TUES. JAN. 6- Bor-ing

Well, the new year has started and…ho-hum. Volume yesterday remained very lackluster and the general malaise that has overtaken the markets trading-wise over the last few weeks continues. There are a few reasons for this. First, a lot of people are just coming back from several days if not several weeks of vacation so it takes a little time for traders to figure out exactly what they want to do. Next, many people are still on vacation. As the father of two very young daughters, trust me when I say one of the best times to go to Disney World is the first week in January. The weather is picture perfect and the crowds of winter break kids are not there. There are many travel deals out there thus there are many people simply not at that desks yet. The third reason is that few people have any conviction in their thoughts as to what the markets will do this year much less this week. The war between those who think the worst is behind us and those who feel things like GM and Madoff can continue to sink the market is causing a stranglehold in activity as there is no confidence anyway. Finally, there is still a relative dearth of news. Earnings season does not start for a couple of weeks and few companies release major news the first week back. So, as we enter a busier time (as soon as Friday when the unemployment report is issued), tiptoe back into the trading arena, but be aware that this light volume environ will likely continue for a few more days.

Markets throughout the world continued to rally overnight. Asian markets were up around 2% across the board with European bourses up 1% or so. With oil up one more time again, prices state-side are up as well. Yesterday was a prime opportunity for a sell-off and when none happened, it has given some people a bit more of an impetus to get back in. Look for the gains to hold overall as there just is no real selling pressure out there, but in relatively placid trade.


Watch list:
162009Eriklist.zip

Reiterating-If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf 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

IDEV- being bought out by ENDP; unique structure…$4.50 in cash plus up to $3 more based on (vague) regulatory milestones…could be particularly interesting in the pre-open as people try to figure out the true value of this deal

MOS- beat on earnings, but said forward guidance is ‘weak’

MEA- very strong; looking for continuation thru Monday 2.79 high

CTDC – has doubled in two days; looking for more momentum to the upside today with an A-B-A2 preferably through 3.80, but ignore this if the stock is trading lower

SQNM- up huge yesterday; looking for buy thru 23.56 Monday high

ACAS- up strongly yesterday; looking for more momentum thru 5.39 Monday high

LNC- broke out; looking for more momentum thru 22 Monday high

WLL- very strong yesterday; looking for buy thru 43.30 Monday high

HPQ- on “Mad Money” last night

DOW- announced it is going to launch a lawsuit against Kuwait to restore its joint venture; also announced a series of capital preservation measures

OREX- received patent approval on its phase III product

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

LDK- warned badly after-hours; should lead entire solar sector down, including STP, SOLF, FSLR, SPWRA

ENDP- acquiring IDEV; story described above

ELX- warned on earnings

IMN- warned on earnings

ICE- trounced yesterday; if it opens higher, looking for short thru unch..if it holds, A-B-A2 to upside…it wad downgraded this morning, however.

RCRC- very weak; looking for continuation short thru Mon’s low of 7

ALL- among other insurers downgraded

NUE- downgraded


Earnings:

TUES JAN 6 BEFORE

AYI

TUES JAN 6 AFTER

FINL GPN RECN

Good luck today.

http://www.epiphanytrading.com/

Erik R. Kolodny- Chief Markets Strategist of Epiphany Trading, LLC

Epiphany Trading's Pick of 2009 Pool

For fun, bragging rights and a full dinner for 4 at Scalinatella Restaurant @ 201 E61st in NYC. For those who live outside of the NYC area, we can substitute with your favorite local restaurant.

We invite the members of Facebook's Wall Street Alumni and Epiphany Trader's Room to visit our blog, www.EpiphanyTraderBlog.com to post your best pick for 2009. We will have a special posting for this contest. As results will be the total percentage gain for 2009, we are allowing you till the closing bell on January 5, 2009 to make your picks. You can chose a LONG or a SHORT.

Epiphany Trading, LLC wishes everyone a Happy and Healthy New Year!!!

