The Prepared Mind 7.30.2012

Greenville-Spartanburg Airport

I am writing this in the terminal at the Greenville-Spartanburg Airport.  My wife and I are returning to Chicago after spending four wonderful days in the mountains on the border of North Carolina and Georgia.

Last week’s market was characterized by wild intraday moves culminated by daily upward moves approaching 2% on Thursday and Friday.  This two day 4% gain was preceded by four trading days where the market was down a total of  3%.  The continual change in sentiment from disaster to salvation is very trying and vexing for traders.   The focus is now on anticipation of QE3  and additional liquidity from the European Central Bank.

The broad indexes ended the week up 0.50% to 2.0%.  The final gain was the result of Friday’s continued push  upward after a 2% gain on Thursday.  Last week the Dow Jones Industrial Average closed at 13,0753.66  up 253.09 points or a gain of 1.97%.    The S&P 500 (SPX) ended the week up 23.31 points –  up 1.71% at 1385.97.  The NASDAQ 100 (NDX), despite disappointing earnings from Apple, responded with a gain of 25.99 points or plus .99% to close at 2,644.03.    The S&P 100 (OEX) gained 1.69% to close at 637.16. The Russell 2000 (RUT) lagged the other indexes by closing  at 796.00, a gain of 4.46 points – up 0.56%.  The VIX and other volatility indexes did not reflect the end of the week optimism as indicated by the rally on Thursday and Friday.    The VIX ended the week at 16.70% to close near recent lows and well down from the weekly highs.  The weekly trading range for the other volatility indexes reflected the schizophrenic attitude about the current market news.

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

I participated in this rally only as an observer.   I had closed my options positions on Tuesday and Wednesday in anticipation of not being able to monitor and trade the market on Thursday and Friday.   As we monitored the market, my mountain host characterized watching the markets as akin to watching the antics of a drunk driver.   After calling 911, I am left with two choices – dropping to a safe distance behind to avoid danger or passing the drunk and hoping I do not get sideswiped.  I am choosing the former.  I need to remember that  “no position” is one of the most undervalued of trading strategies.

The coming week will be characterized by a continued focus on earnings combined with the meeting of the FOMC and a release of a plethora of employment reports.   Any of these events, individually, has the capability to influence the market to go in either direction. I will waiting for an opportune time to reenter the market.

Be careful.  Be aware.  Remember to focus on hitting singles and doubles.

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 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).

Tuesday July 31:

Economic:  ICSC Goldman Sachs Retail Store Sales – 7:45, Personal Income and Outlays – 8.30, Employment Cost Index – 8:30, Redbook – 8:55, S&P Case-Shiller Home Price Index – 9:00, Chicago PMI – 9:45, Conference Board Consumer Confidence – 10:00, State Street Investor Confidence Index – 10:00, Farm Prices – 3:00.

Earnings:  BMO:  Archer Daniels-Midland  (ABM), BP plc (BP), Cummins (CMI), Coach (COH), Deutsche Bank (DB), Ecolab (ECL), Honda Motors (HMC), Tyco (TYC), Pfizer (PFE), Revlon (), TYCO (TYC), Zebra Technologies (ZBRA);  AMC:  FMC (FMC), Hanesbrands (HBI), JMSTR), Peet’s Coffee & Tea (PEET), Pioneer Natural Resources (PXD), Papa John’s (PZZA), Regal-Beloit (RBC).

Other: FOMC Meeting Begins.

Wednesday August 1:

Economic:  Motor Vehicle Sales, MBA Purchase Applications – 7:00, Challenger Job-Cut Report – 7:30 , ADP Employment Report – 8:15,  PMI (Purchasing Manager’s Manufacturing Index) Index – 9:00, ISM Manufacturing Index – 10:00, Construction Spending – 10:00, EIA Petroleum Status Report – 10:30.

Earnings:  BMO:  Allergan (AGN), Automated Data Processing (ADP), Comcast “A” (DMCSA), Devon Energy (DVN), Energizer Holdings (ENR), Hyatt Hotels (H), Harley -Davidson (HOG), InterContinental Exchange (ICE), MasterCard (MA), Phillips 66 (PSX), Stratsys (SSYSD), Time-Warner (TWX), Wisconsin Energy (WEC); AMC: Allegiant (ALGT), Andersons (AND), DaVita (DVA), First Solar (FSLR), General Probe (GPRO), MetLife (MET), Murphy OIL (MUR), Portfolio Recovery (PRAA), Prudential Financial (PRU), Sturm Ruger (RGR), Boston Beer (SAM).

Other:  FOMC Meeting Announcement – 2:15.

Thursday August 2:

Economic:    Chain Store Sales, Jobless Claims – 8:30, Bloomberg Consumer Confidence Index – 9:45, Factory Orders, EIA Natural Gas Status Report – 10:30.

Earnings:  Earnings:  BMO:  Ansys (ANSS), Apache (APA), Becton-Dickinson(BDX), Cardinal Health (CAH), CBOE Holdings (CBOE), CIGNA(CI), Clorox (CL), Duke Energy (DUK), General Motors (GM), Henry Schein (HSIC), Kellog’s (K), Kubota (KUB), Lear (LEA), Parker-Hannifin (PH), Time Warner Cable (TWC); AMC:  Agrium (AGU), Air Methods (AIRM), Atrion (ATRI), Sotheby’s (BID), CBC (CBS), Curtiss-Wright (CW), Dolby Labs (DLB), Fluor (FLR), Kraft Foods (KFT), LinkedIn (LNKD), Mohawk Industries (MHK), Public Storage (PSA), Sunoco (SUN).

Friday August 3:

Economic: Monster Employment Index, July Nonfarm Payrolls – 8:30, July Unemployment Rate – 8:30, ISM Non-Manufacturing Index – 10:00.

Earnings:  BMO: Buckeye Partners (BPL),Cubic Corp (CUB), Gartner (IT), Alliant Energy (LNT), Madison Square Garden (MSG), Northwest Natural Gas (NWN), Procter & Gamble (PG), RBC Bearings (ROLL), Viacom “A” (VIAA), Viacom “B” (VIAB).

Monday August 6:

Economic:  Treasury STRIPS – 3:00.

Earnings:  BMO:  American States Water (AWR), BroadSoft (BSFT), Cinemark (CNK), Dril-Quip (DRQ), Humana HUM), Sohu (SH), Tyson Foods (TSN); AMC:  CF Industries (CF), Chesapeake Energy (CHK), Concho Resources (CXO), Markel Corp. (MKL), Tumi (TUMO), Vornado Realty Trust (VNO).

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