Epiphany Trader Blog

[Epiphany Trading]

Abbott and Costello. Laverne and Shirley. Batman and Robin. If you cannot tell, the theme for today’s piece is pairs. Pairs trading was very much in vogue during the late 1980’s in particular. The concept of ‘pairs trading’ was started by a quantitative analyst from Morgan Stanley named Gerald Bamberger in the late 1980’s. Bamberger discovered that certain equities- particular in the same sector if they were direct competitors- tended to correlate in their day-to-day price movements. For instance, KO and PEP and F and GM are but two famous pairs. To this day, pairs trading is often done with the thought that if a spread between two particular equities gets too wide, the spread comes in, i.e. if PEP rallies, KO should rally as well. The problem for day traders, however, is two-fold. First, there can be a lot of noise intra-day. Spreads can widen and come in intra-day seemingly randomly so it makes it hard to game the system. But the second issue is of more import- one must pick the right pairs. For instance, if one traded Reebok and Nike some time ago (or DELL and IBM most recently), seemingly equal competitors can diverge rapidly, i.e. Nike became the dominant shoe entity while IBM dwarfed DELL. Which brings me to my point: many traders recently have been trading GS and MS together along with the banks as a whole together. And much more often than not, if one is rallying, some of the others in the sectors do not necessarily catch up. This is because of the aforementioned two points: we may well be witnessing – namely the weak are separating from the strong in the financial sector and things are vacillating wildly intra-day. Namely, just because GS is rallying does not mean MS will and vice versa; indeed, MS posted poor earnings on Wednesday and traded down much of the day while GS actually rallied. Daily epiphany: do not overthink things. Keep up with the macro of course, but know that buying a competitor blindly when day trading does not always fellow common sense logic.

Markets in Asia were lightly mixed overnight with Tokyo down 1% and Hong Kong up fractionally. Markets were stronger in Europe with prices up 1% to 2% across the board. State-side, MSFT and AMZN are helping to lead a charge in techs while other sectors are following in lockstop albeit less so in relative terms. With it 70 degrees and sunny in New York tonight, look for a much slower day as traders file out early. But, we should have a marginally higher open. From there, there seems to be a ceiling in the short-term amid worries about the stress test results yet nobody wants to sell anything either in case the results are good. Ergo, we get stuck and that is probably what happens today…a tight range-bound trading market with individual stocks totally utterly the way to go. The bias is to the upside unless shown otherwise, but watch for the 2PM announcement about how the test was conducted as well as any leaks about stress test news.



Reiterating-
Please understand that if the ideas do not get to the hoped for set-ups cited below, more often than not, one should not blindly trade the symbol next to said idea.
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 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

AMZN- good earnings

MSFT- in-line earnings, revenue miss, but stock rallied after-hours

MHK- positive earnings guidance

AXP- good earnings

BNI- good earnings

JNPR- good earnings

CAKE- great earnings

WDC- good earnings

ALGN- good earnings

STAR- good earnings

RVBD- good earnings

PMCS- great earnings

DV- good earnings

NTY- good earnings

CF- good earnings

SYNA- good earnings

FIG- closed on high of day

COF- closed near high of day

CPHD- good earnings

BUCY- good earnings

SKT- good earnings

LVS- mentioned on “Fast Money” last night

PH- mentioned positively on “Mad Money” last night

OFG- good earnings

F- good earnings

HON- good earnings

SLB- good earnings

WL- good earnings





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

NFLX- bad earnings guidance

SPWRA- weak earnings guidance

AMGN- poor earnings

WFR- weak earnings

IBKR- terrible earnings

CNW- bad earnings

DECK- warned on its outlook

EZPW- poor earnings

SWKS- bad earnings

ORI- closed near low of day

SD- doing a share offering at 7.60

MMM- bad earnings

ACI- bad earnings

Earnings:

FRI APR 24 BEFORE
ACI CYH F
HON IDXX IPCR
ITT KMT KTC
MMM PNK SLB

SWK WL XRX




Good luck today.

Erik R. Kolodny


www.TheModernStockOperator.com
www.EpiphanyTrading.com
www.Blog.EpiphanyTrading.com
www.ErikKolodny.com

[Epiphany Trading]

http://www.blog.epiphanytrading.com/


Epiphany Trading Conference May 16, 2009 Red Bank, NJ
Epiphany Trading Conference May 16, 2009 Red Bank, NJ
EPIPHANY TRADING LLC. TRADING CONFERENCE

Saturday May 16th, 2009

Two River Theatre, 21 Bridge Avenue, Red Bank, New Jersey

From 10:30 am to 3:00 pm

Networking Social Gathering Sponsored by Epiphany Trading LLC Post Conference at the Dublin Pub,30 Monmouth Street, Red Bank , New Jersey

Fee $200.00

Feature Speaker : Steven Nison , Founder and President of www.CandleCharts.com , who provides premier educational and advisory services using Japanese Candlestick Charting Techniques.

Erik Kolodny- Chief Market Strategist, developer of the Epiphany Trading Method

Brendan P. Byrne- Founder & President of Epiphany Trading, LLC

Frank Delaney- 25 years of Trading and Money Management Experience in Equities and Futures. Previously partner Bear Wagner, a NYSE specialist.

Ruth Palacio- Clinical Coach and Training Consultant at Palacio Consulting LLC. Ms. Palacio will discuss the emotional triggers of trading and how to use them as a positive tool in your every day trading.

CHECKS: Mailed to EpiphanyTrading LLC., 133 East Main Street, Babylon, NY,11702

Thursday, April 23, 2009
THURS. APR. 23- Oil Still Exists?
Yesterday for the first Wednesday morning in quite some time, there was something I did not do: halt everything and stare at my computer terminal at 10:30AM for the weekly oil inventories report. From the positive perspective, it is shows how little oil is correlated with the market these days because I didn’t think to look plus my focus was elsewhere. From the negative perspective, well, my focus was elsewhere and I didn’t think to look. Let’s briefly discuss both points. As far as oil is concerned, everyone tracked oil at this point last year to the point where many trading operations did their trades with a darn near inverse tick-for-tick oil to S&P 500 futures mindset. It is almost impossible to believe, but it is still less than a year that oil was selling for over 100 dollars a barrel higher than it is now. As time went on, the correlation swung the other way; falling oil prices were viewed as a negative for the worldwide economy. Thus, for awhile, as the market rallied, so would oil and vice versa. But now? Now the markets are much more focus on things like the survival of the banking system with oil way on the backburner. Moral 1: don’t stare at oil on any given day right now for clues as to where the market goes. As for the second point, even though it is not good to stare at oil prices, it is also not good not to glance either. As traders, we must be attuned to every piece of news there is that can move markets; it is why I tend to be so very busy during earnings seasons. While information overload is not good obviously, I do what I can to simply keep up rather than try to know every piece of minutia. And the fact of the matter is that a particular bad or good oil report can provide a jolt still because of the whole ‘world economy’ paradigm in that building or declining inventories can signal the temperature of the economy. Thus, moral 2: don’t repeat my mistake; indeed, oil prices broke fairly hard right at 10:30AM yesterday and it was an opportunity missed. One must keep up with every major piece of news (even oil news) because one never knows where the next trade may exist.

Markets in Asia were up a bit overnight with the Nikkei up over 1% and the Hang Seng over 2%. The European bourses are generally up slightly with the DAX down slightly. State-side, futures are up a bit with techs leading the way; there seems to be no real reason for that to change despite yesterday afternoon’s freaky sell-off. I am looking for a grinding generally upside session with the best trades coming in techs and the myriad of earnings plays out there.