Please leave a comment below with your name or initials with your best pick for 2009.

MON. JAN. 5 - Resolution Time

In the late 1980’s, when the Japanese management style was all the rage, an image that was repeatedly shown on TV was that of groups of Japanese traders standing in a room at the Tokyo Stock Exchange and doing jumping jacks before the opening of the market. Always at the beginning of the trading years, the phenomenon was prominently shown on television networks and discussed on morning business and news shows. It extended over to many American workers doing jumping jacks in clusters in such places as parking lots. This rather wordy beginning leads to a point. I’m not suggesting at traders do a ton of jumping jacks eight minutes before the open to get the blood flowing (although it is not really a bad idea). However, there is a correlation between profitable trading results and traders who have disciplined routines much less undertake some preparation before the opening bell rings. All else equal, I wake up around the same time each workday morning. I do some light preparation for the day from home (checking foreign markets and the top business stories overnight, et al). Then, I arrive at work at almost the exact same time every day. From there, I dig into my research, earnings searches, blog typing, and so forth. If I arrive, say, an hour late, I feel anxious and find myself totally unprepared as I rush to get everything done. Now, not everybody needs the structure that I for one crave and follow, but the other extreme are the people who come in with no preparation at random times. Typically, these type of traders nearly haphazardly –even randomly- put some trades on just after the bell, lose a little, and then spend the rest of the day scalping to try and (usually fruitlessly) put some money in their pockets. So, make it a resolution to simply follow a general routine and study up on the main stories of the day…and follow it daily.

Watch list:

1052009Eriklist.zip

Reiterating-If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf 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

DRYS- very strong along with dry bulk index on Friday

GHM- closed near a high; looking for momentum thru 12.76

AEH- closed near high; looking for buy thru Fri 12.35 high

RIG- closed near high; looking for momentum thru 52.32 Fri high

SOLR- closed near a high; looking to buy thru Fri. 3.65 high

LMDIA- strong Friday; looking to buy thru 19 Fri high

NIHD- closed near high; looking for A-B-A2 thru 21.48 Fri high


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

SNH- suffered a weird reversal in uptrend; looking to short thru 16.38 Fri low

CNMD- warned on its outlook

NAV- warned on its outlook

Earnings:

MON JAN 5 BEFORE

NAV

MON JAN 5 AFTER

MOS

Good luck today.

www.epiphanytrading.com

Erik R. Kolodny- Chief Markets Strategist of Epiphany Trading, LLC

Happy New Year...Or Is It?

So, we’ve now shaken off the cobwebs of the New Year’s parties and flipped the calendar over to 2009. Now what? Well, first, don’t expect many answers today as the crowds of traders take one more day off and maybe not even next week amidst a relative dearth of news. There are two main schools of thought (and far be it from me to pick which one is accurate; after all, I am merely a day trader yet would like a framework from which to work from). The good one first- 401k money piles in as January starts. The market shook off bad news at the end of last year. Oil prices are low which like a small tax cut for the American taxpayer. And the system is stable as the spate of bankruptcies has stopped. Thus, the market maintains its year-end rally and keeps going. Or. Money managers get back from their holidays and discover the Madoff fiasco has impaired their funds thus starting a new round of hedge fund selling. The GM crisis fails to ease with it trending toward zero by the end of the month. Banks continue to fail to lend money the way they need to be doing so. Worries about inflation begin creeping in. So, what’s the answer? Haven’t I already addressed that? I am a day trader and day traders do not need to worry about such heady things when focusing upon the immediate-term. Yet, I do simply because I abhor when someone comes to me and says things like “I don’t get it; the market was up XYZ points today…why did that happen?” First, it does not matter. But second, it is because one of the two aforementioned described scenarios is playing out. For 2009, it will likely be a bit calmer than 2008 as the VIX has tumbled more than 50% from its high, but there is still plenty of good trading to be had. It'll likely be noted for its lack of financial surprises all else equal as opposed to the financial bombshells of '08. So, always remember the macro, but focus upon the micro in terms of trading for the day if your focus is as mine in deriving an income over what will happen over the next 2 ½ minutes rather than the next 2 ½ years.

