The Prepared Mind 2.4.2013

 

The Super Bowl Theory postulates that when a team from the original NFL wins, the stock market tends to go up.  If the NFL team wins, the market has increased 28 out of 33 times with an average increase of over 13%. The average loss is 13.2% when an old NFL team does not win.  Another factor is in play here.  Significant January market gains, such as in 2013, are most often a precursor of further gains for the year.  This year’s participant from the original NFL is the San Francisco 49ers.  The leading indicators (football and market) would seem to indicate a San Francisco win.  Do not ignore the most important caveat:  Past Performance is not an Indicator of Future Results.   Enjoy the game and do not let market decisions be influenced by the outcome of a sporting event

 

The all clear signal has been activated.  The market continued the seemingly inexorable move upwards.  Weekly gains were nearly 1% with YTD gains approaching 7%.  The Dow Jones Industrial Average closed above 14,000 for the first time since October 2007.  The markets showed continue to move upwards despite a small contraction in fourth quarter GDP.  Market bulls instead focused on the Fed’s Wednesday policy statement on the need for continuation of monetary easing.  Further support for bullish sentiment was seen in reports on employment, earnings, consumer sentiment, investor sentiment, construction spending and manufacturing. 

 

Last week, the Dow Jones Industrial Average (DJIA) again finished at recent highs, gaining 113.81 points, or .82%, to close at 14,009.79.  The S&P 500 closed at 1,513.17, up 10.22  points or a gain of .68%.  The S&P 100 (OEX) gained 0..68%, or 4.59 points, to close 681.74.  The NDX avoided continued pummeling by Apple (AAPL) by closing at 2,763.96, a gain of 27.23 points or plus .99%.  The RUT closed at 909.55, a gain of 4.30 points or .48%. Friday’s gains erased gains in the VIX and other volatility indexes. The VIX again closed the week near 5 year lows.   The VIX closed last week at 12.90, an increase of 0.01 points or a weekly gain of 0.08%.  The cash VIX reflects a lack of concern about market volatility in the short term. These VIX levels a characterized by low call prices.  The other volatility indexes reflected the same lack of concern and reflected similar movement for the week.  These VIX levels a characterized by low call prices.  These call prices are a bane for call premium sellers.  Option exchanges and retail option brokers are reporting an increase in purchases of calls.   Here is a capsule view of last week’s market numbers:

Index

Close

Weekly Change

% Weekly

% YTD

Volatility of  Index

Dow Jones Industrials (DJIA)

14,009.79

113.81

0.82%

6.91%

12.07% (VXD)

S&P 500 (SPX)

1,513.17

10.22

0.68%

6.10%

12.90% (VIX)

NASDAQ 100 (NDX)

2,763.96

27.23

0.99%

3.87%

13.89% (VXN)

Russell 2000 (RUT)

909.55

4.30

0.48%

6.83%

16.44% (RVX)

S&P 100 (OEX)

681.74

4.59

0.68%

5.43%

12.44%(VXO)

CBOE Volatility Index (VIX)

12.90

0.01

0.08%

NA

Earnings will continue to have major impact on the market.  Economic reports will not have much ability to move the market this week.  The focus will be on the report on factory orders on Monday morning. Companies making earnings announcements are highlighted by Yum! Brands, Baidu, Chipotle, Panera, Walt Disney, ADP, AFLAC, Allergan, Prudential Financial, Estee Lauder, Ralph Lauren, CVS Caremark, Cummins, Visa and Linkedin.    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 any products you trade.   I am including a consensus earnings estimate for each stock.  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 February 4:

Economic:  Factory Orders – 10:00.

Optionable Earnings:

Symbol

Company Name

Jan 25 close

IV30

XEPS

B/A

CYOU Changyou.com Limited

$31.74

51.0

$1.31

B

GCI Gannett Co. Inc.

$20.31

32.8

$0.88

B

GOLD Randgold Resources Ltd.

$96.11

30.0

$1.59

B

HUM Humana Inc.

$73.86

24.0

$1.08

B

SOHU Sohu.com Inc.

$50.26

41.8

$0.54

B

APC Anadarko Petroleum Corp.

$80.02

27.8

$0.74

A

APKT Acme Packet Inc.

$23.85

55.4

($0.05)

A

BIDU Baidu Inc

$107.92

43.8

$1.28

A

GILD Gilead Sciences Inc.

$78.40

25.4

$0.91

A

HIG Hartford Financial Services Group Inc.

$24.39

30.7

$0.30

A

HOLX Hologic Inc.