Watch list:
04232009Eriklist.zip

Reiterating-
Please understand that if the ideas do not get to the hoped for set-ups cited below, more often than not, one should not blindly trade the symbol next to said idea.
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 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

AAPL- good earnings

EBAY- good earnings

QCOM/BRCM- on verge of finally announcing settlement

NUVA- great earnings

CMG- terrific earnings

YUM- great earnings

EFX- good earnings

PTV- great earnings

TSCO- good earnings

ABMD- received 510k clearance on its lead device

WGOV- good earnings

NE- good earnings

FMER, TOL- featured on “Mad Money” last night

DOX- decent earnings

XLNX, NVLS- decent earnings

DO- good earnings

FITB- great earnings

HSY- good earnings

MAR- good earnings

NIHD- good earnings

PNC- good earnings

RTN- good earnings

STI- good earnings

ZMH- good earnings

RSH- good earnings

ESI- good earnings

OXY- good earnings

NVS- good earnings

RCL- good earnings

UNP- good earnings

JBLU- great earnings

LCC- good earnings

MI- good earnings

COP- good earnings

DLX- good earnings

EXC- good earnings

ABC- good earnings


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

BCR- poor earnings

VMW- atrocious earnings

FFIV- poor earnings

TMK- poor earnings

LRCX- bad earnings

WCN- closed near a low

ARE- closed near a new trend low…scary considering most other REIT’s are well off of their lows

SVR- closed near low of day

CVA- closed near low of day

RJF- bad earnings

BG- bad earnings

NCR- bad earnings

POT- lowered guidance

TMO – bad earnings

ALXN- bad earnings

CIT- bad earnings

BDK- bad earnings

NOV- bad earnings

HSC- bad earnings

Earnings:

THURS APR 23 BEFORE
ABC ALK ALXN
AN AUO AVT
BDK BG BHE
BLL CBE CIT

CLP CLS CME

COP CP DHR

DLX DO EMC

ESI ESV EXC

EXP FCF FITB

GDI GMT GR

HSC HSY IGT

IVZ JBLU JNS

LCC LH LLL

LTM MAR MI

NCR NFX NIHD

NOV NUE NVS

ODFL OMTR ORI

OXY PENN PEP
PM PNC POOL
POT RCL ROP
RS RTN RX
SCG SEIC SIAL
SPWRA STI SU
SVU TASR TCB
TMO UCBI UNP
UPS VLY WCC
WTNY ZMH
THURS APR 23 AFTER

ACF ALGN AMGN
AMZN ATHR AVCT
AXP BNI BUCY

CAKE CATY CB

CF CNW CPHD

CYBS CYN DDR

DECK DFG DV

EMN EZPW FII
FNB GBCI GRA
IBKR INFA INSU
JNPR KLAC MHK
MSCC MSFT NFLX

NTY PMCS RMBS
RVBD SIVB SKT
STAR STSA SWKS
SYNA WDC WFR
YRCW


Good luck today.

Epiphany Trading, LLC

www.epiphanytrading.com

Erik R. Kolodny- Chief Markets Strategist

Brendan P. Byrne- President

[Epiphany Trading]

TUES APR. 21: Stress Test Causing Stress
So what was the main culprit behind yesterday’s major declines for Wall Street? Something that was discussed in this space late last week- stress test worries/rumors. For those who did not read the piece, the Treasury is supposed to announce the results of the stress tests for the country’s largest 19 banks on May 4. The date was originally supposed to be earlier, but government officials decided to wait until after earnings season. Thus there is a lot of posturing at this point. The latest rumor yesterday along with BAC warning of deteriorating credit quality much less a “Wall Street Journal” article pointing to the same credit extension fears was that the Obama administration may convert some of the preferred shares it obtained via bank bailouts into common stock once the stress tests are finished. Such a strategy would give the government the flexibility to have greater control over the banks without necessarily pumping in additional monies yet would dilute existing common stocks of the banks. Basically, if all of the banks pass the stress tests, the credibility of the tests will be questioned yet if some banks fail, they will need additional capital and the entire sector would likely be ravaged by investors much less bank clientele. Thus, the mere whiff of the aforementioned thought of conversion of stock is kind of a ‘backdoor/lukewarm’ de facto nationalization which would be horrible for the bank stocks as socialist tendencies creep in and the current shareholders see the values of their shares get diluted. This plausible and possible thought process was floated to the public by reports by various news services over the weekend (particularly the “Financial Times”) which set the stage for the negative reaction yesterday. Thus, again as noted last week, you’ve got to keep your eyes to stories/rumors about these stress tests because markets will move on any given day by any given rumor right about now.

Overnight, markets in Asia fell about 2.5% on average following up on Wall Street’s poor performance. In Europe, prices are hovering just south of the unchanged line with the German DAX down ¼% as of this writing as an example. Oil is bouncing back a little after its mammoth fall yesterday with bonds up slightly as well. As for today, look for a very choppy session with trading on both sides of unchanged albeit more to the downside overall with the poor banking news out there. The two forces at stake here are the fact that the markets did not break on IBM’s earnings last night showed strength yet the newsflow is not good and there will likely be follow-up to yesterday. Thus, look for an all out battle today; more than most days, pick selected spots and do not overtrade.

Watch list:
04212009Eriklist.zip

Reiterating-
Please understand that if the ideas do not get to the hoped for set-ups cited below, more often than not, one should not blindly trade the symbol next to said idea.
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 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

WAC- closed near a high on first day of trading

TXN- beat earnings estimates

BSX- solid earnings

HWAY- good earnings

PKG- great earnings

SCON- amazing run continued yesterday; closed just off of a high

NTG- recommended on “Fast Money” last night

MICC- good earnings

JEF- beat earnings estimates

COH- good earnings

LMT- good earnings

SCL- good earnings



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

BXP, VNO, AVB, SPG, CBL- among the REIT’s which closed near their lows of the day

COF- one of biggest percentage NYSE lowers amid scrutiny over its credit portfolio

LEN- smashed yesterday in closing near a low after they indicated they needed to raise capital to pay off debt

IBM- beat earnings and raised guidance, but revenues were weak…some analysts worry about quality of earnings; indeed stock traded down most of after-hours yesterday

ZION- atrocious earnings

SYK- poor guidance on earnings

REG- cut guidance slightly and announced a share offering will take place between 32-33 per share

JDAS- warned on earnings guidance

KRG- closed near its low of day

MAC- closed near low of day

FIC- closed on the low of day

SLG- massive reversal; closed near a low

BAC, JPM, WFC, USB, STT, PNC, C, MS, GS- among the banks/financials which closed at or near their lows after the stress test worries discussed in yesterday’s blog

HIG, PRU, MET- among major insurers closing at or near lows of day

BK- poor earnings and cut dividend

DD- bad earnings outlook

JCI- poor earnings

MRK- missed quarterly estimates

CAT- smashed earnings, but warned on outlook

KO- met earnings, but missed on whisper number

NTRS- atrocious earnings

HBAN- wretched earnings

EAT- poor earnings

BRCM- decent earnings, but acquiring ELX

RF- poor earnings

BJS- poor earnings





Earnings:


TUES APR 21 BEFORE
AKS ALGT ALV
AME AMTD BJS
BK BLK BPOP
CAT CMA COH
CSL DAL DD
DGX EAT EDU

ELS FRX HBAN
JCI JEF KCI
KEY KO LMT
LXK MAN MICC
MRK MTB NTRS
NYT PNR RF
SGP STT TRA

UAUA UNH USB
USG UTX WBS
WU
TUES APR 21 AFTER
ALTR AMD AMP
BRCM CBST CENX
CHRW COF CREE
CYMI FULT GILD
HCBK ILMN INFN
MOLX NBR NSC
PPDI SFG SNDK
STX TEX TUP
WCN WMS YHOO


Good luck today.

www.TheModernStockOperator.com "The Modern Stock Operator"

Epiphany Trading, LLC

www.epiphanytrading.com

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

[Epiphany Trading]

Epiphany Trading Conference May 16, 2009 Red Bank, NJ
Epiphany Trading Conference May 16, 2009 Red Bank, NJ
EPIPHANY TRADING LLC. TRADING CONFERENCE

Saturday May 16th, 2009

Two River Theatre, 21 Bridge Avenue, Red Bank, New Jersey

From 10:30 am to 3:00 pm

Networking Social Gathering Sponsored by Epiphany Trading LLC Post Conference at the Dublin Pub,30 Monmouth Street, Red Bank , New Jersey

Fee $200.00

Feature Speaker : Steven Nison , Founder and President of www.CandleCharts.com , who provides premier educational and advisory services using Japanese Candlestick Charting Techniques.

