The Prepared Mind 3.25.2013

“Chance favors the prepared mind.”

The equity markets were essentially unchanged for the week. A rally on Friday erased poor market performance the previous four trading days. Cyprus trumped all else this week – FOMC announcement, weaker earnings from market leaders FedEx and Oracle, stronger earnings from Nike, and resilience in the US equity markets. A number of market oracles described the Cypriot banking crisis as a tempest in a teapot – totally overblown and an excuse to start a market correction.  Ongoing negotiations between the European Central Bank and the Cypriot government will determine the tenor of Monday’s market opening.

The broad-based indexes, with the exception of the NASDAQ 100 (NDX), showed small losses. The NDX closed at 2,800.81, a gain of 1.40 points or 0.05%.   The Russell 2000 (RUT) closed at 946.01 losing 4.83 points or a loss of 0.51%.  The Dow Jones Industrial Average (DJIA) lost 2.08 points or – 0.01%,    The S&P 500 (SPX) closed at 1.556.89, down 3.81 points or a loss of 0.24%.  The S&P 100 (OEX) lost 1.18 points to close 700.57 – minus 0.17%.  The VIX and the other volatility indexes were up for the week.  Theses volatility levels reflected market concern about Cyprus.  The VIX closed last week at 13.57, an increase of 2.27 points or a weekly gain of 20.09%.  Here is a capsule view of last week’s market numbers:

Index

Close

Weekly Change

% Weekly

% YTD

Volatility of  Index

Dow Jones Industrials (DJIA)

14,512.03

-2.08

-0.01%

10.74%

12.28% (VXD)

S&P 500 (SPX)

1,556.89

-3.81

-0.24%

9.16%

13.57% (VIX)

NASDAQ 100 (NDX)

2,800.81

1.40

0.05%

5.26%

13.88% (VXN)

Russell 2000 (RUT)

946.01

-4.83

-0.51%

11.11%

16.98% (RVX)

S&P 100 (OEX)

700.57

-1.18

-0.17%

8.35%

13.24%(VXO)

CBOE Volatility Index (VIX)

13.57

2.27

20.09%

NA

US Markets will be closed on Friday.  The market focus will be on the efforts to resolve the Cypriot banking crisis and the repercussions of any solution.  The Russian depositors make up the bulk of the non-Eurozone depositors in the Cypriot banks.  Plans to tax large depositors to fund the bank rescue have garnered outrage from Russian PM Dimitry Medevin and President Vladimir Putin.  Putin characterized this method of solving the crisis as “unfair, unprofessional and dangerous.”  Stay tuned to see if the Kremlin translates these words into economic action. There is a full slate of domestic economic reports. The Q$ GDP will be released on Thursday.  Multiple regional Fed Banks- Chicago, Kansas City, and Richmond – will be releasing their regional manufacturing indexes.  Other reports will focus on housing and jobs,

The earnings cycle is very quiet. Companies making earnings announcements are highlighted by Dollar General, Red Hat, Jos. A Bank Clothiers and Phillips-Van Heusen.  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.  It is your responsibility to confirm the earnings dates. Continue to be wary of trading any products 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 March 25:

Economic:  Chicago Fed National Activity Index – 8:30, Dallas Fed Manufacturing Survey – 10:30. 

Other:  New York Federal Reserve Bank President William Dudley speech to the Economic Club of New York – 12:30, Federal Reserve Chairman Ben Bernanke and IMF Chief Economist Olivier Blanchard discuss lessons from the crisis with Bank of England Governor Mervyn King at the London School of Economics – 1:15.

Optionable Earnings:

Symbol

Company Name

Mar 15 close

IV30

B/A

XEPS

DG Dollar General Corp.

$48.77

29.8

B

$0.93

Tuesday March 26:

Economic:  ICSC-Goldman Sachs Retail Sales – 8:30, Durable Goods Orders – 8:30, Redbook – 8:55 , S&P Case-Schiller Home Price Index – 9:00, New Home Sales – 10:00, Consumer Confidence – 10:00, Richmond Fed Manufacturing Index – 10:00, State Street Investor Confidence Index – 10:00.

Other:  Eurozone Consumer and Business Sentiment, France GDP, UK GDP.

Optionable Earnings:  

Symbol

Company Name

Mar 22 close

IV30

B/A

XEPS

PLCE The Childrens Place

$45.78

43.0

B

$1.03

MFRM Mattress Firm Holding Corp.

$30.14

52.1

A

$0.31

 Wednesday March 27:

Economic:  MBA Purchase Applications – 7:00, Pending Home Sales Index – 10:00, EIA Petroleum Status Report – 10:30, Farm Prices – 3:00.

Other:  Chicago Federal Reserve Bank President Charles Evans briefing in Chicago – 11:00, Boston Federal Reserve Bank President Eric Rosengren speech on the outlook at St. Anselm’s College, Manchester, NH – 11:30, Cleveland Federal Reserve Bank President Sandra Pianalto speech on managing monetary policy risks in Cleveland – 12:15, Minneapolis Federal Reserve Bank President Narayana Kocherlakota speech on improving the outlook with monetary policy in Edina, MN – 1:00.

Optionable Earnings:

Symbol

Company Name

Mar 22 close

IV30

B/A

XEPS

JOSB Jos. A Bank Clothiers Inc.

$41.22

49.3

A

$1.35

PVH Phillips-Van Heusen Corp.

$111.83

32.7

A

$1.50

RHT Red Hat Inc.

$50.94

47.5

A

$0.21

TXI Texas Industries Inc.

$65.43

41.8

A

($0.40)

 Thursday March 28:

Economic:  GDP – 8:30, Jobless Claims – 8:30, Corporate Profits – 8:30, Chicago PMI – 9:45, Bloomberg Consumer Comfort Index – 9:45, EIA Natural Gas Report – 10:30, Kansas City Fed Manufacturing Index – 11:00.

Other:  UK Retail Sales.

Optionable Earnings:

Symbol

Company Name

Mar 22 close

IV30

B/A

XEPS

ACN Accenture Ltd.

$74.30

21.8

B

$0.97

GME GameStop Corp.

$25.24

54.5

B

$2.09

MOS Mosaic Co.

$60.04

26.4

B

$0.89

SIG Signet Group plc

$61.83

29.7

B

$2.09

 Friday March 29:

Economic:  Personal Outcome and Outlays – 8:30, University of Michigan/Reutters Consumer Sentiment – 9:55.

Other:  US Markets Closed – Good Friday

Optionable Earnings:

 

Monday April 1:

Economic:  Motor Vehicle Sales, PMI Manufacturing Index – 8:58, Construction Spending – 10:00, ISM Manufacturing Index – 10:00.

Optionable Earnings: None meeting criteria.   

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