The Prepared Mind 10.1.2012

The bears are grumbling.

Despite two down weeks in a row , the markets finished up for September and the third quarter.  The S&P 500 was up nearly 2.42% in September and 5.8% for the quarter.  The Dow was up nearly 3% and showed a 4.3% gain for the quarter.  The bears started grumbling last week.  The noise came from anemic growth in GDP, a poor showing in durable goods and employment, reduction in the savings rate, and continued worries about the Euro-zone.  The indexes remain near multi-year highs despite prognosticator jitters. Stay tuned.

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

Index Close Weekly Change % Weekly % YTD Volatility of  Index
Dow Jones Industrials (DJIA) 13,437.13 -142.34 -1.05% 9.98% 14.34% (VXD)
S&P 500 (SPX) 1,440.67 -19.48 -1.33% 14.56% 15.73% (VIX)
NASDAQ 100 (NDX) 2,799.19 -62.45 -2.18% 22.89% 17.01% (VXN)
Russell 2000 (RUT) 837.45 -18.06 -2.11% 13.03% 19.62% (RVX)
S&P 100 (OEX) 663.80 -8.47 -1.26% 16.29% 14.37%(VXO)
CBOE Volatility Index (VIX) 15.73 1.75 12.52% NA

It is employment week – the monthly exercise used by the financial media to ramp up market and economic concerns.  The talk starts on Monday with a full crescendo of speculation leading up to the Employment situation on  Friday.  The speculation is fueled by the ADP Employment Report on Wednesday, the Challenger Job-cut report on Thursday and the Monster Employment Index early Friday morning.  The Employment Situation provides the monthly unemployment rate for the previous month.  The report and the foreplay preceding the report have lead to interday and intraday volatility in the markets during employment week.

The presidential debates on Wednesday have the potential to impact Thursday’s opening.  The debate, taken by itself, is probably not a market mover.  However, the performance, or lack thereof, by the candidates may provide a push in a market with a directional bias.  Chinese markets will be closed this week for a celebration of the “Golden Week” holiday.    Our markets will focus on events in Europe nn the absence of data from the Chinese markets

Third quarter earnings announcements have not started.  These announcements will give direction to the market in future weeks. Many companies are going ex-dividend this week.  Check short in-the-money calls and see if they have the potential to be assigned.  Rolling the short call up to a higher strike price or out to a further expiration month should prevent  early assignment from occurring.

Do not allow yourself to be caught by surprise.  Be disciplined.  Always trade with a short term and long term plan.    Be nimble. Understand what you are trading.   Know where and how you will take profits and losses.

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 October 1:

Economic:  PMI Manufacturing Index 9-00, ISM Manufacturing Index – 10:00, Construction Spending – 10:00.

Earnings:  BMO:  Cal-Maine Foods (CALM), Ferrellgas (FGP);  AMC:  Team Inc (TISI).

Other:  Chinese markets closed.  Ben Bernanke speaks at 12:30.  Chinese markets closed.  Bank of Japan reports business sentiment index.

Tuesday October 2:

Economic:   Motor Vehicle Sales, ISCS-Goldman Sachs Retail Sales – 7:45, Redbook – 8:55.

Earnings:  BMO: Acuity Brands (AVI), Mosaic (MOS);  AMC:  Resource Connection (RECN).

Other:  Chinese markets closed.

Wednesday October 3:

Economic: MBA Purchase Applications – 7:00,  ADP Employment Report – 8:15, ISM Non-manufacturing Index – 10:00, EIA Petroleum Status Report – 10:30.

Earnings:  BMO:  Family Dollar Stores (FDO), Monsanto (MON), RPM International (RPM);  AMC:  Marriott International (MAR),

Other:  Chinese markets closed.  Presidential debate between Obama and Romney – 9:00.

Thursday October 4:

Economic:  Chain Store Sales, Challenger Job-Cut Report – 7:30,  Jobless Claims – 8:30, Bloomberg Consumer Comfort Index – 9:45, Factory Orders – 10:00, EIA Natural Gas Status Report – 10:30.

Earnings:  BMO:  International Speedway (ISCA),

Other:  FOMC Minutes of September Meeting – 2:00. Chinese markets closed.  European Central Bank announces rates.

Friday October 5:

Economic:   Monster Employment Index, Employment Situation – 8:30.

Earnings:  BMO:  Constellation Brands (STZ), TripAdvisor (TRIP).

Other: Chinese markets closed.  Bank of Japan announcement.

Monday October 8:

US Holiday: Columbus Day

Earnings: AMC:  AngioDynamics (ANGO).

Other:  Stock Market open. Banks & Bond markets closed.

Frank Fahey is a mentor with DiscoverOptions, the educational arm of OptionVue Systems.  Inquiries should call 847-816-6610 or email info@DiscoverOptions.com.

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