Erik Kolodny- Chief Market Strategist, developer of the Epiphany Trading Method

Brendan P. Byrne- Founder & President of Epiphany Trading, LLC

Frank Delaney- 25 years of Trading and Money Management Experience in Equities and Futures. Previously partner Bear Wagner, a NYSE specialist.

Ruth Palacio- Clinical Coach and Training Consultant at Palacio Consulting LLC. Ms. Palacio will discuss the emotional triggers of trading and how to use them as a positive tool in your every day trading.

CHECKS: Mailed to EpiphanyTrading LLC., 133 East Main Street, Babylon, NY,11702

Monday, April 20, 2009
MON. APR. 20- Options Expiration Redux
On Friday, as I do every 3rd Friday of the month, I frequently noted the phrase “options expiration today…careful” to anyone who asked me about scalp trades. Without going into an esoteric and ultimately boring explanation as to how options work, the 3rd Friday of the month are when all American-style current month options expire. An option holder must decide that particular day whether to exercise his/her option contracts or let them expire. Typically, weeks of options expiration tend to be somewhat more volatile than normal as options players position themselves for the expiration, but Fridays of expiration week tend to be relatively slow in normal trading markets because most of the options activity is taken care of by Friday morning. Thus, we get days like Friday where the pace of trading is oftentimes frenetic in the early going (on Friday, I for one had my first sizable position at 6:32AM), but did not trade much whatsoever from 12PM-3:30PM. Most traders who do not trade accordingly in that time schematic tend not to do well on the 3rd Fridays of the month. The other trick of the day is that big volume options contracts tend to occur at round numbers and the middles of said numbers…usually, a stock priced at 30 tends to have big volume options contracts at 30, 27 ½, 25, 32 1/2 , and 35 as a for instance. When a stock approaches those numbers, the options players tend to keep the movement of the stocks in place. For instance, X traded within 1% of 30 most of the day, GE closed near 12.50, LVS hovered around 5, FSLR around 145, and so forth. Thus, it makes the game of breakouts and breakdowns via trading on momentum a bit harder as stocks tend to be a little heavier just above and below major strike prices. In short, the two lessons to impart here are: be aware that options expiration sessions tend to be very busy early in the day yet very slow thereafter in normal circumstances and have a rudimentary understanding of the fact that equity prices can tend to be pegged close to major numbers on the 3rd Friday of the month.

Overnight, markets in Asia were quiet and mixed with Tokyo down a little under 1% and Hong Kong up 1%. The situation, however, deteriorated rapidly as we Americans slept with oil prices decline and European bourses tumbling down about 2% plus as of this writing. Late last night, the “Financial Times:” out of London reported that a senior government official wants strong banks to only repay bail-out funds only if as part of the stress test being proposed, said returning of the money must be in ‘the national economic interest.’ Also, Obama’s top economic adviser was on “Meet The Press” that repayments could provide further resources to help the weaker banks, but was noncommittal on the London FT rumor. Add to the mix BAC was out this morning with options expiration behind us and instant recipe for downside soup. As people trudge back to their offices after many were on vacation last week, look for a relatively slow day with much of the great action having already occurred before 8AM ET when BAC came out, but one that should stick to the downside in a very choppy manner all day.

Watch list:
04202009Eriklist.zip

Reiterating-
Please understand that if the ideas do not get to the hoped for set-ups cited below, more often than not, one should not blindly trade the symbol next to said idea.
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 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

DFR – continued its recent run; closed near a high

AOS- warned on earnings last Thursday night; closed well lower but near a high

CYT- warned on earnings last Thursday night; closed well lower but near a high

SCON- closed near a high

CMED, NCTY- two Chinese speculative plays that closed near their highs

MR – closed on its high

CVO- closed on its high

LLY- good earnings

DNDN- positive detail on its recent drug news release at the American Association of Cancer Research conference over the weekend

JAVA- being bought out by ORCL for 9.50

LZ- pre-announced to upside earnings-wise

BAC- beat guidance handily, but may be a case of ‘buy the rumor, sell the news’ particularly when taken in combination with the FT report.

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

ETN- terrible earnings

HAL- bad earnings

PEP- beat pre-announced earnings, but buying out its bottlers PAS and PBG

MMR- poor earnings

ORCL- acquiring JAVA as noted above, but may well be taken as a negative for ORCL today because of the cash outlay




Earnings:

MON APR 20 BEFORE

BAC BOH ETN

HAL HAS LLY

MMR SXT WFT


MON APR 20 AFTER
BRO BSX BXS
CNI CR HWAY
IBM IES LNCR
OMI PKG SYK
TXN ZION



Good luck today.

Epiphany Trading, LLC

www.epiphanytrading.com

Erik R. Kolodny- Chief Markets Strategist
Brendan P. Byrne- President
Posted by Erik Kolodny at 8:45 AM 0 comments Links to this post
Epiphany Trading Conference May 16, 2009 Red Bank, NJ
EPIPHANY TRADING CONFERENCE & NETWORKING RECEPTION
DATE: Saturday, May 16th, 2009 10:00AM- 4:0OPM
LOCATION: Two River Theatre, 21 Bridge Avenue, Red Bank, New Jersey
NETWORKING RECEPTION: Dublin House Pub 30 Monmouth Street, Red Bank, NJ (4-6PM)
SPONSERED BY: EPIPHANY TRADING LLC.
EVENT DETAILS
10:00- 10:30AM REGISTRATION & CONTINENTAL BREAKFAST
10:30- 11:15AM WELCOME & CONFERENCE OVERVIEW
11:15 - 1:15PM STEVEN NISON, CANDLESTICK CHARTING TECHNIQUES
12:15-12:30PM BREAK
1:15 - 2:00PM LUNCH
2:00 - 2:30PM ERIK KOLODNY, INTRO OF EPIPHANY TRADING SYSTEM
2:30 - 3:15PM RUTH PALACIO, THE EMOTIONS OF TRADING
3:15 - 3:30PM BREAK
3:30 - 4:00PM BRENDAN BYRNE- WORD FROM OUR PRESIDENT & CLOSING REMARKS
4:00 - 6:00PM NETWORKING RECEPTION- DUBLIN PUB
FEE: $200- in Advance $250 – Day of Event
RSVP: To Register please email [e-mail] or call [phone]
EVENTS PRESENTERS
Steven Nison is Founder and President of Candlesticks.com. Steven provides premier educational and advisory services using Japanese Candlestick Charting Techniques.
Erik Kolodny is the developer, and will introduce the Epiphany Trading System.
Brendan Byrne is the President of Epiphany Trading LLC.
Frank Delaney has over 25 years of Trading and Money Management experience in the Equities & Futures markets.
Ruth Palacio is a Clinical Coach and Training Consultant with Palacio Consulting LLC. Ruth will discuss the emotions of trading and how to turn triggers into positive tools to enhance your trading decisions.
Posted by Brendan P. Byrne at 8:36 AM 0 comments Links to this post
Recognizing Real Value
For those of you that dont't know me, I have been working in the finance industry for close to 15 years. I started as a retail stock broker for the first 6 years then became a trader for the remainder. I have seen a lot in this business, from boom to bust and everywhere in-between. I have also met a wide variety of individuals ranging from quality good guys to the very questionable. Unfortunately more so then not I have found that there have been a larger percentage of greedy selfish questionable guys. Fortunately I have always been smart enough to stick closer to the quality guys which has kept me successful in this business for so long. My point here is that one needs to recognize the quality and value and stay close to it if you want to stay successful in this business for any great length of time. I have learned a great deal about trading the markets since joining Epiphany Trading. The Epiphany Method works. My daily trading has been steady. My dailygoals have been met in a market that is volatile where traders all over the street are getting demolished. The one thing that I see that is most valuable is the TEAM WORK. Everyone at Epiphany and everyone in the chatroom contribute to me hitting my daily goals. It is very valuable to have a group of unselfish eyes all looking for set-ups and trades. It is for this reason that I feel that I don't stray from the program and get myself into the trading hazzards that have taken a whole lot of money from me in the past. The Epiphany Method is real, everyone that contributes to the room are unselfish. Its is important that we all continue to work together and we will all get bigger and better as traders. Thank You!!!