$23.33

29.7

$0.37

A

LIFE Life Technologies Corporation

$61.66

38.0

$1.11

A

SWI SolarWinds Inc

$54.64

44.7

$0.29

A

YUM Yum! Brands Inc.

$66.39

28.3

$0.01

A

   

 

Tuesday February 5:

Economic:  ICSC-Goldman Sachs Store Sales – 7:45, Redbook – 8:55, S&P ISN Non-Manufacturing Index – 10:00.

Optionable Earnings:

Symbol

Company Name

FEB 1 close

IV30

XEPS

B/A

ACM AECOM Technology Corporation

$25.57

36.3

$0.33

B
ADM Archer-Daniels-Midland Co.

$28.53

23.8

$0.59

B
AGN Allergan Inc.

$105.01

22.6

$1.19

B
ARMH ARM Holdings plc

$41.06

39.8

$0.16

B
ATK Alliant Techsystems Inc.

$64.72

28.8

$1.70

B
BP BP plc

$44.52

22.5

$1.05

B
CNC Centene Corp.

$43.16

43.8

$0.33

B
CSC Computer Sciences Corp.

$41.80

47.8

$0.63

B
DLPH Delphi Automotive PLC

$38.66

28.7

$0.87

B
DO Diamond Offshore Drilling Inc.

$75.09

20.6

$1.10

B
EL Estee Lauder Companies Inc.

$60.93

35.0

$1.04

B
EMR Emerson Electric Co.

$57.25

20.8

$0.62

B
ETN Eaton Corporation, PLC

$56.95

23.9

$0.94

B
TM Toyota Motor Corp.

$95.37

24.3

$1.35

B
AFL AFLAC Inc.

$53.06

24.2

$1.48

A
CERN Cerner Corp.

$82.55

39.5

$0.60

A
CHRW CH Robinson Worldwide Inc.

$66.15

29.7

$0.70

A
CME CME Group Inc.

$57.84

21.0

$0.63

A
CMG Chipotle Mexican Grill Inc.

$307.01

34.6

$1.95

A
DIS Walt Disney Co.

$53.88

23.1

$0.77

A
EQR Equity Residential

$55.39

20.6

$0.75

A
EXPE Expedia Inc.

$65.25

55.2

$0.55

A
HAIN The Hain Celestial Group Inc.

$57.00

59.3

$0.69

A
HBI Hanesbrands Inc.

$37.48

33.6

$1.00

A
MYGN Myriad Genetics Inc.

$27.06

36.7

$0.38

A
PNRA Panera Bread Co.

$159.81

38.5

$1.74

A
SFLY Shutterfly Inc.

$33.08

55.9

$1.01

A
SU Suncor Energy Inc.

$34.02

21.2

$0.80

A
TRMB Trimble Navigation Ltd.

$62.50

31.8

$0.50

A

 

Wednesday February 6:

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

Other:  Japan Industrial Production. EU Economic Sentiment.

Optionable Earnings:

Symbol

Company Name

FEB 1 close

IV30

XEPS

B/A

GRA WR Grace & Co.

$71.80

26.1

$1.06

UNK
PHH PHH Corp.

$21.88

30.2

$0.78

D
CMI Cummins Inc.

$114.83

30.7

$1.74

B
CVS CVS Caremark Corp.

$51.20

20.2

$1.10

B
MAC Macerich Co.

$59.72

22.1

$0.87

B
MPEL Melco Crown Entertainment Ltd

$20.96

46.0

$0.20

B
MRO Marathon Oil Corp.

$33.61

24.5

$0.69

B
NUS Nu Skin Enterprises Inc.

$42.36

62.0

$0.95

B
ORLY O’Reilly Automotive Inc.

$92.65

28.6

$1.08

B
RL Polo Ralph Lauren Corp.

$166.48

36.9

$2.21

B
TWX Time Warner Inc.

$50.52

22.2

$1.10

B
USG USG Corp.

$29.39

42.4

($0.28)

B
VMED Virgin Media Inc.

$39.39

28.2

$0.41

B
WYN Wyndham Worldwide Corporation

$55.79

24.6

$0.60

B
AIZ Assurant Inc.

$38.24

27.2

($0.31)

A
AKAM Akamai Technologies Inc.

$40.71

56.0

$0.37

A
ALL Allstate Corp.

$43.90

23.5

($0.07)

A
DV DeVry Inc.

$25.17

60.3

$0.57

A
ENS EnerSys

$40.93

32.4

$0.80

A
EXP Eagle Materials Inc.

$64.77

37.2

$0.43

A
FMC FMC Corp.

