The Prepared Mind 7.1.2013

“Chance favors the prepared mind..” — Louis Pasteur

Volatility remained a constant as the markets showed a minor recovery from previous weeks’ self-offs.    The greatest volatility was seen in the precious metal and interest rate markets.  Gold closed the at $1,192/ ounce –  down 14% ($197) in the past two  weeks and down 8% this week.   Option activity was bullish on Friday.  This activity reinforced the call by many market technicians of support in the $1,175 – $1,200 range.  Intraday and interday movement in gold suggests use of options strategies with defined close-ended risk.  The 30-year fixed mortgage posted the largest weekly percentage gain in over 25 years – rising on average from 4.46% from 3.93%.

Q2 ended on Friday.  The stock market turned its best opening six months since 1999 and best second quarter since 2009.  The &P 500 show its first weekly gain in three weeks.  All the indexes showed around a 1% gain for the week – giving away nearly another 1% in the last hour of trading on Friday.  The Russell 2000(RUT) was the strongest index last week.  It gained 1.25%, up 1.25 points to close at 72.49.   FTER TRADING ABOVE 15,00, the Dow Jones Industrials (DJIA) closed at 14,90.60,  up 110.20 points or a gain of 0.74%.  The NASDAQ 100 (NDX) closed at 2,909.60, gaining 1.10% or 31.66 points.  The S&P 500 (SPX) is trading back above 1,600 closing at 1,606.28 – up 13.85 points or a gain of 0.87%.  The S&P 100 (OEX) closed at 720.62 – gaining 3.04 points or 0.42%.  The VIX and the other volatility indexes reflected continuing concern about the equity and bond markets.  The VIX closed last week at 16.86 – a loss of 2.04 or 10.79%.  At least one major anonymous investor is betting big on a volatility move before August.  The investor bought 108,000 Aug 28/37.50 call vertical this past Wednesday for 60 cents – $6,500,000 total.  The other volatility measurements showed similar volatility moves to the downside.  The wait and see attitude continues among traders.

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

Index

Close

Weekly Change

% Weekly

% YTD

Volatility of  Index

Dow Jones Industrials (DJIA)

14,909.60

110.20

0.74%

13.78%

15.21% (VXD)

S&P 500 (SPX)

1,606.28

13.85

0.87%

12.63%

16.86% (VIX)

NASDAQ 100 (NDX)

2,909.60

31.66

1.10%

9.35%

16.47% (VXN)

Russell 2000 (RUT)

972.49

11.98

1.25%

14.22%

20.30% (RVX)

S&P 100 (OEX)

720.62

3.04

0.42%

11.45%

17.21% (VXO)

CBOE Volatility Index (VIX)

16.86

-2.04

-10.79%

NA

It will be a shortened trading week, but it is employment week.  The markets will close early on Wednesday and be closed all day Thursday.  The typical job week employment announcements are on Wednesday, Thursday and Friday.  This week the announcements will be compressed into two days.   The announcements will be dissected by analysts trying to determine the timing for tapering of easing by the Fed.   Interest rates will continue to have a major sway on the markets.  Keep interest rate futures on your monitor as you watch the day’s trade.

This will be the quietest week for earnings announcements.  Only two stocks meet my criteria for being included in the blog.  The next cycle starts in earnest in two weeks.  Be aware of this as you begin to establish positions in July and August options.   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.

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 July 1:

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

International Economic:  Japan Manufacturing Index – 7:50, EU, Germany, and France PMI Manufacturing – 4:AM.

Optionable Earnings: None meeting criteria.

 

Tuesday July 2:

Economic:  Motor Vehicle Sales, ICSC – Goldman Sachs Store Sales – 7:45, Redbook – 8:55,  Factory Orders – 10:00.

International Economic:  EU PPI – 5:00.

Other: New York Federal Reserve Bank President William Dudley speech on economic conditions, Stamford, Conn -12:30, Federal Reserve Governor Jerome Powell speech on international financial regulatory reform in New York – 5:45.

Optionable Earnings:

Symbol

Company Name

June 28 close

IV30

B/A

XEPS

STZ Constellation Brands

$51.87

30.0

B

.41

 

 

Wednesday July 3:

Economic:  MBA Purchase Applications – 7:00, Challenger Job Cut Report – 7:30, ADP Employment Report – 8:15, Bloomberg Consumer Comfort Index – 9:45, ISM Non-manufacturing Index – 10:00,  EIA Petroleum Status Report – 10:30, EIA Natural Gas Report – 12:00.

International Economic: EU, Germany PMI Composite – 4:00 AM.

Other:  New York Stock Exchange, CBOE Equity Options Early Close – 1:00, CBOE Index Options Close – 12:15

Optionable Earnings: 

Symbol

Company Name

June 28 close

IV30

B/A

XEPS

MSM MSC Industrial Direct

$77.46

34.3

B

..97

 

 

 

Thursday July 4:

Independence Day – US Markets Closed

International Economic:  EU GDP – 5:00 AM, Great Britain Bank of England Announcement – 7:45 AM.

Other: Federal Reserve Gov. Jerome Powell speech on monetary policy to Bipartisan Policy Center in Washington – 10:30, Atlanta Federal Reserve Bank President Dennis Lockhart speech on the economic outlook to Kiwanis Club, Marietta, Georgia – 12:30.

 

 

Friday July 5:

Economic: Chicago PMI – 9:45 AM, University of Michigan/ Reuters Consumer Sentiment – 9:55.

International Economic:  Germany Manufacturing Orders – 5:00 AM.

Optionable Earnings: None meeting criteria.

Monday July 8:

Economic:  TD Ameritrade IMX – 12:30.

International Economic:  Germany Industrial Production – 6:00 AM.

Optionable Earnings: None meeting criteria.

 

 

 

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