www.EpiphanyMethod.com
www.TheModernStockOperator.com

[Epiphany Trading]

Epiphany Tradin Method "Epiphany Method"
By Erik Kolodny

www.EpiphanyMethod.com

Below is a brief description of the trading model that I have been using since 1998. This trading model has been back- tested for over 10 years and I have not had a losing month of trading since the commencement of the usage of the model. While no trading model is ever perfect, my trading performance over the years shows that the model does work. I have now brought the model to Epiphany for all of us to use.

The elements in the criteria we utilize in our trading model are designed to increase the probability for if not maximize profit potential yet reduce our risk profile on our intra-day trades.

In an effort to measure and define the profit potential of our selected stocks, we have developed a ranking system that awards a "STAR" for every criteria that is satisfied in a particular trading idea.

The more stars an idea has, the greater confidence we have in trading that particular stock. Below is a detailed description of our criteria's and how our ranking system works. (See Free Video Tutorial)





Epiphany Method Star Rating System Overview:
A "Star" is awarded for every criteria met in our trading model. The more Stars presented in a trading idea, the greater confidence we have in trading that particular stock.

1 Star = "Do Nothing"
A trading idea that ranks only "1 Star" does not constitute a convincing argument or reason to take a position.

7 Stars = "Trade In Size"
A trading idea that qualifies for a total of "7 Stars" may present a compelling argument to proceed with the trading idea, and do so in large size. Naturally, a seven star rated idea represents many reasons to believe that stock will most likely follow the path of our trading patterns and prevail as planned in our trading model.



Below is a brief description of the elements in our criteria that constitutes a "Star". (Video Tutorial Available)
News Spotlight: One of the primary elements of our criteria is a company or Industry that has recent news that is in the "Spotlight". Naturally, spotlighted news is heavily discussed in the main stream financial media, therefore, millions of investors around the world are aware of the company's stock activity for that day. In most cases, a stock that is "Spotlighted" in today's news may appear on our Epiphany Focus List. This news may be positive (a possible long position) or negative (a possible short position).

Some examples of company news in the "Spotlight" may include the following:


Earnings Announcements (expected or released)
Mergers & Acquisitions
Analyst Upgrade or Downgrade
Employee Lay-Offs or Corporate Restructuring
Resignation or the Appointment of Officers
Corporate Buy-Backs
Stock Split / Reverse Spit
Company Product Approval or Disapproval
Company or Industry related Catastrophes
* In some cases, an idea for a stock may earn a Star even though the news is unrelated to that particular stock. For example, if oil prices drop significantly, this may be an opportunity to take a long position on stock in the airline industry.



Direction: The stock of interest will be considered more favorably if its news indicates a direction that is the same as the overall market. If the news related to the stock of interest has the same direction as the overall market, we will consider the stock to have "Direction" and this idea will earn a "Star" . Conversely, if the news on the stock of interest indicates a path of direction CONTRARY to the overall market, this would raise concern and may NOT earn a star for "Direction" in our criteria.


Liquidity: Any stock with plentiful liquidity will most likely be awarded a Star for meeting this criteria. However, there have been times when a stock is seriously deficient in liquidity and will be discarded even though it may have been awarded 6 Stars for meeting all the other elements of our criteria. The lack of liquidity in a stock can make it very difficult to exit a position at a reasonable price.

As a general guideline, we seek to trade only stocks which average a minimum of 1,000,000 shares per day of volume over the previous 30 days and/or stocks in the news which do not satisfy the first volume requirement, but have traded 2,000,000 shares on the given day when they come to our attention.

Therefore, it is extremely necessary to evaluate the stocks "Liquidity Factor" BEFORE taking a position for the following two reasons.

Reason 1: Plentiful liquidity is absolutely necessary for you to capture your "unrealized gain" when you isolate a winning trade. In some cases, a considerable "Unrealized Gain" can be eaten away as the liquidity on the other side of your trade runs thin. In this case, the price on the other side of your trade will change significantly against you as you scale out of your position. As a result, your unrealized gain disappears and you may break even or possibly lose money on this trade that was once a winner.

Reason 2: The second reason takes place when there is absolutely no liquidity and can result in serious damages to you trading account. A complete lack a liquidity may result in you being "held hostage" in a position for an entire day and possibly over night in some cases. Considering our model which dictates being flat at day's end, we do not want to be trapped in a position and accept horrendous fills when we exit. Therefore, we have un written guidelines of acceptable liquidity.

More information about measuring and evaluating a stock's liquidity is explained in our Video Tutorials.



The Set Up: All of our Epiphany Traders follow a handful of textbook patterns that allow us to "Set Up" or prepare a trading plan (entrance & exit strategy) for a particular trade. These patterns have been back tested for over ten years and have been proven to be accurate more often than any other group of patterns in existence. This is proven to be true from measuring the success of our traders as well as some of Epiphany's executive staff of seasoned traders that have tried everything in their 20+ years of professional day trading.

These patterns and set-ups are briefly explained below and are discussed in more detail in our
Expert Video Tutorials.

HOD Pattern - We may take a Long Position when a chosen stock penetrates through its High Of Day. If a stock is trading at or near its intra-day high, we tend to buy the stock at or just above the day's high, particularly if the stock has traded at or near the high of the day for an extended period of time (usually 10 minutes minimum).
LOD Pattern - We may take a Short Position when a chosen stock penetrates through its Low Of Day. If a stock is trading at or near its intra-day low, we tend to short the stock at or just below the day's low, particularly if the stock has traded at or near the low of the day for an extended period of time (usually 10 minutes minimum).
Price Unchanged Pattern (UNCH) - We may take a Long or Short position when a stock penetrates through its prior day's official closing price (documented at 4pm EST) known as the "Price Unchanged." If a stock is trading at or near its previous day's close for a 10 minute minimum after having been down much of the day particularly on a piece of news perceived as being negative to a general investor/trader, we tend to enter the stock once the stock ticks above unchanged (i.e. the previous day's close). If a stock is trading at or near its previous day's close for a 10 minute minimum after having been up much of the day particularly on a piece of news perceived as being positive to a general investor/trader, we tend to enter the stock once the stock ticks below unchanged (i.e. the previous day's close).
Size Pattern - We may take a Long or Short or Long position when we see a large block of stock in a Level II box that influences the trading price of that stock. Occasionally, a large block of stock (50,000 shares or more) is displayed on the Level II market maker screens. We look to buy the tail end of a diminishing block of stock for sale and/or short sell the tail end of a diminishing block of stock for purchase, particularly in coordination with the aforementioned HOD, LOD, and UNCH criteria
Negative Through Positive - We may take a Long Position if a stock is down on the day and abruptly goes positive with all other (Level II) factors in place. (more on level 2)
Positive Through Negative - We may take a Short Position if a stock is up on the day and abruptly goes negative with all other (Level II) factors in place. (more on level 2)



Stagnation: All of the patterns mentioned above must have the appropriate amount of "Stagnation". Trading ranges which establish some degree of price history create a more defined level of safety for entering and exiting a position. If a stock trades in a certain tight range, the highs and lows of said range tend to create support and resistance. We use these levels to calculate risk particularly in determining where we can exit if the trade is not acting in coordination with how we think it should perform. Thus, the longer the time duration and the smaller the price derivation are near an entry point of interest, the higher the likelihood the trade should be entered. As a general rule, we seek at least 10 minutes of a stock trading within a 0.5% price range based on the overall price of the stock near the entry point of interest (more on stagnation). (more on stagnation)



Potential: We try to refrain from trades that do not have the ability to make a significant move. A general rule of thumb that we use is the "20 cent rule". This rule dictates that if we cannot make 20 cents with relative ease, we do nothing. Throughout our extensive trading experience, we have found that the low potential trades deliver close to flat results and may result in losses after transaction costs and fees are calculated.



