The Prepared Mind 1.21.2013

We are three weeks into the New Year and the U.S. markets are up 4%.  The Dow Jones Industrial Average finished the week at a new 5-year high.  Technical analysts pointed to the market’s ability to push through an intraday high from this past September as an indication of the potential for further increases in the market.  These analysts see further support for the beginning of a secular bull market in the behavior of the Dow Jones Transportation Average which is up 7.3% this year.  Many see the Transports as a leading indicator of the stock market and the general economy.  This week’s “Fear of the Day” in the financial media was the low crescendo of “Should we get in now before we miss any more gains?”  Four weeks ago, the media “Fearcasting” was focused upon the fiscal cliff and the dangers to the downside.  It is your responsibility to develop a cogent personal risk/reward comfort zone.  The back and forth between the pundits reminds me of the opening lyrics of “Helter Skelter.”

When I get to the bottom I go back to the top of the slide

Where I stop and I turn and I go for a ride

Till I get to the bottom and I see you again

Yeah yeah yeah hey.

Lennon and McCartney make as much sense as many of these financial entertainers.  So yeah yeah yeah hey and know what you are trading, balance risk and reward, and remain disciplined.

Last week, the Dow Jones Industrial Average (DJIA) finished at its highest level since December 2007, gaining 161.27 points, or 1.20%, to close at 13,649.70.  The S&P 500 closed at 1,485.98, up 13.93 points or a gain of 0.95%.  The S&P 100 (OEX) gained 0.52%, or 3.49 points, to close 671.37.  The NDX reflected relative weakness in the tech sector by closing at 2,743.24, a loss of 5.02 points or – 0.18%.  The RUT closed at 891.82, a gain of 11.63 points or 1.32%. The VIX and other volatility indexes reflected the current lack of fear.  The VIX closed the week at 5 year lows.   The VIX closed last week at 12.46, a decrease of 0.90 points or a weekly loss of 6.74%.  The cash VIX reflects a lack of concern about market volatility in the short term. This is the lowest level for the VIX since June 2007.  The other volatility indexes reflected the same lack of concern and reflected similar movement for the week.  Here is a capsule view of last week’s market numbers:

Index Close Weekly Change % Weekly % YTD Volatility of  Index
Dow Jones Industrials (DJIA)

13,649.70

161.27

1.20%

4.16%

11.47% (VXD)
S&P 500 (SPX)

1,485.98

13.93

0.95%

4.19%

12.46% (VIX)
NASDAQ 100 (NDX)

2,743.24

-5.02

-0.18%

3.09%

14.17% (VXN)
Russell 2000 (RUT)

891.82

11.63

1.32%

4.75%

14.67% (RVX)
S&P 100 (OEX)

671.37

3.49

0.52%

3.83%

12.14% (VXO)
CBOE Volatility Index (VIX)

12.46

-0.90

-6.74%

NA

This will be a shortened trading week.  Earnings will be the primary focus of the trading week.  Companies making earnings announcements highlighted by  Google, IBM, CSX, Texas Instruments, DuPont, Johnson & Johnson, McDonald’s, Apple, Abbott Labs, Union Pacific, Microsoft, 3M, Starbucks,  Kimberly-Clark, and Procter & Gamble.  I have scanned stocks with upcoming earnings using the following criteria:  Price > 20, 30 Day Implied Volatility > 20, and Average Daily Option Volume > 200 contracts.  Be wary of trading in equities where there is not adequate liquidity and narrow enough markets.  You should be aware of daily volume and open interest in the products you trade.   I am including a consensus earnings estimate for each stock.  Economic announcements cover regional Fed manufacturing indexes and housing.

Stick with your plan.    Remain disciplined.  Remain on top of market news and movers.  Do not chase profits and disregard risk.

Remember:

  “Chance favors the Prepared Mind.” – Louis Pasteur

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

Monday January 21

All Markets Closed – Martin Luther King Jr. Day.

Tuesday January 22:

Economic:  Chicago Fed National Activity Index – 8:30, Existing Home Sales – 10:00, Richmond Fed Manufacturing Index – 10:00.

Earnings:

Symbol

Company Name

Jan 18 close

IV30

B/A

XEPS

B/A

EAT Brinker International Inc.

$33.27

31.8

B

$0.50

B

FCX Freeport-McMoRan Copper & Gold Inc.

$34.08

27.0

B

$0.72

B

KSU Kansas City Southern

$87.87

26.6

B

$0.82

B

OSIS OSI Systems Inc.

$67.65

34.7

B

$0.68

B

PKG Packaging Corp. of America

$39.94

27.7

B

$0.62

B

WAT Waters Corp.

$90.57

25.2

B

$1.58

B

CA CA Inc.

$24.22

24.9

A

$0.61

A

CREE Cree Inc.

$32.58

49.2

A

$0.30

A

CSX CSX Corp.

$20.89

23.2

A

$0.39

A

GOOG Google Inc.

$711.32

30.4

A

$10.54

A

IBM International Business Machines Corp.

$193.65

20.2

A

$5.25

A

ISRG Intuitive Surgical Inc.

$514.20

38.7

A

$4.09

A

NSC Norfolk Southern Corp.

$65.95

20.8

A

$1.19

A

TXN Texas Instruments Inc.

$33.15

20.3

A

$0.34

A

 

 

Wednesday January 23:

Economic:  MBA Purchase Applications – 7:00, ICSC-Goldman Sachs Store Sales – 7:45, Redbook – 8:55.

