The Prepared Mind 6.25.2012

"Chance favors the prepared mind."-- Louis Pasteur

Last week the markets closed within a percentage point, plus or minus, of breakeven.  This performance masked significant intra-day volatility which was present throughout the week.  The positive mood from Sunday’s Greek election was quickly replaced by concern about Spain’s fiscal problems.  The Fed warned about ongoing risks to economic recovery, yet did not announce the new QE many traders were looking for.  Weakening commodity prices were seen by many as an indication of weakening economies in India and China.  A slowdown of the Chinese economic engine would have a major impact on the global economy.

Last week the market action was a daily reaction to news – real and imagined.  The Dow Jones Industrial Average closed at 12,640.78 – down 126.39 points or a loss of 1.70%.  The Russell 2000 (RUT) closed at 775.16 , a gain of 3.84 points – up 0.50%.   The SPX ended the week down 7.82 points –  down 0.58% at 1,335.02.  The NASDAQ 100 (NDX) gained 14.30 points or plus 0.56% to close at 2,585.53.    The S&P 100 (OEX) lost 0.51% to close at 611.73.  The VIX continues to fluctuate between negative and positive sentiment.  This week the VIX returned to near end the week near recent lows.  The VIX and the other index volatility measurements were down approximately 15%

Here is a capsule view of last week’s market numbers:

Index Close Weekly Change % Weekly % YTD Volatility of  Index
Dow Jones Industrials (DJIA) 12,640.78 -126.39 -0.99% 3.46% 16.12% (VXD)
S&P 500 (SPX) 1,335.02 -7.82 -0.58% 6.16% 18.11% (VIX)
NASDAQ 100 (NDX) 2,585.53 14.30 0.56% 13.51% 19.12% (VXN)
Russell 2000 (RUT) 775.16 3.84 0.50% 4.62% 23.44% (RVX)
S&P 100 (OEX) 611.73 -3.11 -0.51% 7.17% 17.90%(VXO)
CBOE Volatility Index (VIX) 18.11 -3.12 -14.70% NA

The week will be highlighted be U.S. economic reports on housing, manufacturing, production and jobs.  The market will also be focused on the European financial problems.  The New York Times reported that some Chinese economic indicators are being inflated by 1% to 2% to mask slowing of the Chinese economy.  This difference is the result of local and regional officials inflating economic output, tax receipts, and corporate profits. A “weakening” in perceived Chinese strength could have a negative effect on global markets.  Another wild card is tension in the Mideast.  Syria shot down a Turkish jet over international waters.  NATO will be convening to determine a NATO response. if any, to Syrian aggression.

Do not allow yourself to be surprised by “wild card” or unscheduled announcements.  Be nimble.  Be willing to take profits and recenter risk.

Be careful.  Be aware.


“Chance favors the Prepared Mind.” – Louis Pasteur

This week’s economic news (All times are Eastern Daylight Time.) Dates and times are subject to change:

Monday June 25:

Economic:  Chicago Fed National Activity Index – 8:30, New Home Sales – 10:00, Dallas Fed Manufacturing Survey – 10:30.

Earnings:    AMC:  Apollo Group (APOL), AuRico Gold (AUQ), Standard Microsystems (SMSC), SYNNEX (SNX).


Tuesday June 26:

Economic:  ICSC Goldman Sachs Retail Store Sales – 7:45, Redbook – 8:55, Case-Shiller Home Price Index, Conference Board Consumer Confidence – 10:00, Richmond Fed Manufacturing Index – 10:00, State Street Investor Confidence Index – 10:00.

Earnings:  BMO:  Robbins & Myers (RBN);  AMC:  AeroVironment (AVAV), H&R Block (HRB).

Wednesday June 27:

Economic:  MBA Purchase Applications – 7:00, Durable Goods Orders – 8:30, Pending Home Sale Index – 10:00, EIA Petroleum Status Report – 10:30.

Earnings:  BMO:  Commercial Metals (CMC), General Mills (GIS), Lennar (LEN), Lindsay Corp. (LNN), McCormick & Co (MCK), Monsanto (MON), UniFirst (UNF);  AMC:  Herman Miller (MLHR), Paychex (PAYX), Progress Software (PRGS).


Thursday June 28:

Economic:    Gross Domestic Product – 8:30, Jobless Claims – 8:30, Corporate Profits – 8:30, Bloomberg Consumer Confidence Index – 9:45, EIA Natural Gas Status Report – 10:30, Kansas City Fed Manufacturing Index – 11:00, Farm Prices – 3:00.

Earnings:  BMO:  American Greetings (AM), Family Dollar Stores (FDO), Greenbrier Companies (GBX), MSC Industrial Direct (MSM), Schnitzer Steel (SCHN), Shaw Communications (SJR), Worthington Industries (WOR);  AMC:  Accenture (ACN), AZZ Inc. (AZZ), Nike (NKE),(NKE), Research in Motion (RIMM), Shaw Group (SHAW), Smith & Wesson (SWHC), Tibco (TBX).

Other:  European Union Summit in Brussels.

Friday June 29:

Economic: Personal Income and Outlays – 8:30, Chicago Purchasing Managers Index – 8:30, Consumer Sentiment

Earnings:  BMO: Finish Line (FINL), KB Home (KBH), Constellation Brands (STZ).

Other:  European Union Summit in Brussels.

Monday July 1:

Economic:  Chicago Fed National Activity Index – 8:30, New Home Sales – 10:00, Dallas Fed Manufacturing Survey 10:30.

Earnings:  Acuity Brands (AYI).

Other:  Results of Mexico’s presidential election on July1 announced.

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