Confirmation: Epiphany's group of professional traders are always in contact with each other through our trader chat room. As professionals, we find it very useful and easy to attain a quick second opinion for our private community of traders much less facilitate the sharing of our ideas. Working as a community allows for more people to trade more ideas which tends to lead to more trading profits. Plus, it is impossible for any given individual to see every major trading idea simultaneously. Since we are all social traders who's confidences thrive on the community that we have created, we need to communicate our ideas. Therefore, when we notice a set up, we share the idea with the others in our chatroom for a second opinion. Our research shows that trades that are not vetted by the community and executed quietly or sneakily have low probabilities of profit. The main reason why these "quiet" or "sneak trades" occur is usually because the trader usually wants to avoid the grief associated to mentioning trades that the others in the group do not endorse. To quantify this tenet, a stock symbol must be mentioned with a specific entry price. We encourage all traders to call out all ideas. With that in mind, stock symbols mentioned with such notations as a question mark indicate that the idea - no matter the quality- has no defined entry point by the person suggesting it. Thus, forcing an idea to have a desired entry point encourages the shout-out of said idea while allowing the suggestion to be well thought-out.

[Epiphany Trading]

www.TheModernStockOperator.com
www.EpiphanyMethod.com


FRI. APR. 17- Uptrending Environment
One of my favorite phrases to use when applicable – particularly apt on afternoons such as yesterday when the market is in a slow yet very steady ascent- is as such: “It’s a great day to be an investor, but a terrible day to be a trader.” I derived this from going to various social functions over the years with the average person assuming my performance as a day trader was perfectly correlated with the general market’s direction much less the delta of the move. But it of course is not. My performance is based on my adherence to my personal trading rules aka discipline, doing a lot of homework in being prepared for many what-if scenarios, and having as clear a head as possible along with one other factor. That ‘other factor’ is what I want to focus upon because it has become an extremely variable for not only myself, but for almost every other trader I know in recent times- market performance. Typically, volatility in uptrending markets decreases. So, what happens on the big up days is a general placid stair-step motion. Two steps forward, one back, two steps forward, ½ back, one step up, ½ back, two up, one back. And so forth. But particularly after the brutal bear market of 2008, traders are ingrained to look to short dips. But it doesn’t work when the market is uptrending because, well, prices are increasing. Furthermore, getting long is also nervewracking at times as prices don’t typically rally as much as they can decline. Put another way, it can take years to build a monument, but minutes to bring it down. So, what to do? First, go with the tape. All else equal if you are a disciplined momentum day trader and the market is rallying, buy equities thru new highs and if the market is declining, short thru new lows. Second, keep really tight stops particularly whenever doing any contra-trend day trading. One bad trade can destroy a day. Third, ignore the noise around you. Stop worrying about what others are doing, and what you ‘think’ should happen. As for what not to do: First, don’t overtrade. When volatility decreases, it is so tempting to increase frequency of trades. Second, don’t dramatically increase the size of your positions. That can only lead to trouble. And finally, don’t get frustrated when things just don’t go right. The rules have changed in recent weeks with the market; pay attention to the market. Bottom line- when the environment changes, change with circumstance.

Overnight, the Nikkei was up about 1 ½% although the rest of Asia was quieter. European bourses are up about 1% as well following in Wall Street’s wake. In the U.S., futures are slightly weaker with a tug’o’-war between GOOG and this morning’s earnings darlings of GE and C. With it being options expiration today, the market is likely to remain quiet with this struggle continuing all day; the market will take its cues from the direction of GOOG in techland and the conference calls of C and GE (due to start after this writing). Likely, the overall bias will be slightly weaker particularly for the NASDAQ, but again, C, GE, and GOOG should tell the tale all day for the market.
Reiterating-
Please understand that if the ideas do not get to the hoped for set-ups cited below, more often than not, one should not blindly trade the symbol next to said idea.
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 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

TPX – great earnings

TEL/HRS- TEL selling a division to HRS

DFR- closed near a high; announced venture with Pegasus Capital for infusion of capital

MTG- closed near a high

RF- closed near a high after pre-announcing that they will post a profit for the quarter when the estimate is for a loss

DRYS- announced completion of its “ATM” equity offering in which it raised $800 million

EXPD- broke out to new intermediate-term high

ORCT- rallied sharply; closed on high of day

HP- closed near high of day

JAH- after posting great earnings, closed near high of day

KKD- rallied sharply after earnings report; closed near high

BBT- terrific earnings

C- beat earnings solidly; did not issue anything negative whatsoever so shorts continue to cover…best trades likely to be well before 8AM ET as earnings issued 6:30AM ET

GE- beat earnings, but missed revenue guidance slightly



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

GOOG- beat on quarter, but issued cautious comments and top sales executive took a new role within company; watch big cap tech (AAPL, RIMM, AMZN, IBM) to potentially move with it

BIIB- beat on quarter, but said they see “$4 or more” for year with estimate of $4.05…very weird way of stating outlook

AMLN- in-line earnings

CYT- atrocious earnings

PBCT- missed quarterly estimate

MGM- Icahn pushing for bankruptcy filing; LVS/WYNN may move in sympathy

WRI- offering 25.5 million shares; warned very slightly for the year earnings-wise

ISRG- suspended earnings guidance; company’s visibility is ‘not good’

CHK- cut natural gas production

AEM, GG, NEM- among gold producers which were in the group of biggest losers yesterday; all closed near lows

DDS, JCP, M- debt cut to “junk” by Standard & Poors

NCTY- confirmed it lost ‘War of Worldcraft’ licensure yesterday morning; closed on its low

AOS- poor earnings guidance




Earnings:

FRI APR 17 BEFORE

AOS BBT C

FHN GE MAT

PRSP VMI

Erik R. Kolodny dubbed "The Modern Stock Operator" by Active Trader Magazine


Good luck today.

Epiphany Trading, LLC

www.epiphanytrading.com

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

[Epiphany Trading]

Epiphany Trading Conference May 16, 2009 Red Bank, NJ
EPIPHANY TRADING LLC. TRADING CONFERENCESaturday May 16th, 2009Two River Theatre, 21 Bridge Avenue, Red Bank, New JerseyFrom 10:30 am to 3:00 pmNetworking Social Gathering Sponsored by Epiphany Trading LLCPost Conference at the Dublin Pub,30 Monmouth Street, Red Bank , New JerseyFee $200.00Feature Speaker : Steven Nison , Founder and President of www.CandleCharts.com , who provides premier educational and advisory services using Japanese Candlestick Charting Techniques.Erik Kolodny- Chief Market Strategist, developer of the Epiphany Trading MethodBrendan P. Byrne-The President of Epiphany TradingFrank Delaney- 25 years of Trading and Money Management Experience in Equities and Futures. Previously partner Bear Wagner, a NYSE specialist.Ruth Palacio- Clinical Coach and Training Consultant at Palacio Consulting LLC. Ms. Palacio will discuss the emotional triggers of trading and how to use them as a positive tool in your every day trading.CHECKS: Mailed to EpiphanyTrading LLC., 133 East Main Street, Babylon, NY,11702







