The Prepared Mind 7.23.2012

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The markets finished flat despite a sell off on Friday.  An increase in Spanish yield stirred some fear in a market where there appears to be no significant buyers or sellers.  Volume for the week indicated a lack of bullish or bearish sentiment  Positive earnings reports from Google, General Electric, and IBM put a positive spin on the market.  It appears the markets interpreted Ben Bernanke’s remarks before Congress as being bullish.  The prospect of further quantitative easing puts an damper on traders’ willingness to be short the market.

The markets were essentially unchanged for the week.  Last week the Dow Jones Industrial Average closed at 12,822.57  up 45.48 points or a gain 0.36%.    The SPX ended the week up 5.88 points –  up 0.43% at 1,362.66.  The NASDAQ 100 (NDX) responded to good earnings from Google with a gain of 33.07 points or plus 1.28% to close at 2,618.04.    The S&P 100 (OEX) gained 0.60% to close at 626.57. The Russell 2000 (RUT) bucked the upward trend by closing at 791.54, a loss of 9.45 points – down 1.18.  The continued weakness in the RUT is in response to perceived exposure to the European financial crisis.

The VIX continues to fluctuate between negative and positive sentiment.  The VIX ended the week at 16.27% to close near its recent lows.  The other index volatility measurements reflected the current mildly bullish stance by closing down from the previous week’s marks.

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

Index Close Weekly Change % Weekly % YTD Volatility of  Index
Dow Jones Industrials (DJIA) 12,822.57 45.48 0.36% 4.95% 14.93% (VXD)
S&P 500 (SPX) 1,362.66 5.88 0.43% 8.35% 16.27% (VIX)
NASDAQ 100 (NDX) 2,618.04 33.07 1.28% 14.94% 18.27% (VXN)
Russell 2000 (RUT) 791.54 -9.45 -1.18% 6.83% 21.18% (RVX)
S&P 100 (OEX) 626.57 3.74 0.60% 9.77% 15.99% (VXO)
CBOE Volatility Index (VIX) 16.27 -0.47 -2.81% NA

The market did not exhibit the previous week’s intraday volatility.   Earnings could have a major influence on market movement.  Earnings announcements reach their peak this week.  The highlight will be earnings from Apple (AAPL) Tuesday after the market close.  The consensus estimates are for earnings of $10.39 per share.  Other important earnings are McDonald’s on Monday, Ford Motor, Caterpillar, Boeing, Pepsico, and Visa on Wednesday, and Colgate-Palmolive, Facebook and Exxon Mobil on Thursday.  These earnings have the capability of sending the markets in either direction.

We are approaching the one year anniversary of the Congressional brinkmanship which lead to last year’s major sell-off.  Media focus on last year will bring the focus to the possibility of the current “financial cliff.”  The major economic reports are weekly initial unemployment on Thursday, and second quarter estimate GDP on Friday.  Be wary of the impact of a revision of the first quarter GDP.  Traders looking to  the GDP announcement as an indicator of the state of the U.S. economy.

The past week’s market behavior is not an indication everything is “all right”  Be careful.  Be aware.

Remember:

“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 July 23:

Economic Chicago Fed National Activity Index – 8:30.

Earnings:  BMO:  Cal-Maine Foods (VALM), Eaton Corp (ETN), General Electric (GE)Halliburton (HAL), Hasbro (GAS), McDonalds (MCD), RPM International (RPM);  AMC:  Baidu (BIDU), Celanese (CE), Seacor Holdings (CKH), Crane (CR), Gulfmark Offshore (GLF), Jacobs Engineering (JEC), Olin (OLN), Texas Instruments (TXN), United Stationers (USTR), VMware (VMW).

Tuesday July 24:

Economic:  ICSC Goldman Sachs Retail Store Sales – 7:45, Redbook – 8:55, PMI Manufacturing  Index Flash – 8:58, FHFA Housing Price Index – 10:00, Richmond Fed Manufacturing Index – 10:00.

Earnings:  BMO:  Air Products & Chemicals (APD), Anixter International (AXE), Avery Denison (AVY), BE Aerospace (BEAV), Biogen Idec (BIIB), Peabody Energy (BTU), Rockwell Collins (COL), Ceradyne (CRDN), EI DuPont de Nemours (DD), Dominos Pizza (DPZ), EMC (EMC), Illinois Tool Works (ITW), Lockheed Martin (LMT), Lexmark (LXK), Neogen (NEOG), Paccar (PCAR), Potlatch (PCH),  Polaris Industries (PII),  Ryder System (R), Reynolds American (RAI), Rogers Communications (RCI), SAP AG (SAP), Simon Property Group (SPG), Six Flags (SIX), ATT&T (T), Under Armour (UA), United Parcel Service (UPS)Westinghouse Air Brake WAB), Whirlpool (WHR);  AMC:  Apple (AAPL), ACE (ACE), AFLAC (AFL), Buffalo Wild Wings (BWLD), Cabot Oil & Gast (COG), Chicago Bridge & Iron (CBI), Illumina (ILMN), iRobot (IRBT), Netflix (NFLX), Panera Bread (PNRA), Questcor Pharmaceuticals (QCOR), Valmont Industries (VMI), .