.Markets in Asia were up very nicely overnight and this spilled over to Europe with the main bourses up about 1% there. However, oil is off dramatically and the dollar is notably stronger this morning. Thus, markets will likely open a bit higher future-wise eaely on via hope if nothing else that 2009 is gonna be a good year, but I don’t think it holds. Look for choppy trading on thin volumes as Monday is the first real day of trading in ’09, but there will be pockets to trade- focus on those pockets only…scalping will not work whatsoever today.


Reiterating-If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf 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

BLTI- exploded into close; if/when it approaches the 1.49 close, buy thru unch

CNO- closed strong; likely a buy thru Wed close of 5.21

PNX- closed near a high; looking to buy via A-B-A2 and/or thru Wed’s. 3.47 high

XTXI- closed near a high; looking to buy thru 4.09 Wed high

TBBK- massive rally the last two days; looking for buy thru unch if it opens at or below unch at 3.75; otherwise, A-B-A2 to the downside on what seems to be a window dressing situation

HPT- strong on Wed.; looking to buy thru Wed 14.99 high when/if it gets there

LRY- strong on Wed.; looking to buy Wed. 23 high when/if it gets there

ALY- closed on high on big uptick; looking for A-B-A2 to downside in the vein of NLC on Wed.

CTDC- received a contract to build a power station

DRYS, EXM, EGLE, GNK- dry bulk shippers up on nice gains in the dry bulk index overnight in Asia

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

WFC, PNC, BAC- all sold off dramatically after Wednesday’s close; these things are likely buys particularly in the pre-open…sold off as MER, WB, NCC came out of the S&P indeces so theoretically it sparked some artificial selling in these new parent companies

SCG- offering 2.5 million shares at 35.50; if it opens below the offering price and tries to rally, it is likely a buy thru 35.50 as it’d shoe the offering is priced into the stock

Earnings:

None today

Watch list:
122009Eriklist.zip

Good luck today.

www.epiphanytrading.com

Erik R. Kolodny- Chief Markets Strategist of Epiphany Trading, LLC

WED. DEC. 31- The End of '08

The last day of the trading year can sometimes be quite interesting. Usually, the last day of trading acts like the previous 5-10 business days thus it is likely to be quiet today as well, but one never knows. There are two main forces at work today which the straggler money managers as well as many retail investors contend with. First, there is the ‘wash rule’ phenomenon. A ‘wash sale’ is defined as the purchase and subsequent sale of a security within a short period of time. Most importantly, sales which take place within 30 days of the underlying purchase do not afford ordinary taxpayers to take a loss on their tax return unless using mark-to market accounting. Thus, if someone who is not a trader by career choice owned 1000 shares of SIRI from 8 and sells the shares at 0.10 on December 31, 2008, he cannot get credit for the tax write-off if he were to buy SIRI before January 31, 2009. Exiting the dense explanation, what this oftentimes mean is that retail investors push down weaker stock performers in 2008 as it is the last day to sell the stock to get the loss credit. Furthermore, many try to worm their way around the wash rule in establishing a similar position (i.e. selling a long position in SPY, but going out and buying DIA) thus some strange machinations can occur in many lower-priced stocks. The other major force today is that there is a great deal of ‘window dressing’ going on by the stragglers among the big-name money managers. Window dressing is a strategy employed by many money managers to improve the appearance of their funds before presenting results to their clients. The most common ways they do this is in dumping their worst performers so as to not show where their investments occurred and even more sinister is that some of these characters buy up shares of strong yearly performers and/or illiquid stocks to boost performance. Their buying alone can sometimes spark an inexplicable rise in a stock. So, again, some years are better than others for these forces, but be on the lookout today for some very whipsaw action, particularly in some smaller-priced stocks.