THURS. APR. 16- Stress Test? Stressful?
Having problems uploading watch list- I will e-mail it out...if you are not on e-mail list, please e-mail [e-mail]
-------------------------------------------------------------------------------------
Yesterday, the U.S. Treasury indicated it is seeking a way to reveal the details of the tests it is currently conducting to determine the shape of the biggest banks in the United States. Usually, the innards of such bank exams are not released to the public. In previous discourses of the current stress test procedures in which the biggest 19 U.S. banks have been tested against the potential for declining economic conditions, the Treasury said it’d only reveal the amount of capital it gave to said banks rather than details of how the numbers were arrived upon. After all, the purpose of the program is to prevent panics rather than cause them which is why the Treasury fears that details of the tests will somehow be leaked. This is why the release of the data has been delayed until after the bulk of the first quarter earnings season (GS just reported, JPM reports today, C reports tomorrow, and so forth). The reason for this is to avoid complication the reaction of the equities to the results of the test. It’d seem- and this is totally off the cuff- that it’d be in the best interests of the banks much less the government for each bank to pass the test which would theoretically restore confidence in the system by the public. However, Treasury officials likely worry about how the stocks of the banks determined to need a large amount of capital (even if ‘passing’ the test) would react. For day traders, this is certainly a situation to monitor. It is certainly not in the interest of any bank to hypothesize how much capital they may need nor should they necessarily do so. However, there are many people out there guessing what each of these banks is going to need and when the results/money are released, it will become a focal point for any trader interested in bank stocks. In the interim, it is something to keep an eye on; however with no concrete data, it is simply a situation to wait to speculate upon until said information is provided.


Markets in Asia were mixed overnight with prices in Europe rising about ¾% on average. State-side, futures are stronger based on JPM’s results. And JPM will indeed likely be the story for the day for market reaction. Look for a very very busy morning (as it has been already) with JPM the leader one way or another…markets will likely be weak relative to JPM to start with the newsflow out there re poor housing starts number, but the trend of the most notable financial name on the planet on its earnings will likely set the way for the day for the markets.

Reiterating-
Please understand that if the ideas do not get to the hoped for set-ups cited below, more often than not, one should not blindly trade the symbol next to said idea.
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 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

MVSN- raised earnings guidance slightly for the year

RJF- warned badly on Tuesday afternoon; stock still finished down but on its high of the day

COF- shook off news of a rise in bad loans in closing near a high

OC- closed near high of the day

JPM, BK, USB, WFC, PNC, STT, STI- all closed near their highs of the day

SPG, VNO, WRE, WRI, CBL- among the REIT’s which closed near high of day

GCI, BIIB- mentioned positively on “Fast Money” last night; GCI also with earnings and BIIB with drug news

RAS- doing IPO at 18

GMKT- bought out by EBAY for 24

JAH- pre-announced earnings to upside

DCTH- closed near a high

SCHW- closed on a high after posting good earnings

AXP- huge rally yesterday; closed near a high

CYD- closed near a high

HOG- great earnings

CY- good earnings

LUV- good earnings
NOK- terrific earnings

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

ATR- missed earnings estimate for quarter

LSTR- missed earnings estimates for quarter slightly

PLCM- missed earnings estimates

KMP- poor earnings

DRE- announced 64 million share offering and issued slightly warning for the quarter

NCTY- closed on its low amid rumors that the company lost its license to its best selling videogame (World of Warcraft)

LUFK- closed near a low after posting terrible earnings

BGG- bad earnings

PH- poor earnings

PII- bad earnings

LNC-downgraded by Moody’s
Earnings:

THURS APR 16 BEFORE

APH BAX BGG

CY FCS GCI

GPC HOG ITW

JPM KNL LUV

NOK PH PII

PPG SHW SON

UMPQ
THURS APR 16 DURING

ASBC (1PM ET)


THURS APR 16 AFTER

AMLN BIIB CYT

GOOG ISRG PBCT

TPX VRTX


Good luck today.

Epiphany Trading, LLC

www.epiphanytrading.com

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

[Epiphany Trading]

WED. APR. 15- At The Copa...
On Monday, President Obama opened a tiny space in the nearly half-century-old U.S. embargo against the communist regime of Fidel Castro in Cuba. Ostensibly, American telecommunications entities will be allowed to commence providing their services for Cubans. Also, restrictions on family ties to the island will be relieved a bit as well. Mind you, the White House machinations do not eliminate the 47 year-old trade embargo, but it is an olive branch of sort to the Cuban government. Forgetting the politics much less potential effectiveness of Obama’s gesture, there is most definitely a day trading aspect to this matter. It is why I implore everyone all the time to pay attention to every piece of major news out there; one can always find opportunities. In this specific case, it was time to think of industries affected. For instance, how many cruise ships would go to Cuba? Sure enough, on Monday, Royal Caribbean (RCL) traded its heaviest volume in over two months yesterday in closing ahead more than 15%. Shares of the Herzfeld Caribbean Basin Fund (symbol:CUBA) rallied a stunning 41% on Monday amid record volume. Thus, pay attention to the headlines; oftentimes, one can find trades out of seemingly nothing- and the stocks can remain in play for some time to come…as they undoubtedly well in this case as rumors (and reality) of the Cuban situation come to fruition.

Markets overnight were down marginally throughout the world with stocks losing 1% of their value in Tokyo and about 0.5% on average throughout Europe. Oil is up a little, gold is flat, but the bond market is notably strong in the early going. Futures are weaker on INTC’s disappointing outlook, but not dramatically so. It looks to be a somewhat placid day with an increasing flow of earnings news, but nobody in the first-tier (those really start in earnest tomorrow). Yet, with GS indicated weaker anew, there is no rush to own stocks albeit no outflow with a flush of the futures. For the day, it is a dangerous intra-day environment with a relative dearth of news and a lot of options squaring. Look for marginal downside action, but keep on eye on BAC/C in particular because if the banks begin turning back up, they will lift the market with a ceiling over things as INTC seemingly caps any major rally today.

Watch list:

04152009Eriklist.zip

Reiterating-
Please understand that if the ideas do not get to the hoped for set-ups cited below, more often than not, one should not blindly trade the symbol next to said idea.
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 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

CSX- good earnings

EBAY- spinning off its Skype division

CYH- among other hospital stocks which rallied after HCA announced a lower patient bad-debt ratio

EGLE- strongest of the dry bulk shippers; closed near a high

BSDM- closed near a high on terrific strength after receiving FDA clearance for their BSD 510k

CPE- closed near the high of the day yesterday

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

INTC- beat earnings for quarter, but issued hazy forward guidance

LLTC- poor earnings

FNF- closed near a low after announcing a stock offering; offering for 15.8 million shares priced at 19 last night

GS- an ugly day yesterday; closed on its low…MS should move in sympathy

COF- closed near a low

PNC, BAC, ASBC, CBSH- among the banks closing on or near their lows of the day

VNO, SPG- among the weak REIT’s which closed near their lows of the day

INFY- poor earnings

ABT- neutral earnings, but lukewarm guidance

LUFK- missed earnings estimates significantly

COF- rate of bad-loans increased sharply in March from February…8.08% to 9.33%.

KMT- warned badly on outlook

BTU- missed earnings estimates by a wide margin

Earnings:

WED APR 15 BEFORE

ABT ADTN AMR

BTU LUFK PGR

PJC

WED APR 15 AFTER

ASML ATR CCK

KMP LSTR PLCM


Good luck today.