$61.47

24.4

$0.81

A
GMCR Green Mountain Coffee Roasters Inc.

$45.53

84.8

$0.65

A
IACI IAC/InterActiveCorp

$41.25

50.1

$0.63

A
IRBT iRobot Corp.

$22.88

57.8

($0.34)

A
LNC Lincoln National Corp.

$28.98

29.8

$1.06

A
NTES Netease.com Inc.

$46.42

42.3

$1.06

A
NWS News Corporation

$28.24

25.5

$0.44

A
NWSA News Corporation

$27.74

26.3

$0.42

A
PRU Prudential Financial Inc.

$57.88

26.9

$1.74

A
TRLG True Religion Apparel Inc.

$23.71

64.8

$0.83

A
TSO Tesoro Corporation

$48.69

41.1

$1.38

A
V Visa Inc.

$157.91

21.3

$1.78

A
YELP Yelp, Inc.

$21.24

77.2

($0.05)

A

 

Thursday February 6:

Economic:  Jobless Claims – 8:30, Productivity and Costs – 8:30, Bloomberg Consumer Comfort Index – 9:45,  EIA Natural Gas Report – 10:30, Consumer Credit – 3:00.

Other:  German CPI

Optionable Earnings:

Symbol

Company Name

FEB 1 close

IV30

XEPS

B/A

AAP Advance Auto Parts Inc.

$73.52

36.0

$0.75

B
CI CIGNA Corp.

$58.34

24.6

$1.47

B
CS Credit Suisse Group

$29.54

29.7

$0.42

B
CTSH Cognizant Technology Solutions Corp.

$78.18

26.8

$0.91

B
EXC Exelon Corp.

$31.44

30.4

$0.65

B
HOT Starwood Hotels & Resorts Worldwide Inc.

$61.41

25.8

$0.65

B
INGR Ingredion Incorporated

$66.07

27.2

$1.41

B
LAZ Lazard Ltd.

$34.65

28.6

$0.33

B
LUFK Lufkin Industries Inc.

$57.91

44.7

$0.84

B
MSCI MSCI Inc

$33.74

25.8

$0.53

B
NBL Noble Energy Inc.

$107.79

22.0

$1.11

B
NNN National Retail Properties Inc.

$32.02

20.6

$0.44

B
PCYC Pharmacyclics, Inc.

$69.33

50.8

$0.29

B
PTEN Patterson-UTI Energy Inc.

$20.34

33.4

$0.28

B
TCK Teck Cominco Ltd.

$36.49

31.3

$0.52

B
TDC Teradata Corporation

$66.66

44.8

$0.70

B
TEVA Teva Pharmaceutical Industries Ltd.

$37.99

20.8

$1.33

B
ATHN Athenahealth Inc.

$86.47

42.8

$0.17

A
CSTR Coinstar Inc.

$50.88

62.5

$0.73

A
HAS Hasbro Inc.

$37.37

28.1

$1.21

A
LNKD LinkedIn Corporation

$123.79

46.3

$0.01

A
MCHP Microchip Technology Inc.

$33.45

20.2

$0.32

A
NUAN Nuance Communications Inc.

$24.05

34.7

$0.24

A
OPEN Open Table, Inc.

$52.69

54.3

$0.31

A
RSG Republic Services Inc.

$31.89

26.3

$0.43

A
XL XL Capital Ltd.

$27.72

24.1

($0.34)

A

 

 

Friday February 7:

Economic:  International Trade – 8:30, Wholesale Trade – 10:00.

Other: EU Manufacturing Index. EU Employment.

Optionable Earnings:

Symbol

Company Name

FEB 1 close

IV30

XEPS

B/A

APO American Community Properties Trust

$22.27

25.2

$0.71

B
AOL AOL Inc.

$30.65

45.6

$0.40

B
CBOE CBOE Holdings Inc.

$33.88

20.9

$0.42

B
LH Laboratory Corp. of America Holdings

$89.50

24.3

$1.61

B
CCJ Cameco Corp.

$21.55

28.7

$0.41

A

 

 

Monday February 11:

Economic:  No major announcements.

Other:  EU Producer Price Index (PPI).

Optionable Earnings:

Symbol

Company Name

FEB 1 close

IV30

XEPS

B/A

ALEX Alexander & Baldwin, Inc.

$33.60

25.1

$0.14

A
DNB Dun & Bradstreet Corp.

$81.54

31.6

$2.41

A
VECO Veeco Instruments Inc.

$31.45

46.1

$0.02

A

 

 

 

 

 

 

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