The Prepared Mind: March 18, 2014

What a difference one week can make.  Seven days ago the markets were wrapped in in a near all-encompassing blanket of euphoria.  The entire focus of the financial media was on new highs.  Last weekend’s business articles focused on the when and where of forthcoming new highs for indexes.  Articles on the possibility of a stock market bubble were relegated to “off Wall Street” internet pages.  Optimism has been replaced by concern.

The indexes were down five straight days with the S&P 500 dipping into the red for the year.  Fingers were pointed at Vladmir Putin and the crisis in Crimea, but there are other factors contributing to last week’s malaise.  Economic reports from China contributed to the aura of concern.  Chinese exports, factory production, and retail sales were all weaker than forecasted last week.  The overall consensus is bearish when reports from Russia and China are combined with disappointing European industrial production and declining U.S. consumer confidence.

 

Index

Close

Weekly Change

% Weekly

% YTD

Volatility of  Index

Dow Jones Industrials (DJIA)

16,065.67

-387.05

-2.35%

-3.90%

16.76% (VXD)

S&P 500 (SPX)

1,841.13

-36.91

-1.97%

-0.51%

17.82% (VIX)

NASDAQ 100 (NDX)

3,628.13

-76.00

-2.05%

1.36%

18.89% (VXN)

Russell 2000 (RUT)

1,181.02

-22.41

-1.86%

2.04%

21.83% (RVX)

S&P 100 (OEX)

809.95

-16.75

-2.03%

-2.14%

17.22% (VXO)

CBOE Volatility Index(VIX)

17.82

3.82

27.29%

NA

 

The VIX and VIX futures proved to be prescient by exhibiting a cautionary stance the week before last.  Friday was the second busiest day ever for VIX options with over 1.8 million option contracts being traded.  The heaviest trading was in March calls.  It is not readily apparent if these were opening trades or covering of front month short call positions.  March VIX settlement will be on the open this Tuesday.  All March positions will be in play for a volatility event on Monday.

All eyes will, again, be on the Ukraine and Crimea. The  upcoming week is loaded with news with the potential to move markets.  This news includes the FOMC meeting, Janet Yellen’s first quarterly press conference, Fed forecasts and domestic economic reports focusing on industrial production, manufacturing and housing.  Be wary of the perfect storm of less than stellar news from here and abroad..

 

This will be one of the quietest weeks for earnings.. Major announcements include: Men’s Wearhouse, Urban Outfitters, Carnival Corporation, Hertz, Adobe, Oracle, FedEx, Guess?, ConAgra, PetroChina, Nike, Darden Restaurants and Tiffany.  .    Keep an eye on bellwether and “hot’ stocks.  Keep an eye on “hot stocks.”  These stocks will respond with the most volatility to any negative market news.  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 17:

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

International Economic:  EU HICP – 6:00.

Optionable Earnings:  No earnings meeting criteria.

Tuesday March 18 :

Economic:  ICSC-Goldman Store Sales – 7:45, CPI (Consumer Price Index) – 8:30, Housing Starts – 8:30, Redbook – 8:55.

International Economic:  EU Merchandise Trade – 8:00, Japan All Industry Index – 11:30PM.

Other:  FOMC meeting begins.

Optionable Earnings: 

Symbol

Company Name

Mar 27 Close

IV30

B/A

XEPS

CCL Carnival Corporation

$38.51

27.8

B

($0.08)

DSW DSW Inc.

$39.58

34.2

B

$0.29

FDS FactSet Research Systems Inc.

$103.63

29.3

B

$1.22

HTZ Hertz Global Holdings, Inc.

$25.81

44.5

B

$0.32

ADBE Adobe Systems Incorporated

$67.08

33.3

A

$0.12

ORCL Oracle Corporation

$37.65

26.9

A

$0.67

 

Wednesday March 19:

Economic:  MBA Purchase Applications – 7:00, Current Account – 8:30,  EIA Petroleum Status Report –10:30.

International Economic: Bank of England Minutes – 5:30 AM.

Other:  FOMC meeting announcement – 2:00, Fed Chair Press Conference – 2:30.

Optionable Earnings:

Symbol

Company Name

Mar 27 Close

IV30

B/A

XEPS

FDX FedEx Corporation

$136.68

24.3

B

$1.52

VRA Vera Bradley, Inc.

$27.27

55.3

B

$0.46

XONE ExOne Co

$41.18

67.9

A

$0.01

FNV Franco-Nevada Corporation

$52.50

35.5

A

$0.22

GES Guess?, Inc.

$28.67

40.8

A

$0.80

 

Thursday March 20:

Economic:  Jobless Claims – 8:30,  Bloomberg Consumer Comfort Index – 9:45,  Philadelphia Fed Survey – 10:00, Existing Home Sales – 10:00, Leading Indicators – 10:00,  EIA Natural Gas Report – 10:30.

International Economic: Germany PPI – 3:00 AM.

Optionable Earnings: 

Symbol

Company Name

Mar 27 Close

IV30

B/A

XEPS

PTR PetroChina Company Limited (ADR)

$98.07

24.5

D

$4.61

CAG ConAgra Foods, Inc.

$29.47

21.7

B

$0.60

LEN Lennar Corporation

$40.35

37.5

B

$0.28

CTAS Cintas Corporation

$59.62

25.3

A

$0.71

NKE Nike Inc

$78.53

25.8

A

$0.73

SLW Silver Wheaton Corp. (USA)

$26.53

38.6

A

$0.25

TIBX Tibco Software Inc.

$21.03

41.1

A

$0.11

 

Friday March 21:

Economic:  Atlanta Fed Business Inflation – 10:00

International Economic: No major announcements.

Other:  Quadruple Witching – Expiration

Optionable Earnings: 

Symbol

Company Name

Mar 27 Close

IV30

B/A

XEPS

DRI Darden Restaurants, Inc.

$49.01

26.4

B

$0.82

TIF Tiffany & Co.

$92.24

27.4

B

$1.52

 

Monday March 24:

Economic:  Chicago Fed National Activity Index – 8:30, PMI Manufacturing Index Flash – 9:45.. 

International Economic:  China PMI Flash Index – Sunday @ 9:45 PM.

Optionable Earnings:  

Symbol

Company Name

Mar 27 Close

IV30

B/A

XEPS

SONC Sonic Corporation

$20.88

36.1

A

$0.06

 

 

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