Epiphany Trading, LLC

www.epiphanytrading.com

Erik R. Kolodny- Chief Markets Strategist

Brendan P. Byrne- President

[Epiphany Trading]

MON. APR. 13- All's Seemingly Well At Wells
This is another “wha’ happened” piece. Most people who weren’t around on Thursday don’t have any idea why the markets continued to rally whereas most people who were around to trade on Thursday, well, they don’t understand either. It comes down to one company :Wells Fargo. A seemingly innocuous headlines crossed the newswires at 8AM Thursday morning: “Wells Fargo Sees 55 Cents Per Share For First Quarter.” Except that the estimate was 31 cents. They went on to say that their Wachovia acquisition is going even better than anticipated. What jumped out at me was that they reported another quarter of 10% plus revenue growth and stunningly, they expect to have net income of $3 billion for the quarter! The company reiterated that they should save about $5 billion a year by combining Wells and Wachovia operations and had a 41% increased in unclosed mortgage applications. Now, let’s take all of this at face value (it is still up for debate of course because of the history of accounting shenanigans in the industry, but let’s say everything is pure because, well, I’m an optimistic if idealistic guy). What this news indicates is the first absolute concrete evidence that the end of the world just might not be near. If in this environment WFC can earn $3 billion, it implies that things like nationalization, government interference, and unfettered regulation just might not be the way to go. More to the point, it automatically gave instant credibility anew to the idea of a sound banking system much less capitalism. It shows that things, as bad as they have been, have a shot to get better. For day traders, we’ve witnessed things like the FAZ falling from 115.50 to 10.50 in days. Maybe there is a reason for this. Even if there is not and this particular WFC story is smoke and mirrors, it is worth noting that both good news as well as the stream of bad news we’ve been used to for the past couple of years can move markets extraordinarily wildly these days.


Watch list:

04132009Eriklist.zip

With the exception of the Nikkei which was mildly weaker overnight, every major world market was closed for Easter Monday. Oil is lower, gold is up, and the dollar and bonds are quiet. In the early going, rumors of a pressuring of GM to go Chapter 11, a GS share offering, and riots in Thailand are pressuring the futures. With many people away on vacation and a relative dearth of news, look for a fairly uneventful day today following a weaker open. The middle of the day will likely be extraordinarily placid. There should be a little short covering early in the morning after the run-up of recent weeks, but a ploddy slow downside day is the most likely scenario to occur today with banks in particular as today’s benchmark.

Reiterating-
Please understand that if the ideas do not get to the hoped for set-ups cited below, more often than not, one should not blindly trade the symbol next to said idea.
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 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

TTWO- recommended as takeover play on “Fast Money” on Thursday night

SIVB- closed near a high

MS- closed near a high

GYMB- closed near a high after posting great earnings

USB, NTRS, ZION- strongest closes of the banks in the banking sector

NFLX- broke to new all-time high today and closed near intra-day high

TROW- closed near intra-day high

FMBI, STSA- among smaller banks closing near their highs

SKT- closed near high of day

LUK- continued huge rally in closing near intra-day high

AVB – among the strong REIT’s closing near its high

HIW- closed near high of day

FNF- broke out towards high of year near end of day Thursday

YHOO- rumored to be in talks with MSFT again

WLP/ESRX- ESRX buying division of WLP

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

BA- warned on earnings estimates after-hours Thursday

WFR- warned on earnings outlook

CVX- sees its 1st quarter earnings sharply below that of the 4th quarter; XOM may follow

GNW- will not participate in the U.S. Capital Purchase Program

PDCO/HSIC- mentioned in “Sell Block” segment of “Mad Money” Thursday night

GS- looking to do share offering to raise money to repay TARP

WFC- downgraded at Keefe with price target of 12

TRE- negative “Barron’s” article

SPW- warned badly on earnings

Earnings:

None today

Good luck today.

Epiphany Trading, LLC

www.epiphanytrading.com

Erik R. Kolodny- Chief Markets Strategist

Brendan P. Byrne- President

[Epiphany Trading]

TUES APR. 7 - Taking It Slow
The thing I heard the most around the ol’ trading house yesterday was “is it going to be this slow all week?” The answer is a definitive “no.” Assuming there is no extraneous event, it is going to get slower this week. Good Friday week in particular is always a tricky calendar time in which to trade- day trade in particular. It is dependent upon the lunar calendar, but typically, Passover tends to start during Good Friday week (this year, Wednesday night at sundown). Just as the markets are closed on Friday, many people take off for the first day or two of Passover (much les the whole week thereafter). Also, a lot of traders take off to celebrate Easter with their families. The litany continues. It is ‘spring break’ week in most New Jersey schools this week with New York schools to be closed Thursday, Friday, and all of next week. But it gets better. As many people take off during this time, much of corporate America does as well. Earnings season technically starts today with Alcoa (AA) leading off the earnings parade and there are a handful of fairly big companies reporting next week (many of the big financials such as GS, GE, and C are due to report next week). Yet, next Monday (the first business day after Good Friday) is the slowest earnings day of the quarter and usually one of the slowest trading days of the year for that matter. The net of all of this is this: the next four trading days in particular will be progressively slower (likely denoted in smaller than normal watch lists). Next week’s trade will be busier but illiquid due to a relative paucity of trades yet there will be some news flow. Thus, do not overtrade these next few days and save your powder for the earnings season to come…with next week being the start of the action albeit busy pockets with quiet trade during the middle of the days.

Overnight, markets in Asia were down about 1/3% on average with markets in Europe declining heavier to the tune of 1% to 2% across the board. The dollar and oil are also down. And completing the fun- futures are pointing to a sharply lower open. There is no major news out there except for reports out of Detroit regarding the ever-increasing likelihood that GM is preparing for bankruptcy. With the relative dearth of news-flow, don’t look for extreme movements today with downside action likely. As has so often been the case, again note that the corollary here is that if the financials shake off renewed weakness, you’ll see a turn rapidly as shorts rush to cover…but with the techs down with the financials this morning, it just doesn’t seem likely

Watch list:
04072009Eriklist.zip

Reiterating-
Please understand that if the ideas do not get to the hoped for set-ups cited below, more often than not, one should not blindly trade the symbol next to said idea.
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 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

BLUD- good earnings

LMT, NOC, RTN, BA- among the very strong defense stocks yesterday on comments from Defense Secretary Gates about the government’s budget plans for the next 12-18 months

RIMM, AAPL- among the strongest of the big cap techs in a weak overall tech market yesterday

FMD- the strongest of some small financials which closed near a high

CZZ- huge recent run-up; closed near intra-day high

KAMN- broke to new intermediate-term high

SPIL- mentioned on “Mad Money” positively last night

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

VTR- issued in-line guidance for 2009, but also offering 8.5 million shares and doing a notes offering as well

CHTT- beat quarterly estimates and raised guidance on underlying earnings, but missed on revenue guidance

Earnings:

TUES APR 7 BEFORE

CHTT

TUES APR 7 AFTER

AA BBBY MOS

RECN RT


Good luck today.

Epiphany Trading, LLC

www.epiphanytrading.com

Erik R. Kolodny- Chief Markets Strategist

Brendan P. Byrne- President

[Epiphany Trading]

MON; FEB. 2: Not A Good Start To 2009
Everyone is talking about the poor January performance of the stock market amidst fears of the whole “So goes January, so goes the market for the year’ hypothesis. For those not familiar, there is an old saw that whatever the market does in January is what it does for the year overall; of course, it has some credence because a particularly big move in January can be hard to overcome. And this was the worst January on record in percentage terms for the S&P 500. But the point of this piece is to look away from equities for a moment; rather, did anyone notice how the metals and gold have done recently? Despite commodities like oil not coming back, the price of gold (as well as other metals) closed at four-month highs on Friday. And bonds? The 10-year bond had its worst one-month performance on record. The yield on the benchmark 10-year bond has risen from just over 2% to over 2.8% in weeks. There are three possible explanations for this move. First, inflation is ‘a-comin.’ Traditionally, in inflationary times, gold outperforms and bonds underperform. Or. Second, a Depression is ‘a-comin.’ Paper in the U.S. much less everywhere would be worth a lot less whereas a safe haven is gold. But, at least in the immediate-term, I’d like to believe it is the 3rd choice. Namely, there is a risk premium being taken out of things as the panic of late last year subsides. Investors are selling off bonds as the gains got very extended in the 10-year. Of course, this does not fully explain gold’s rise except to note that gold could be being used as a bit of a safety here since the stock market is still off-limits to many people. For day traders, these two indicators will likely be discussed should the trend intensify. For months on end, the equity markets moved almost in complete inverse correlation with the price of oil…it is entirely plausible that a trend (longer-term as well as immediate-term) could well develop developing along the same lines with either bonds or gold should the moves of the last several weeks become exaggerated.

