The Prepared Mind: March 3, 2014

“Chance favors the prepared mind.” — Louis Pasteur

Color me confused.  Fourth quarter economic growth was revised from 2.4% from 3.2% and mystery troops (supposedly Russian) have entered Crimea yet the S&P 500 hit a new intraday high on Friday and anew new closing high at 1,859.45.  The SPX was up 4.3% in February – the best February performance since 1998.  The second close above 1,850 has given further impetus to those calling the February move a breakout.  Much credit was given to Janet Yellen’s Thursday comments concerning a possibility of a delay in tapering the Fed’s bond buying programs.  A glimmer of hope was all that was need to push the SPX to a new high,  The week’s gains were tempered by concerns about the Ukraine leading to an end of day sell-off.  The spot VIX and its monthly futures moved in opposite directions this week.  The VIX declined 0.68 or 4.63% while the VIX futures and VIX options showed gains. (I am adding the following table of the VIX and VIX futures to this and future blogs.)

  Close Change % Change
VIX

14.00

-0.68

-4.63%

Mar (VXH4)

15.25

0.10

0.66%

Apr (VXJ4)

15.70

0.25

1.62%

May (V4M4)

16.40

0.30

1.86%

June (VXM4)

17.00

0.40

2.41%

The gains in the VIX futures and the implied volatility of the VIX options  may be the direct result of using volatility to hedge long equity positions.  Next week’s employment release and/or the turmoil in the Ukraine may have been the impetus behind this movement.  One of the larger trades of the week was the purchase on Thursday of nearly 10,000 VIX APR 18 calls at 1.10.  Was this a hedge or a directional trade? Large VIX trades are generally hedged by selling another option – i.e. put on as a spread.

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

Index

Close

Weekly Change

% Weekly

% YTD

Volatility of  Index

Dow Jones Industrials (DJIA)

16,321.71

218.41

1.36%

-1.95%

13.22% (VXD)

S&P 500 (SPX)

1,859.45

23.20

1.26%

0.78%

14.00% (VIX)

NASDAQ 100 (NDX)

3,696.10

33.50

0.91%

3.91%

15.01% (VXN)

Russell 2000 (RUT)

1,182.54

19.38

1.67%

2.22%

19.52% (RVX)

S&P 100 (OEX)

818.24

10.91

1.35%

-0.86%

12.93% (VXO)

CBOE Volatility Index (VIX)

14.00

-0.68

-4.63%

NA

 

The markets will be locked focused all week on the Ukraine and on the myriad of employment numbers on Wednesday through Friday.  Domestic unemployment is expected to remain unchanged at 6.6%.  Additional economic reports will cover construction, consumer sentiment, and manufacturing.

Earnings are slowing to a trickle.  Major announcements include: Big Lots, Bob Evans Farms, PetSmart, Brown-Forman, Costco, Staples, Children’s Place, Kroger, and Footlocker,   Keep an eye on bellwether and “hot’ stocks.  These stocks are often indicators for behavior in indexes or industry sectors.  I scan stocks announcing earnings the coming week using the following criteria:  Price > 20, 30 Day Implied Volatility > 20, and Average Daily Option Volume > 200 contracts.  It is your responsibility to confirm these earnings dates. Earnings dates can and do change.

 

Trading advice to remember:

  “Chance favors the Prepared Mind.” – Louis Pasteur

“One of the funny things about the stock market is that every time one person buys,

another sells, and both think they are astute.” – William Feather

 

Monday March 3:

Economic:  Motor Vehicle Sales, Gallup US Consumer Spending Measure – 8:30, PMI Manufacturing Index – 8:58, ISM Manufacturing Index – 10:00, Construction Spending – 10:00, Global Manufacturing PMI – 11:00. 

International Economic:  EMU PMI Manufacturing – 4:00 AM, All Global PMI Manufacturing..

Optionable Earnings: 

Symbol

Company Name

Feb 28 Close

IV30

B/A

XEPS

AKRX Akorn, Inc.

$26.80

51.9

B

$0.13

CLDX Celldex Therapeutics, Inc.

$31.59

76.5

B

($0.28)

EVEP EV Energy Partners, L.P.

$35.28

30.0

B

$0.20

JKS JinkoSolar Holding Co., Ltd.

$30.81

83.3

B

$0.86

MGA Magna International Inc. (USA)

$87.19

25.4

B

$1.53

NUS Nu Skin Enterprises, Inc.

$84.52

71.5

B

$1.99

ROC Rockwood Holdings, Inc.

$81.12

43.8

B

$0.31

SSW Seaspan Corporation

$21.92

28.5

B

$0.24

SSYS Stratasys Ltd

$127.15

50.8

B

$0.41

GEVA Synageva Biopharma Corp

$118.42

59.6

A

($1.02)

MR Mindray Medical International Ltd

$35.69

56.2

A

$0.50

SCTY SolarCity Corp

$86.14

68.6

A

($0.56)

URS URS Corp

$45.41

33.1

A

$0.19

VIPS Vipshop Holdings Ltd – ADR

$116.57

76.3

A

$0.37

 

Tuesday March 4 :

Economic:  ICSC-Goldman Store Sales – 7:45, Gallup Economic Confidence Index – 8:30, Redbook – 8:55.

