The Prepared Mind 4.1.2013

“Chance favors the prepared mind.” — Louis Pasteur

The shortened trading week was not without excitement.  The broad best indexes were up for the week, up for the month, and up for the quarter.  The markets shook of bad news from Cyprus with the S&P 500 finally hitting new closing highs on Thursday. The index joined the Dow Jones Industrial Average in the rarified air of new highs.  The lag time for the broad based SPX in joining the narrower DJIA was the result of the heavier weighting of technology stocks in the S&P 5oo.  The technology sector is up only 4% in 2013. Bears and bulls alike are confounded.  So am I.  An old market adage says, “Sell May and go away.”  One  bearish market pundit stated this weekend that in 2013, it should be, “Sell April and go away.”   The bears have been forecasting a sell-off or correction for weeks.  Continuation of current monetary policies by the Federal Reserve and other central banks may continue to buoy the US markets.  In addition, other pundits are describing the US markets as being the “best place in a bad neighborhood.”  This situation would lead to capital inflows from across the globe.

The broad-based indexes all showed modest gains. The NDX closed at 2,818.69, a gain of 17.88 points or 0.64%.   The Russell 2000 (RUT) closed at 949.47 gaining 3.46 points or a gain of 0.37%.  The Dow Jones Industrial Average (DJIA) gained 66.51 point or + 0.46 %,    The S&P 500 (SPX) closed at 1569.19 up 12.30 points or a gain of 0.79%.  The S&P 100 (OEX) gained  3.90 points to close at 704.47 – a gain of 0.56%..  The VIX and the other volatility indexes were down for the week.  Theses volatility levels reflected market concern about Cyprus.  The VIX closed last week at 12.70, an loss of 0.87  or a weekly loss of 6.41%.  Here is a capsule view of last week’s market numbers:

Index

Close

Weekly Change

% Weekly

% YTD

Volatility of  Index

Dow Jones Industrials (DJIA)

14,578.54

66.51

0.46%

11.25%

11.69% (VXD)

S&P 500 (SPX)

1,569.19

12.30

0.79%

10.03%

12.70% (VIX)

NASDAQ 100 (NDX)

2,818.69

17.88

0.64%

5.93%

13.28% (VXN)

Russell 2000 (RUT)

949.47

3.46

0.37%

11.52%

16.18% (RVX)

S&P 100 (OEX)

704.47

3.90

0.56%

8.95%

12.04%(VXO)

CBOE Volatility Index (VIX)

12.70

-0.87

-6.41%

NA

The focus will be on jobs this week.  In past months, the financial media touted the jobs announcements at the beginning of each month as reasons for the market to move up or down.  This media obsession has all but disappeared in recent months.  The announcements start with the ADP Employment Report on Wednesday culminating the March Employment Situation Report on Friday.  Be aware of the potential impact of these reports.  Additional focus will be on overseas markets and a possible delayed reaction to the Cyprus bailout plans.  North Korea bellicose rumblings remain a wild card.

A large number of earning announcement will take place in April and May.  These announcements can increase the prices and implied volatility of individual options. You should be aware of the earnings date for any equities you trade. 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 April 1:

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

Other:  Germany, Italy and other markets are closed for Easter Monday.

Optionable Earnings: None meeting criteria.

Tuesday April 2:

Economic:  ICSC-Goldman Sachs Retail Sales – 8:30, Redbook – 8:55 , Factory Orders – 10:00.

Other:  Eurozone February Unemployment, Eurozone March Manufacturing PMI

Optionable Earnings:  

Symbol

Company Name

Mar 22 close

IV30

B/A

XEPS

GPN

Global Payments

$49.43

27.0

A

$0.88

Wednesday April 3:

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

Optionable Earnings:

Symbol

Company Name

Mar 22 close

IV30

B/A

XEPS

JOSB

Jos. A Bank Clothiers

$40.36

50.2

B

$1.35

MON

Monsanto Co.

$105.12

23.7

B

$2.55

 Thursday April 4:

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

Other:  European Central Bank Monetary Announcement, Eurozone February PPI.

Optionable Earnings:

Symbol

Company Name

Mar 22 close

IV30

B/A

XEPS

GBX

Greenbrier Companies

$21.33

39.7

B

$0.37

 

 

 

Friday April 5:

Economic:  March Employment Situation – 8:30, February International Trade – 8:30, University of Michigan/Reuters Consumer Sentiment – 9:55, February Consumer Credit – 3:00..

Other:  Eurozone Retail Sales.

Optionable Earnings:

 

Monday April 8:

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

Optionable Earnings:

Symbol

Company Name

Mar 22 close

IV30

B/A

XEPS

AZZ

AZZ incorporated

$48.25

32.6

B

$0.49

 

 

 

 

 

 

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