Markets in Asia were down about 1.5% to 2.5% overnight on earnings woes. The weakness extended to Europe as well with the bourses down 2% to 3% across the board on a continued general malaise over the lack of definitive corrective action to the financial crisis by, well, anyone. And it’s Groundhog Day all over again in the U.S. with futures down hard early. With no trigger in sight, look for the continued push lower in somewhat slow choppy trade as earnings season continues.

Watch list:
2209Eriklist.zip

Reiterating-
Please understand that if the ideas do not get to the hoped for set-ups cited below, more often than not, one should not blindly trade the symbol next to said idea.
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

STAR- closed near the high; looking for continuation thru 15

DRIV- closed near a high; looking for momentum thru 25

HIG- an article indicates in “Barron’s” postulates that the stock could double in the next few years

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

DRYS- closed near another low; may be a short thru 6.50 if it opens higher otherwise likely a phenomenal pre-market trade in a stairstep lower pattern

DDUP- likely continuation short thru Fri. 12.80 low

BDK- closed near a low; looking to short thru Fri 28.82 low

CACB- closed near the low; looking for momentum thru 2.19 low

PCBC- trend low close; looking for close thru 10.50 Fri low

FO- continued down after three days; looking to short thru Friday 31.90 low

DOW- continues breaking down; looking to short thru Friday 11.50 low

NWL- closed near low; looking to short thru Friday 8 low

STI- new trend low as well; looking to short thru Friday 12.10 low

NI- yet another one breaking down; looking to short thru Fri. 9.60 low

CPO- bad earnings

HUM- missed on quarter, but guidance pretty good for next year; if it opens down, it may well be a ‘buy thru unch’ candidate particularly if the market rallies

MAT- atrocious earnings

ROK- terrible earnings


Earnings:


MON FEB 2 BEFORE

BBD BEAV CPO

EPD GRA HUM

MAT PJC ROK

SYY

MON FEB 2 AFTER

AFL APC ATHR

CCK CPX HOLX

LRY PCL PRE

RCII SNDK TSRA

Good luck today.

www.epiphanytrading.com

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

www.Blog.EpiphanyTrading.com

[Epiphany Trading]

Friday, January 30, 2009
FRI. JAN. 30 - Share Offerings

A topic I am frequently asked about is the concept of share offerings and how I play them. First, let’s back up a step. A company which needs to raise capital and either does not want to borrow money and/or cannot find a bank to lend to it will frequently tap the equity market to raise funding. These are typically done via a concept called a secondary offering in which a consortium of investment bankers agree to buy X amount of shares of the company doing the offering, presumably at a price in which they can make money over and above the fees that they get. The last thing a Goldman Sachs or a Morgan Stanley wants to do is buy hundreds of thousands of shares of a stock which they will lose money on. Ergo, a stock will usually fall in anticipation of the offering, the offering price is announced below the close, and the stock tends to hold above the offering price. There are a few ways to play this. My personal favorite way is to short through the offering price. If a stock trades so much as one penny below the offering, it indicates to me that the investment bankers have used up their allotted resources while at other times, it is sustained; either way, I do not care as I am trying to earn a living fast. Yesterday, for instance, Century Aluminum (CENX) had a share offering at 9.50. The stock fell from 7.35 on Tuesday to close at 4.60 yesterday. The offering was done at 4.50. When the stock breached 4.50, it fell almost 30 cents in a minute or two as i-banks and momentum players sold out as fast as they could. A second way to play a share offering occurs when a stock opens below the offering price, rallies toward the offering price, a reloading bid comes in, and the stock begins to stairstep higher. For instance, had CENX opened at 4.25 yesterday, rallied to 4.51, traded a lot at 4.50 on the bid, and notched to a new high, I’d have theoretically bought the 4.52 (confirmation of a new high). Finally, I love when a stock falls a huge amount over a period of days in advance of a stock offering and stabilizes on the day of the offering. Newmont Mining (NEM) had an offering at 37 yesterday after falling from 45.45 on Monday to 38.33 on Wednesday (with a 38.61 close). The stock initially traded lower, but held 37. When it popped thru unchanged at 38.61 after trading lower all morning, it rallied almost 40 cents within minutes and almost a dollar by the end of the day. So, pay attention to the share offerings, the prices where they occur, and what the stocks have done not only leading up to the date/price of the share offering, but what they are doing on the day of the offering because there are frequently quick day trades to be made off of these offerings.

Overnight, equities in Asia were lower with Tokyo down around 3%. Stocks were flattish early on, but are now down 1% to 2% in Europe. State-side, futures are once again pointing down on bank worries ahead of the expected GDP report debacle today. Overall, look for relatively muted session; declines will likely be limited on window dressing on the last day of the month as well as the strong AMZN and XOM earnings. Benchmarks to note today will be the banks, oils, and AMZN. Look for tech to outperform relative and to lead a bit of a small rally mid-morning. Yet, the overall tone remains negative so expect a great deal of choppiness in this muted session.

Watch list:
1302009Eriklist.zip
Reiterating-
Please understand that if the ideas do not get to the hoped for set-ups cited below, more often than not, one should not blindly trade the symbol next to said idea.
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

AMZN- blowout earnings

ACS- beat earnings for quarter

DRIV- decent earnings

MCHP- beat earnings estimate for quarter slightly

SPWRA- great earnings; watch for pops in solar sector in sympathy

YRCW- missed for quarter, but supposedly nearing getting additional financing

BCR- beat slightly for quarter

CYBS- beat for quarter

MWW- beat estimates for quarter

CA- beat estimates for quarter

CHK- CEO on “Mad Money” last night

CAT- mentioned positively on “Mad Money” last night

SQNM- rallied back yesterday after poor drug news; may continue rallying today

XOM- good earnings

ACI- good earnings

SPG- beat on quarter; will meet for year- this is very good as whisper numbers well below that


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

BRCM- bad earnings

CB- beat for quarter; warned on year

HCN- will miss earnings slightly, having a share offering, and a shake-up in management. Stock traded down 5 after-hours before storming back.

JNPR – missed earnings and warned

KLAC- missed earnings for quarter

MXIM- beat for quarter; warned on revenue projections for year

VAR- beat slightly for quarter; warned for next quarter

BANR- closed near low yesterday on poor earnings

WMS- met for quarter; guided estimates for year down

LNN- warned for quarter

DDUP- warned for year

TEX, JEC- mentioned negatively on “Mad Money” last night

DRYS- plunged yesterday after reporting they plan on doing share offering; looking for more decline today. Company seems adequately capitalized so it is a bit of a mystery why they seek more capital.

EK- looking to short thru Thurs. 4.91 low

CEDC- closed near a low

CETV- closed near a low

SCHW- very weak in closing near a low

BUSE – broke to a new 52-week low

BEN- closed near a low

ASH- terribly weak in testing its all-time low; 8 is a major number for the stock

BDK- closed near a low after posting wretched earnings yesterday

PG – warned on next quarter

AME- relatively poor earnings


Earnings:

FRI JAN 30 BEFORE

ACI AME AXL

CVX GCI HON

HRZ IDXX IVZ

PCAR PG SPG

WL XOM


Good luck today.

www.epiphanytrading.com

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