Markets throughout the world were up about 0.5% to 1% across the board. Oil is substantially lower and the bond market quiet. Today will be a little different in all likelihood than the other days this week. Markets will still be quiet, but a bit more active as some money sloshes around. Look for very choppy trading at the beginning and end of the day with a flat middle, but again, there will likely be some more volatility today than has been present throughout much of the 2nd half of December.

Reiterating-If the whole story is not there -If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf 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

NFP- rallied very hard amid news that its merger should go through; looking for a buy thru 3.16 Tues high

SOL- very strong all day yesterday; want A-B-A2 buy off of open if it sets up correctly

SFN, ZINC- mentioned by some analyst on CNBC late last night; may be in play because of that

TSL, JASO, STP- very strong despite cousins like APWR warning

GS- very strong yesterday; may be in play today on window dressing

NLC, IEX- closed violently higher on last second ticks

CWST- closed sharply higher near a high; looking for continuation of momentum

IOC- found gas at a well in Canada

NAV- out with earnings early…decent enough numbers on the surface

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

WTR, PLL – closed sharply lower on last second ticks

AHR- announced a slashing of dividend and restructuring after-hours yesterday

Watch list:

12312008Eriklist.zip

Earnings:

None today



Good luck today.

www.epiphanytrading.com

Erik R. Kolodny- Chief Markets Strategist of Epiphany Trading, LLC

TUES. DEC. 30- All Is Quiet Near New Year's Day

There are a few unique features which tend to occur only around this time of the year amidst the reference to the U2 song in the subject title. One of the more prominent features which the day traders that are around tend to love is the reaction to the CNBC chatter. Most institutional players either are away or have little interest in trading this time of year so the pool of participants is different. The retail investor becomes a much more prominent player in immediate-term stock movement. Many people are home from work and have nothing better to do so they put on their retail stock accounts at bigger name places like E-Trade or Ameritrade and spend the day in front of their computer terminals. Thus, moves can occur which usually do not simply because volume is driven by these smaller players. On Friday, for example, Amazon (AMZN) said at 8AM ET that it had its highest volume holiday season ever. It did not mention numbers nor did it mention earnings. Plus, I got an e-mail message in my in-box around the same time with the tag line “Up To 70% Off Year-End Deals” from AMZN which indicates to me that gross margins may not be so hot on these record sales. Yet, CNBC reported the headline at 8:28AM (20 minutes after the story broke, mind you). Often-times, there is a bit of a CNBC ‘bump’ in which a stock will move a little after a commentator touts whatever positions has and/or recommends and the stock goes right back down. Not AMZN. AMZN –already up a bit over a dollar- ran a full 2 ½ more points! And it held for awhile before coming gradually back to Earth over time. So, two points here: 1) keep your ears peeled to CNBC the next few days because this whole retail trade concept is in full effect and 2) in the illiquid conditions, stocks can and likely will move much more than you can begin to imagine due to the plethora of retail customers and the lack of the ‘big money’ players.

Markets remain muted throughout the world. Prices were generally down a fraction of a percent in Asia and up 1% or so throughout continental Europe. Same schpiel today- markets will likely be quiet again amid a dearth of news and participants with an upside bias. Pick entry spots carefully.


Reiterating-If the whole story is not there -

If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf 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

HOKU- receiving financing from U.S. Bank and a fund advisor for solar power projects in Hawaii

GM- GMAC received TARP monies last night


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

DOW- potential for follow-through on yesterday’s atrocious news; looking for short thru 14.93 low

MAC- hit very hard yesterday; potential follow through with an entry point of yesterday’s 16.58 low

CAB- one of weakest stocks yesterday; looking for continuation short thru yesterday’s 4.90 low

SFI- looking for continuation short thru Mon.’s 2.10 low after closing near a low

RZ- closed near a low; looking for continuation short thru Mon.s’ 4.22 low

Earnings:

None today


Watch list:

12302008Eriklist.zip

Good luck today.

http://www.epiphanytrading.com/

Erik R. Kolodny- Chief Markets Strategist of Epiphany Trading, LLC

MON. DEC. 29: Slowdown Stretch

These are the volumes for the last several trading days of the QQQQ instrument: 172.1 million, 160 million, 142.8 million, 118.3 million, 95.4 million, 68.8 million, 27.2 million, 20.9 million. The pace of trading has not just slowed down these last few days; it has completely collapsed. On the day before Christmas (a half day of trading), the QQQQ traded just over 15% of what it had traded. On Friday (a full day of trading), the volume was less than it was on Christmas Eve! What does this tell you? Not only are people exhausted, they just did not want to trade last week Many people have gotten hit horribly from a financial standpoint this year and nobody wanted to be around. This week started out just the same. There is no point in extrapolating deeply in this except to quote from that esteemed stock market guru, Kenny Rogers in his song “The Gambler: ”You got to know when to hold ‘em, know when to fold ‘em, know when to walk away, and know when to run.” Well, this is one of those stretches in which the best choice has been to ‘walk away.’ Yet, most day traders are programmed to sit in front of their computer screens and push buttons. Why? There are so many better things to do whether the mundane like Internet surfing to the important like paying bills if you happen to be stuck at your desk. It is absolutely astounding to me that trading volumes for many day traders are almost the same during this stretch even as the level of activity is ostensibly nonexistent on the NASDAQ. All of this said, a)trading is still OK in pockets. Microcap stocks are having gigantic moves when the conditions are right. Witness JRT on Friday which went to 1.40 after stagnating all morning between 88 cents and 98 cents as an example. B) The past is not necessarily indicative of the future. It is still wise to pick spots in this terrible day trading environment, but there may be a bit more to do this week as the last of the year can be ripe for opportunities. Those big players left around are doing some window dressing as well as positioning for next year so things can be pushed around rather easily. Thus, be particularly nimble, but on alert for the opportunities that do present themselves.

Markets throughout the world rose overnight; Asian markets were barely positive, but markets in Germany and Britain were both up over 2%. Violence in the Middle East has sparked a rally in oils and metals thus a sharp rebound in shares in those sectors have helped propel overall averages higher. It is likely that the same type of action will occur state-side. Overall, markets should be listless, but strength in the commodities will help net-net. Look for another quiet session with a slight bias to the upside, but again, an environment in which it will be relatively difficult to put significant positions on.


Reiterating-If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf 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

JRCC- closed near a high; looking to buy thru Friday’s 14.47 high

JNY- closed near a high; looking to buy thru Friday’s 5.66 high

GASS- closed near a high; looking to buy thru Friday’s 3.95 high

ALD- closed near a high; looking to buy thru Friday’s 2.90 high

NUE/X- among the steel stocks which closed near a high

LZR- closed on a high; looking for continuation thru 7.71 close

GNK- strongest of the dry bulk shippers; looking to buy thru 13.17 after strong Friday close

JAG- closed near a high; looking to buy thru 4.71 high

OCLS- closed near high; looking to buy thru 1.60 Friday high

NYT- inexplicably rallied Fri afternoon; looking to buy thru 7.03 Fri high, but more likely an A-B-A2 to short side

LINE- positive mention in “Barron’s”

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

SIVB – just no life here; looking for a short thru 24.15 when/if it gets down there

DOW- called off gigantic endeavor with Kuwaiti government; worries about its merger with ROH will be in the headlines as much of the financing of the takeover was to be from the Kuwaiti proceeds although both companies insist the merger is still on

CALM- missed earnings

Earnings:

MON DEC 29 BEFORE

CALM

MON DEC 29 AFTER
None

Watch list:

12292008Eriklist.zip

Good luck today.

www.epiphanytrading.com

Erik R. Kolodny- Chief Markets Strategist of Epiphany Trading, LLC