The Prepared Mind: August 26, 2013

“Chance favors the prepared mind.” — Louis Pasteur

The week’s news and the week’s markets were decidedly mixed.  The news from the Fed and economic reports on housing and manufacturing raised questions rather than providing answers.  The FOMC minutes garnered the most attention when released on Wednesday afternoon. The minutes lead many to believe the timing of tapering will be dependent upon economic data to be released in September.  The majority of the Fed’s governors be the risk of ending tapering is less than the specter of indefinite quantitative easing.  It appears tapering will be gradual and tempered by the absence of any sudden changes in policy.  The focus of traders will move to the next monthly employment situation release on Friday September 6.

Despite last week’s “Fearcasting” by market mavens, most of the equity indexes showed gains.  The sole exception was the Dow Jones Industrials (DJIA) which was down about a half of one per cent.   Anticipation of the content of the FOMC minutes and the initial cursory reading of the minutes created slippage in the indexes for the first three days of the week.  Thursday’s initial jobless claims, growth in existing home sales and positive news from China led to a recovery in prices during trading sessions on Thursday and Friday. Positive retail earnings contributed to the late week gain.  The VIX and other volatility indexes dropped this week.  Some analysts are pointing to a narrowing of the spread between the September and October  VIX futures contracts (VX U3 and VX V3) as a potential  indicator of investor concern about the market.

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

Index

Close

Weekly Change

% Weekly

% YTD

Volatility of  Index

Dow Jones Industrials (DJIA)

15,010.51

-70.96

-0.47%

14.55%

13.05% (VXD)

S&P 500 (SPX)

1,663.50

7.67

0.46%

16.64%

13.98% (VIX)

NASDAQ 100 (NDX)

3,124.27

50.36

1.64%

17.41%

14.62% (VXN)

Russell 2000 (RUT)

1,037.53

16.56

1.62%

21.86%

17.91% (RVX)

S&P 100 (OEX)

744.04

1.66

0.22%

15.07%

13.91%(VXO)

CBOE Volatility Index (VIX)

13.98

-0.39

-2.71%

NA

 

Domestic and international news will dominate the week as traders await the following week’s employment reports.  Domestic focus will be on manufacturing and durable goods orders.  Last week new home sales numbers ran counter to existing home sales.  The market will be seeking clarification from this week’s pending homes sales.  The GDP estimate on Thursdays  will clarify the strength and momentum of the economy.  The plethora o domestic reports will be augmented by significant international reports.  These  include Eurozone consumer confidence, German and British GDP, and Japanese retail sales, manufacturing, industrial production, CPI and unemployment.  The exact times and reports are on the following calendar.

Earnings are not a factor this week.  The last week of August are is often characterized by low volume as many traders take advantage of the long weekend and go on vacation.  Market movements are often exacerbated as the B Team monitors and adjusts for perceived market risk.  I continue to wonder  late August market movement is result of changes in market structural underpinnings or the product of the fears of traders whose primary responsibility is to not “screw up” while more senior traders are on vacation.

Remember:

  “Chance favors the Prepared Mind.” – Louis Pasteur

““I knew I was going to take the wrong train, so I left early.”  –  Famous trading coach Yogi Berra

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

Monday August 26:

Economic:  Durable Goods Orders – 8:30, Dallas Fed Manufacturing Survey – 10:30.

International Economic:  No major announcements.

Optionable Earnings:

Symbol

Company Name

August 23 close

IV30

B/A

XEPS

QIHU Qihoo 360 Technology Co Ltd

$72.86

$74.67

B

$0.13

 

Tuesday August 27:

Economic:  ICSC – Goldman Sachs Store Sales – 7:45,  Redbook – 8:55, S&P Case-Shiller Home Price Index – 9:00, Conference Board  Consumer Confidence – 10:00, Richmond Fed Manufacturing Index – -10:00, State Street  Investor Confidence  Index– 10:00..

International Economic:  Japan All Industry Index – 12:30 AM, German PPI – 4:00 AM.

Other:  San Francisco Federal Reserve Bank President John Williams on panel discussing monetary policy challenges in Gothenberg, Sweden – 6:50 AM.

Optionable Earnings: 

Symbol

Company Name

August 23 close

IV30

B/A

XEPS

DSW DSW Inc.

$80.28

$33.34

B

$0.80

TIF Tiffany & Co.

$81.50

$34.92

B

$0.74

AVGO Avago Technologies Ltd

$36.61

$36.03

A

$0.61

WDAY Workday Inc

$74.96

$48.01

A

($0.24)

 

Wednesday August 28:

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

International

Optionable Earnings: 

Symbol

Company Name

August 23 close

IV30

B/A

XEPS

JOSB Jos. A. Bank Clothiers Inc

$40.95

$41.54

B

$0.53

JOY Joy Global Inc.

$52.48

$35.58

B

$1.38

GES Guess?, Inc.

$28.78

$49.65

A

$0.36

 

Thursday August 29:

Economic:   GDP – 8:30, Jobless Claims – 8:30, Corporate Profits – 8:30,  Bloomberg Consumer Comfort Index – 9:45, Leading Indicators – 10:00, EIA Natural Gas Report – 10:30.

International Economic: China Merchandise Trade –EU Composite PMI Flash – 4:00 AM

Other:  Richmond Federal Reserve Bank President Jeffrey Lacker speech on the history of the Fed, in Newport News, Virginia – 2:00 PM, St. Louis Federal Reserve Bank President James Bullard speech on the economy and monetary policy in Tupelo, Mississippi – 7:45.

Optionable Earnings: 

Symbol

Company Name

August 23 close

IV30

B/A

XEPS

CPB Campbell Soup Company

$45.85

$20.09

B

$0.42

KKD Krispy Kreme Doughnuts

$22.62

$53.04

A

$0.15

CRM salesforce.com, inc.

$43.75

$42.79

A

($0.03)

SPLK Splunk Inc

$50.19

$46.17

A

($0.11)

 

 

Friday August 30:

Economic: Personal Income and Outlays – 8:30, Chicago PMI – 9:45, University of Michigan/Reutters Consumer Sentiment – 9:55, Farm Prices – 3:00.

International Economic: German GDP – 2:00  AM, Great Britain GDP – 4:30 AM.

Other:  St. Louis Federal Reserve Bank President James Bullard speech on the economy and monetary policy in Memphis – 9:00.

Optionable Earnings:

Monday September 2:

Labor Day – U.S. Markets Closed

Tuesday September 3:

Economic:  Motor Vehicle sales, Gallup US Consumer Spending Measure – 8:30, PMI Manufacturing Index – 8:58, ISM Manufacturing Index – 10:00, Construction Spending – 1000 .

International Economic: 

Optionable

Earnings:

 

 

 

 

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