Wednesday July 25:

Economic: MBA Purchase Applications – 7:00, New Home Sale – 10:00, EIA Petroleum Status Report – 10:30.

Earnings:  BMO:  AOL (AOL), Airgas (ARG), Boeing (BA), Bristol-Myers Squibb (BMY), Canon (CAJ), Caterpillar (CAT), Canadian National Railway (CNI), ConocoPhillips (COP), Canadian Pacific Railway (CP), Diebold (DBD), Ford (F), General Dynamics (GD), Corning (GLW), WR Grace (GRA), Hess (HES), Eli Lilly (LLY), Lorillard (LO), Motorola Solutions (MSI), Northrop Grumman (NOC), Pepsico (PEP), Praxair (PX), Regeneron Pharmaceuticals (REGN), Rockwell Automation (ROK), Southern Co. (SO), SolarWinds (SLI), Tupperware (TUP), WellPoint (WLP);  AMC:  Angie’s List (ANGI), Avalonbay (AVB), CR Bard (BCR), Crown Castle (CCI), Citrix Systems (CTXS), Graco (GGG), InterDigital (IDCC), Kaiser Aluminum (KALU), Kirby (KFX), Morningstar (MORN ), Raymond James (RJF), Shutterfly (SFLY), Tactor Supply (TSCO), Visa (V).

Thursday July 26:

Economic:    Durable Goods Orders – 8:30, Jobless Claims – 8:30, Bloomberg Consumer Confidence Index – 9:45, June Pending Home Sales Index – 10:00, EIA Natural Gas Status Report – 10:30, Kansas City Fed Manufacturing Index – 11:00.

Earnings:  BMO:  Arctic Cat (ACAT), Barrick Gold (ABX), Amylin Pharmaceuticals (AMLN), Ashland (ASH), AstraZeneca (AZN), Brunswick (BC), Ball Corp (BLL), BorgWarner (BWA), Cabela’s (CAB), Colgate-Palmolive (CL), CME Group (CME), Covidien (COV), Carters (CRI), Carbo Ceramics (CRR), Dunkin Brands (DNKN), Dow Chemical (DOW), Dr. Pepper Snapple (DPS), Goodrich (GR), Starwood Hotels (HOT), Hershey (HSY), IMAX (IMAX), Imperial Oil (IMO), International Paper (IP), Kimberly-Clark (KMB), L# Communications (LLL), Moody’s (MCO), McGraw-Hill (MHP), 3M (MMM), Monro Muffler Brake (MNRO), Mylan (MYL), Noble Energy (MYL), Occidental Petroleum ((OXY), Precision Castparts (PCS), Pulte Homes (PHM), Potash (POT), Royal Dutch Shell )RDS.A), Radware (RDWE), Reliance Steel (RS), Raytheon (RTN), Rayoneer (RYN), Teledyne (TDY), Tenneco (TEN), Timken (TKR), Unilever plc (UL), United Technologies (UTX), Vulcan Materials (VMC), Waste management (WM), Exxon Mobil, (XOM),  Zimmer Holdings (ZMH); AMC:  Amgen (AMGN), Amazon (AMZN), Chubb (DB), Columbia Sportswear (COLM) Coinstar (CSTR), Deckers Outdoor (DECK), Dun & Bradstreet (DNB), Expedia (EXPE), Facebook (FB), Gilead Sciences (GILD), McKesson (MCK), Mettler-Toledo (MTD), NetSuite (N), Netgear (NETG), Starbucks (SBUX),

Friday July 27:

Economic: GDP – 8:30, University of Michigan/Reuters Consumer Sentiment – 9:55.

Earnings:  BMO: Chevron (CVX), DTE Energy (DTE), Legg Mason (LM), Merck (MRK), Newmont Minning (NEM), Newell Rubbermaid (NWL), Total SA (TOT), Weyerhaeuser (WY).

Monday July 30:

Economic:  Dallas Fed Manufacturing Survey – 8:30.

Earnings:  BMO:  Arrow Electronics (ARW), Franklin Resources (BEN), CNA Financial (CNA), HSBC Holdings (HSBC), Loews (L), Roper Industries (ROP); AMC:  Andarko Petroleum (APC), Cirrus Logic (CRUS), Eastman Chemical (EMN), Forest Oil (FST), Herbalife (HLF), NewMarket (NEU), Seagate (STX), Texas Roadhouse (TXRH).

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