Earnings:

Symbol

Company Name

Jan 18 close

IV30

B/A

XEPS

B/A

ATI Allegheny Technologies Inc.

$30.07

38.7

B

$0.16

B

BHI Baker Hughes Inc.

$42.73

25.9

B

$0.61

B

CHKP Check Point Software Technologies Ltd.

$49.17

31.1

B

$0.88

B

COH Coach Inc.

$61.57

37.4

B

$1.29

B

DGX Quest Diagnostics Inc.

$60.55

22.3

B

$1.06

B

MLNX Mellanox Technologies Ltd.

$51.81

98.0

B

$0.65

B

MSI Motorola Solutions, Inc.

$58.04

24.3

B

$1.02

B

STJ St. Jude Medical Inc.

$39.23

27.7

B

$0.89

B

TXT Textron Inc.

$27.09

29.2

B

$0.56

B

WLP WellPoint Inc.

$62.42

23.3

B

$0.95

B

AAPL Apple Inc.

$502.68

40.7

A

$13.41

A

ALTR Altera Corp.

$35.70

31.1

A

$0.39

A

AMGN Amgen Inc.

$83.94

21.4

A

$1.44

A

CCI Crown Castle International Corp.

$74.00

20.2

A

$0.14

A

FFIV F5 Networks Inc.

$98.52

47.7

A

$1.15

A

JEC Jacobs Engineering Group Inc.

$46.05

21.3

A

$0.75

A

LRCX LAM Research Corp.

$40.07

29.6

A

$0.44

A

NE Noble Corp.

$39.61

32.5

A

$0.62

A

NFLX Netflix Inc.

$97.70

71.8

A

-$0.60

A

SNDK SanDisk Corp.

$48.39

44.5

A

$0.73

A

URI United Rentals Inc.

$49.28

43.4

A

$1.01

A

VAR Varian Medical Systems Inc.

$74.59

27.8

A

$0.87

A

WDC Western Digital Corp.

$45.22

43.1

A

$1.82

A

 

 

Thursday January 24:

Economic:  Jobless Claims – 8:30, PMI Manufacturing Index Flash, Bloomberg Consumer Comfort Index – 9:45,  EIA Natural Gas Report – 10:30, EIA Petroleum Status Report – 11:00, Kansas City Fed Manufacturing Index.

Earnings:

Symbol

Company Name

Jan 18 close

IV30

B/A

XEPS

B/A

BPOP Popular Inc.

$22.34

26.4

B

$0.51

B

CELG Celgene Corporation

$98.19

32.7

B

$1.31

B

DOV Dover Corp.

$68.24

20.8

B

$1.07

B

ETN Eaton Corporation, PLC

$56.42

22.3

B

$0.94

B

GWW W.W. Grainger Inc.

$210.34

21.1

B

$2.61

B

KMT Kennametal Inc.

$42.60

31.6

B

$0.65

B

PCP Precision Castparts Corp.

$186.27

21.5

B

$2.48

B

SWK Stanley Black & Decker, Inc.

$77.28

24.7

B

$1.28

B

TKR Timken Co.

$50.66

34.7

B

$0.62

B

UAL UAL Corporation

$25.76

38.9

B

-$0.55

B

CRUS Cirrus Logic Inc.

$29.78

69.7

A

$1.41

A

INFA Informatica Corp.

$31.86

47.5

A

$0.37

A

JBHT JB Hunt Transport Services Inc.

$62.78

24.8

A

$0.69

A

JNPR Juniper Networks Inc.

$21.28

40.2

A

$0.22

A

KLAC KLA-Tencor Corp.

$51.89

28.8

A

$0.22

A

MXIM Maxim Integrated Products Inc

$30.67

27.9

A

$0.42

A

RHI Robert Half International Inc.

$33.71

25.5

A

$0.41

A

RMD ResMed Inc.

$44.37

39.7

A

$0.51

A

SBUX Starbucks Corp.

$54.50

27.7

A

$0.57

A

TPX Tempur Pedic International Inc.

$34.98

65.1

A

$0.55

A

VRSN VeriSign Inc.

$39.41

31.6

A

$0.51

A

 

 

Friday January 25:

Economic:  New Home Sales – 10:00, Reuter’s/University of Michigan Consumer Sentiment – 9:55.

Earnings:

Symbol

Company Name

Jan 18 close

IV30

B/A

XEPS

B/A

OSK Oshkosh Truck Corp.

$33.48

33.0

B

$0.31

B

WY Weyerhaeuser Co.

$30.79

23.2

B

$0.20

B

LM Legg Mason Inc.

$26.73

29.7

A

 

A

 

Monday January 28:

Economic:  Durable Goods Orders – 8:30, Pending Home Sales – 10:00, Dallas Fed Manufacturing Survey – 10:30.

Earnings:

Symbol

Company Name

Jan 18 close

IV30

B/A

XEPS

B/A

BIIB Biogen Idec Inc.

$143.72

22.9

B

$1.46

B

CAT Caterpillar Inc.

$95.70

21.3

B

$1.70

B

BMC BMC Software Inc.

$42.76

25.9

A

$1.01

A

ILMN Illumina Inc.

$51.59

39.8

A

$0.41

A

OLN Olin Corp.

$22.91

22.8

A

$0.34

A

STX Seagate Technology

$35.02

45.7

A

$1.27

A

VMW VMware Inc.

$95.36

36.5

A

 

A

YHOO Yahoo! Inc.

$20.13

27.5

A

$0.28

A

ZION Zions Bancorp.

$22.50

27.7

A

$0.39

A

 

 

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