AGCO AMED

ASH AVY BEAV

BP CE CIT

CMI CVG DD

ECL EL ENR

F FPL HCP

HSP KCI LCC

LXK MHP MMM

NEM NXY NOV

ODP SWK TLAB

TYC UA UAUA

UPS VLO WAT

WU X

TUES APR 27 AFTER

AFL BRCM BWLD

BXP CENX DFG

DVA DWA FIS

FLEX LIFE MOLX

MTW NSC PNRA

RHI RRC



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

 

[erikrkolodny]

THURS. APR. 29- Focusing On The Best

If you were a huge Yankees baseball fan with no obligations and plans to go to sleep on a Friday night but were given free box seat tickets three hours before game-time to a Red Sox-Yankees game, you probably would make the effort to get out to Yankee Stadium. If you were a theater buff and you had plans to go out with a friend to a dinner but said friend received tickets to a Broadway show, you’d both go to the show. Even more specifically, if you really really really wanted tickets to either the game or the Broadway show, you’d be aggressive about it in trying to obtain the tickets from the Internet or the phone rather than just hoping a random friend comes up with them. Sometimes the hope comes to fruition, but usually when you’re not doing what you’re supposed to do, you miss out on the good opportunities by not being aggressive in doing what it is you are supposed to do. Such is the case with trading. It astounds me that when one is trying to trade for opportunities to make at least 20 cents easily in time that one would waste time looking at shares of things like Parametric Technology (PMTC) – a stock with a range of about 40 cents on the day- when things like GS and AAPL were flopping around in point increments while opportunities to make at least 20 cents relatively easily abounded in things like UIS, AIG, and PNC. This principle applies to all types of trading. Why hone in something that may work a little when one can do something bigger within any style of trading one wants to do? Time really is money. If you are staring at something that has next to no chance of working- and even if it does, it won’t provide a lot of benefit- you are simply keeping yourself from making a living. Thus, no matter what type of trading you do, make sure you focus on the true opportunities rather than spinning your wheels in wasting your time and money.

Markets in Asia were generally lower overnight with Hong Kong down about 0.8%. However, there was a distinct trend shift in Europe as hopes for a Greek bailout renewed themselves following statements from the German government with the bourses trading generally higher to the tune of about ¾%. Oil is nicely higher anew again with the euro gaining a bit of strength. Look for the market’s gains to hold pending anything major out of Europe. Focus on the myriad of earnings out there and trade aggressively off of news as long as the market remains somewhat stable.

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

CLF- good earnings

BIDU- phenomenal earnings

FSLR- great earnings

AKAM- great earnings

FTI- good earnings

OIS- good earnings

IRBT- great earnings

TSRA- good earnings

BEC- good earnings

OKE- good earnings

CPNO, MSO- mentioned on “Mad Money” last night

GS- closed near a high

SHPGY- decent earnings

PDE- decent earnings

AZN- decent earnings

AET- good earnings

CELG- good earnings

CNX- good earnings

IMAX- good earnings

IP- good earnings

LZ- good earnings

NIHD- good earnings

OMX- good earnings

OSK- good earnings

HOT- decent earnings

BWA- decent earnings

BMY- decent earnings



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

HPQ- acquiring PALM for 5.70 in cash

OPWV- terrible earnings

ETFC- share offering

SNV- share offering

ESRX- poor earnings

V- poor earnings

VAR- poor earnings

VRSN- poor earnings

WLT- poor earnings

XLNX- poor earnings

GMCR- terrible earnings

ALL- poor earnings

LNC- poor earnings

OII- poor earnings

RYL- poor earnings

SKX- poor earnings

OI- poor earnings

CERN- poor earnings

CVD- poor earnings

RDN- closed near a low

UIS- closed near a low after reporting earnings

AOL- closed near a low after reporting earnings

PPL- closed near a low after announcing acquisition of a German entity for $7 billion plus

OXY- poor earnings

CAGC- share offering

EK- poor earnings

PG- poor earnings

POT- poor earnings

PCBC- terrible earnings

XOM- poor earnings



Earnings:

THURS APR 29 BEFORE

AEP AET APA

AVT AZN BC

BDX BMY BWA

CAH CAM CELG

CL CME CNX

D DLR EK

ETR FO HAR

HOT HP IMAX

IP IPG IRM

K KBR LZ

MJN MOT MRO

MYL NBL NIHD

NRG OCR OMX

OSK OXY PDE

PG POT PTEN

RAI SHPGY SWY

TEN TWC UTHR

VCI WM WY

XEL XOM XRAY



THURS APR 29 AFTER

ACS AEM AMCC

AMX APKT CQB

CSTR DRIV ELY

EXPE GNW GPRO

HGSI HIG ITMN

JAH KLAC MET

MFE MHK MWW

MXIM QLGC RSG

SPWRA SQNM SUN

SWKS SWN TRMB

TSO VSEA WFR

WYNN



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