The Prepared Mind 10.22.2012

“Chance favors the prepared mind.” — Louis Pasteur

The indexes, with the exception of the tech heavy NDX, hovered around unchanged for the week.  Current market sentiment was colored by the largest daily downturn in the markets since June.  An accumulation of earnings disappointments was blamed for the sell-off.  The list of disappointments was led by Google (GOOG). IBM (IBM). Intel (INTC), General Electric (GE), Chipotle (CMG), Microsoft (MSFT), and McDonald’s (MCD).  A mistaken release of Google’s earnings on Thursday afternoon created downside market momentum which continued through the entirety of Friday.   Friday’s close for the Dow Jones Industrials (DJIA) was down 205.43 points or 1.5%.  The losses on Friday continued with the S&P 500 (SPX) down 1.7%, the NASDAQ 100 (NDX) down 2.2%, the Russell 2000 (RUT) down 2.2% and the S&P 100 (OEX) down 1.7%.

The picture for the entire week was completely different. The Dow Jones Industrial Average (DJIA) gained 14.66 points to close at 13,343.51 – a gain of 0.11%.   The S&P 500 closed at 1,433.19  –  up 4.59 points or 0.32%%.   The tech heavy continues to reflect the near 20% weighting of Apple in the index.  The NDX closed at 2,648.32, a loss of 41.82points or 1.54%.  The Russell 2000 (RUT) closed at 817.47  – a loss of 4.47  points or down 0.54%.  The S&P 100 (OEX) gained 0.03% , or 0.22 points ,  to close at 657.11. The VIX and other volatility indexes reflected Friday’s market weakness by being up for the week.   The VIX closed last week at 17.05 – a gain of 3.90%.  Volatility measurements for the other indexes showed similar or great gains.

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

Index

Close

Weekly Change

% Weekly

% YTD

Volatility of  Index

Dow Jones Industrials (DJIA)

13,343.51

14.66

0.11%

9.22%

15.48% (VXD)

S&P 500 (SPX)

1,433.19

4.59

0.32%

13.96%

17.05% (VIX)

NASDAQ 100 (NDX)

2,678.32

-41.82

-1.54%

17.58%

20.05% (VXN)

Russell 2000 (RUT)

817.47

-4.47

-0.54%

10.33%

20.67% (RVX)

S&P 100 (OEX)

657.11

0.22

0.03%

15.12%

15.91%(VXO)

CBOE Volatility Index (VIX)

17.05

0.64

3.90%

NA

 

The mantra for the week remains the same – Earnings, earnings, earnings……with another chorus of earnings.    The major stock announcing earnings this week include:  Caterpillar (CAT), United Parcel (UPS), Lilly (LLY), Boeing (BA), Procter & Gamble (PG), Occidental (OXY), Amazon (AMZN), Apple (AAPL), Colgate -Palmolive (CL) and Merck (MRK).  These announcements will continue to impact the individual stocks and the market as a whole.  Analysts will be looking at the company calls after the earnings announcements.  These calls will further impact sentiment for individual stocks and the market as a whole.  The domestic focus will shift from the Presidential debates on Monday night to the FOMC meeting on Tuesday and Wednesday.  Regional Feds will be releasing important data throughout the week.  Housing reports and jobs will add an additional mix to the market stew.

I have received numerous calls and emails on Friday and this weekend.  The underpinning of most of these communications was uncertainty followed by “What should I do.?”  The first priority is to take the time to assess the risk and rewards in your current positions.  Do not allow yourself to be caught by surprise.  Have a plan which will define your response to alternate market realities.  What will your response be  – do nothing, close or adjust the positions?  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.     Be disciplined in opening new positions.  Doing nothing is a viable strategy.

Famed financier Bernard Baruch said:  “Don’t try to buy at the bottom and sell at the top.  This can’t be done except by liars.”

John Templeton said in response to a question by Louis Rukeyser about how Templeton made his millions”  “I never bought a bottom and never sold a top.”  Heed this advice.  Do not feel you are missing an opportunity by not having a trade on.  Be wary.  Don’t panic.

 

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 22:

Economic:   None scheduled.