Other: Richmond Federal Reserve Bank President Jeffrey Lacker speech in New York – 4:15PM.

International Economic:  Japan PMI Composite – 6:15 PM, China PMI Composite- 8:45 PM.  

Optionable Earnings: 

Symbol

Company Name

Feb 28 Close

IV30

B/A

XEPS

AZO AutoZone, Inc.

$538.46

24.6

B

$0.56

BRLI Bio-Reference Laboratories Inc

$25.55

40.0

B

$0.14

HTH Hilltop Holdings Inc.

$24.48

32.6

B

$0.38

AVAV AeroVironment, Inc.

$31.88

47.2

A

$0.19

HCI HCI Group Inc

$48.05

56.0

A

$1.51

SQM Sociedad Quimica y Minera de Chile

$30.45

41.8

A

$0.33

VEEV Veeva Systems Inc

$35.85

74.1

A

$0.06

YY YY Inc (ADR)

$75.00

78.1

A

$0.53

 

Wednesday March 5:

Economic:  MBA Purchase Applications – 7:00, ADP Employment Report – 8:15, Gallup US Job Creation Index 8:30, PMI Services Index – 8:58, ISM Non-manufacturing Index – 10:00, EIA Petroleum Status Report –10:30, Beige Book 2:00. .

International Economic:  EMU PMI Composite – 4:00 AM, EMU GDP – 5:00 AM, .

Other:  Dallas Federal Reserve Bank President Richard Fisher speech in Mexico City – 7:00 PM, San Francisco Federal Reserve Bank President John Williams speech on the economic outlook in Seattle – 8:30 PM..

Optionable Earnings:

Symbol

Company Name

Feb 28 Close

IV30

B/A

XEPS

CSIQ Canadian Solar Inc.

$43.07

75.5

B

$0.55

MEMP Memorial Production Partners LP

$22.16

21.2

B

$0.55

PETM PetSmart, Inc.

$66.62

27.0

B

$1.22

SN Sanchez Energy Corp

$29.46

51.1

A

$0.36

 

 

Thursday March 6:

Economic:  Chain Store Sales, Challenger Job Cut Report – 7:30, Gallup US Payroll to Population – 8:30, Productivity and Costs – 8:30, Jobless Claims – 8:30,  Bloomberg Consumer Comfort Index – 9:45,  Factory Orders – 10:00, EIA Natural Gas Report – 10:30.

Other:  Bank of England Announcement – 5:00 AM, EMU European Central Bank – 7:00AM

Optionable Earnings: 

Symbol

Company Name

Feb 28 Close

IV30

B/A

XEPS

NAV Navistar International Corp

$37.20

53.8

D

($1.55)

AFAM Almost Family Inc

$27.75

53.1

B

$0.26

BIG Big Lots, Inc.

$29.44

61.2

B

$1.45

BITA Bitauto Hldg Ltd (ADR)

$40.11

82.4

B

$0.34

CIEN Ciena Corporation

$25.12

55.3

B

($0.01)

CNQ Canadian Natural Resource Ltd

$36.29

24.8

B

$0.56

JOY Joy Global Inc.

$56.04

36.8

B

$0.64

KR The Kroger Co.

$40.14

24.8

B

$0.73

PLCE Children’s Place Retail Stores, Inc.

$55.06

42.0

B

$0.94

A NQ Mobile Inc (ADR)

$21.21

153.7

A

$0.11

AMBA Ambarella Inc

$33.91

64.7

A

$0.11

FNSR Finisar Corporation

$23.93

54.8

A

$0.36

HRB H & R Block Inc

$31.69

36.7

A

($0.08)

QIHU Qihoo 360 Technology Co Ltd

$110.76

69.1

A

$0.29

TFM The Fresh Market Inc

$32.85

60.2

A

$0.42

VNET 21Vianet Group Inc

$25.85

57.3

A

$0.04

 

Friday March 7:

Economic:  Employment Situation – 8:30, International Trade – 8:30.

International Economic: China CPI – 8:30 PM, China PPI – 8:30 PM (On Saturday March 8.)

Optionable Earnings: 

Symbol

Company Name

Feb 28 Close

IV30

B/A

XEPS

FL Foot Locker, Inc.

$41.83

31.1

B

$0.75

 

 

Monday March 10:

Economic:  TD Ameritrade IMx – 12:30 PM.. 

Other: Philadelphia Federal Reserve Bank President Charles Plosser speech on monetary policy, banks and protectionism in Paris – 4:45 AM.

International Economic:  Bank of Japan Announcement.

Optionable Earnings:  

Symbol

Company Name

Feb 28 Close

IV30

B/A

XEPS

IOC InterOil Corporation (USA)

$57.85

53.0

D

($0.04)

MED Medifast Inc

$26.82

50.2

A

$0.37

PWRD Perfect World Co., Ltd. (ADR)

$20.23

61.0

A

$0.44

URBN Urban Outfitters, Inc.

$37.62

35.4

A

$0.55

 

Comments are closed