The Prepared Mind: March 10, 2014

This week marks the 5th anniversary of the March 9, 2009 closing low for the S&P 500.  The recovery from the nadir closing of the financial crisis has been stunning.  I am repeating the numbers in the following chart for emphasis.  The 5 year growth in the indexes has ranged from 150% (DJIA and OEX) to over 250% (NDX and RUT.)  This has been a very impressive bull market.

Last week’s market shrugged off troubles in the Ukraine.  Monday started with a major sell-off.   On Tuesday it was all forgotten, with gains exceeding the market losses on Friday and Monday.   We finished the week with new highs and a plethora of market optimism.  Some of the headlines for the week:

“Stocks Rise 1%, S&P 500 Reaches New High”

“Better U.S. economic date trumped geopolitical jitters, spurring talk of a bubble. However, that may be overdone.”

“Next Stop, Nasdaq 5000”

“The Nasdaq could revisit its old high sooner than many investors think.”

”No technical resistance left in SPX”

“Strong confirmation of new highs”

Index

Close

Weekly Change

% Weekly

% YTD

Volatility of  Index

Dow Jones Industrials (DJIA)

16,452.72

131.01

0.80%

-0.95%

13.37% (VXD)

S&P 500 (SPX)

1,878.04

18.59

1.00%

2.08%

14.11% (VIX)

NASDAQ 100 (NDX)

3,704.13

8.03

0.22%

4.21%

15.23% (VXN)

Russell 2000 (RUT)

1,203.43

20.89

1.77%

4.68%

18.66% (RVX)

S&P 100 (OEX)

826.70

8.46

1.03%

0.45%

12.97% (VXO)

CBOE Volatility Index (VIX)

14.11

0.11

0.79%

NA

 

 

 

The euphoria was near universal echoing lines from an American classic “Home on the Range:”

Where seldom is heard a discouraging word

And the skies are not cloudy all day.

If there was any dissent, it came from the VIX and VIX futures.  New highs are normally accompanied by lower prices for VIX.  The prices actually held constant or gained minimal amounts last week.  This market behavior shows a bit less optimism than the financial talking head are exhibiting.

The markets will again be locked focused on the Ukraine.  Crimea will be holding a referendum on becoming part of Russia.  The EU, the U.S., and the Ukraine consider the vote to be “illegitimate.  Economic reports highlight the consumer sector – retail sales and consumer confidence.  Recent retail sales have been adversely affected by adverse weather conditions.  It is hoped an easing of the polar vortex will be reflected in February retail sales.  Many analysts are calling for better consumer confidence numbers resulting from the onset of spring.

 

It will be a quiet week for earnings. These announcements are concentrated in the retail sector.    Major announcements include: Men’s Wearhouse, Urban Outfitters, Diamond Foods, American Eagle Outfitters, Verifone, Dresser-Rand, Williams-Sonoma, Aereopostale, Dick’s Sporting Goods and Hibbett Sports.    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 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, Chicago Fed President Charles Evans speech on the economy and monetary policy in Columbus, Georgia – 12:40 PM.

International Economic:  Bank of Japan Announcement.

Optionable Earnings: 

Symbol

Company Name

Mar 27 Close

IV30

B/A

XEPS

IOC InterOil Corporation (USA)

$59.49

55.7

D

($0.04)

MED Medifast Inc

$25.52

66.0

A

$0.37

PWRD Perfect World Co., Ltd. (ADR)

$25.66

64.0

A

$0.44

URBN Urban Outfitters, Inc.

$36.99

35.2

A

$0.55

 

Tuesday March 11 :

Economic:  NFIB Small Business Optimism Index – 7:30, ICSC-Goldman Store Sales – 7:45, Redbook – 8:55, JOLTS – 10:00, Wholesale Trade – 10:00.

International Economic:  No major announcements.

Optionable Earnings: 

Symbol

Company Name

Mar 27 Close

IV30

B/A

XEPS

DKS Dicks Sporting Goods Inc

$53.61

32.9

B

$1.11

IMOS ChipMOS Technologies (Bermuda) Ltd

$23.02

47.0

B

$0.28

CZR Caesars Entertainment Corp

$25.70

61.0

A

($1.45)

DMND Diamond Foods, Inc.

$30.55

50.8

A

$0.08

DRC Dresser-Rand Group Inc.

$58.28

31.0

A

$1.29

FURX Furiex Pharmaceuticals Inc

$91.54

79.5

A

($1.05)

PAY VeriFone Systems Inc

$30.06

55.5

A

$0.15

 

Wednesday March 12:

Economic:  MBA Purchase Applications – 7:00, Quarterly Services Survey – 10:00, EIA Petroleum Status Report –10:30.

International Economic:  EMU Industrial Production – 6:00 AM, China Industrial Production – 9:00 PM, China Retail Sales – 9:00 PM.

Optionable Earnings:

Symbol

Company Name

Mar 27 Close

IV30

B/A

XEPS

QIWI Qiwi PLC

$39.75

81.4

B

$0.28

MTDR Matador Resources Co

$24.24

53.7

A

$0.28

MW The Men’s Wearhouse, Inc.

$54.98

48.3

A

($0.11)

WSM Williams-Sonoma, Inc.

$58.89

31.1

A

$1.35

 

Thursday March 13:

Economic:  Jobless Claims – 8:30,  Retail Sales – 8:30, Import and Export Prices – 8:30, Bloomberg Consumer Comfort Index – 9:45,  Business Inventories – 10:00, EIA Natural Gas Report – 10:30.

International Economic: Bank of Japan Minutes – 7:50 PM.

Optionable Earnings: 

Symbol

Company Name

Mar 27 Close

IV30

B/A

XEPS

CCL Carnival Corporation

$39.19

25.7

B

($0.07)

DG Dollar General Corp.

$59.41

35.6

B

$1.01

GOGO Gogo Inc

$24.29

85.0

B

($0.27)

MEI Methode Electronics Inc.

$34.74

71.3

B

$0.39

CTB Cooper Tire & Rubber Co

$23.80

34.0

A

$0.21

MFRM Mattress Firm Holding Corp

$44.40

61.8

A

$0.29

TAHO Tahoe Resources, Inc.

$23.97

45.5

A

($0.09)

ULTA Ulta Salon, Cosmetics & Fragrance, Inc.

$87.30

56.6

A

$1.07

 

Friday March 14:

Economic:  PPI-FD (Producer Price Index – Final Demand) – 8:30, Consumer Sentiment – 9:55,

International Economic: No major announcements.

Optionable Earnings: 

Symbol

Company Name

Mar 27 Close

IV30

B/A

XEPS

ANN Ann Inc

$35.61

36.3

B

$0.07

BKE The Buckle, Inc.

$45.89

30.3

B

$1.21

 

 

Monday March 17:

Economic:  Empire State Manufacturing Survey – 8:30, Treasury International Capital – 9:00, Industrial Production – 9:15, Housing Market Index – 10:00. 

International Economic:  No major announcements.

Optionable Earnings:  No earnings meeting criteria.

 

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