Earnings:   BMO:  Peabody Energy (BTU), Caterpillar (CAT), Cubic Corp (CUB), Freeport-McMoRan Copper & Gold (FCX), Hasbro )HAS), Lennox International (LII), Nielsen Holdings (NLSN), Potlatch (PCH), PetMed (PETS), VF Corp (VFC);  AMC:  American Campus communities (ACC)< Celanese (CE), Canadian National Railway (CNI), Crane (CR), Healthstream (HSTM), Hub Group (HUBG), IDEX (IEX), Interactive INtelligenc3e (ININ), Rent-A-Center (RCII), Southern Copper (SCCO), Texas Instruments (TXN),United Stationers (USTR), Western Digital (WDC), Yahoo! (YHOO),  Zions Bancorp (ZION).

Other:  Third Obama-Romney debate.

Tuesday October 23:

Economic:    ISCS-Goldman Sachs Retail Sales – 7:45, Redbook – 8:55, Richmond Fed Manufacturing Index.

Earnings:  BMO:  Asbury Automotive (ABG), Applied Industrial Technologies (AIT), Autoliv (ALV), Airgas (ARG), Anixter International (AXE), BE Aerospace (BEAV), CIT Group (CIT), Coach (COH), Carpenter Technology (CRS), EI DuPont de Nemours (DD), Dorman Products (DRM), Harley-Davidson (HOG), Illinois Tool Works (ITW), Lexmark (LXK), 3M (MMM), Molex (MOLX), Nu Skin (NUS), ProLogis (PLD), Ryder System (R), Reynolds American (RAI), Sonic Automotive (SAH), Techne (TECH), United Parcel Service (UPS), United Technologies (UTX), Virgin Media (VMED), Westinghouse Air Brake (WAB), Waters Corp (WAT), Whirlpool (WHR);  AMC:  Abaxis (ABAX), ACE (ACE), AFLAC (AFL), Altera (ALTR), Amgen (AMGN), AmSurg (AMSG), CR Bard (BCR), Buckeye Technologies (BKI), Broadcom (BRCM), Chicago Bridge & Iron (CBI), Facebook (FB), Gilead Sciences (GILD), Hanesbrands (HBI), Illumina (ILMN), iRobot (IRBT), Juniper Networks (JNPR), Netflix (NFLX), Norfolk Southern (JNPR), Panera Bread (PNRA), Questcor Pharmaceuticals (QCOR), Tempur Pedic (TPX), Unisys (UIS), VMware (VMW).

Other:   FOMC meeting begins.  Apple announces mini-iPad?

Wednesday October 24:

Economic:  MBA Purchase Applications – 7:00, PMI Manufacturing Index Flash – 8:58, New Home Sales – 10:00, FHFA House Price Index – 10:00, EIA Petroleum Status Report – 10:30.

Earnings:  BMO:  American Electric Power (AEP), Alexion Pharmaceuticals (ALXN), Arbitron (ARB), Avery Dennison (AVY), Boeing (BA), Bristol-Myers Squibb (BMY), Canadian Pacific Railway (CP), Dr. Pepper Snapple (DPS), DTE Energy (DTE), Brinker International (EAT), EMC (EMC), General Dynamic (GD), Corning (GLW), WR Grace (GRA), Kimberly-Clark (KMB), Lumber Liquidators (LL), Eli Lilly (LLY), Lockheed Martin (LMT), Lorillard (LO), Mine Safety (MSA), Motorola Solutions (MSI), NASDAQ (NDAQ), Northrop Grumman (NOC), Owens Corning (OC), Praxair (PX), Rogers Communication (RCI), Regeneron Pharmaceuticals (REGN), SAP AG (SAP), Six Flags (SIX), Silicon Labs (SLAB), AT&T (T), Thermo Fisher (TMO), T. Rowe Price (TROW), Tupperware(TUP), Wyndham Worldwide (WYN); AMC:  Ancestry.com ACOM), Agnico-Eagle Mines (AEM), Assurant (AIZ), Allegiant Travel (ALGT), American Railcar (ARII), Cheesecake Factory (CAKE), Crown Castle (CCI), Choice Hotels (CHH), Cliff’s Natural Resources (CLF), CoreLogic (CLGX), COCS (CROX), Citrix Systems (CTXS), Equifax (EFX), Energen (EGN), F5 Networks (FFIV), Graco (GGG), InterDigital (IDCC), Kaiser Aluminum (KALU)), KBR (KBR), Kirby (KEX), Morningstar (MORN), Owens-Illinois (OI), O’Reilly Automotive (ORLY), Range Resources (RRC), Stericycle (SRCL), Steiner Leisure (STNR), Taubman Centers (TCO), Tractor Supply (TSCO), Encore Wire (WIRE), Zynga (ZNGA).

Other:  FOMC meeting announcement – 2:15.

Thursday October 24:

Economic:  Jobless Claims – 8:30, Durable Goods Orders –  8:30, Chicago Fed National Activity Index – 8:30,  Bloomberg Consumer Comfort Index – 9:45, 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), Aetna (AET), Alaska Air (ALK), AutoNation (OAN), Avnet (AVT), AstraZeneca (AZN), Brinks (BCO), Franklin Resources (BEN), Bunge (BG), Biogen Idec (BIIB), Ball Corp (BLL), Bemis (BMS), Cabela’s (CAB), Canon (CAJ), Celgene (CELG), Colgate-Palmolive (CL), CME Group (CME), ConocoPhillips (COP), Carters (CRI), Carbo Ceramics (CRR), Credit Suisse (CS), Diebold (DBD), 3D Systems (DDD), Dunkin Brands (DNKN), First Solar (FSLR), GNC (GNC), Group 1 Automotive (GPI), Chart Industries (GTLS), Starwood Hotels (HOT), Hershey (HSY), International Paper (IP), Linn Energy (LINE), McKesson (MCK), Mead Johnson (MJN), Monro Muffler Brake (MNRO), Meritage Homes (MTH), Mylan (MYL), Noble Energy (NBL), Novartis (NVS), Nexen (NXY), Occidental Petroleum (OXY), Precision Castparts (PCP), Procter & Gamble (PG), Potash (POT), Perrigo (PRGO), Roper Industries (ROP)Raytheon (RTN), Rayonier (RYN), Sherwin Williams (SHW), Simon Property (SPG), SolarWinds (SWI), Standex (SXI), Teledyne (TDY), Tenneco (TEN), Timken (TKR), Under Armour (UA), Unilever plc (UL), United Therapeutics (UTHR), Vitamin Shoppe (VSI)Zimmer Holding (ZMH); AMC:  Apple (AAPL), Amazon.com (AMZN), BioMarin Pharmaceutical (BMRN), Bally Technologies (BYI), Chubb (CB), Cerner (CERN), Seacor Holdings (CKH), Cabot Oil & Gas (COG), Columbia Sportswear (COLM), Coinstar (CSTR). Decker’s Outdoor(DECK), Dun & Bradstreet (DNB), Eastman Chemical (EMN), Express Scripts (ESRX), Expedia (EXPE), Las Vegas Sands (LVS), NewMarket (NEU), Netgear (NTGR), Olin (OLN), PerkinElmer (PKI), Portfolio Recovery (PRAA), ResMed (RMD), Varian (VAR), VeriSign (VRSN), Wynn Resorts (WYNN).

Friday October 19:

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

Earnings:  BMO:  Arch Coal (ACI), Aon (AON), Comcast (CMCSK), Rockwell Collins (COL), Lear (LEA), Legg Mason (LM), Lifepoint Hospitals (LPNT), Moody’s (MCO), Merck (MRK), Radware (RDWR), Weyerhaeuser (WT).

Monday October 29:

Economic:   Personal Income and Outlays – 8:30, Factory Orders _ 10:00.

Earnings:   BMO:  Armstrong World Industries (AWI), Compass Minerals (CMP), CNA Financial (CNA), Gardner Denver (GDI), Haemonetics (HAE)), Harris (HRS), Loews (L), Lufkin Industries (LUFK),Mercury General (MCY), Sohu.com (SOHU), Unisource Energy (UNS); AMC:  General Cable (BGC), Baidu (BIDU), Cognex (CGNX), Chemed (CHE), Cirrus Logic (CRUS), Eagle Materials (EXP), Flowserve (FLS), FMC (FMC), Herbalife (HLF), Quaker Chemical (KWR), MicroStrategy (MSTR), Regal-Beloit (RBC), Transocean (RIG).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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