The Prepared Mind: July 28, 2014

“Chance favors the prepared mind.” –Louis Pasteur

The naysayers and bears were out in force on Friday as the markets ended the week on a sour note. Despite the wailing and gnashing of teeth, the only indexes which showed losses were the Dow Jones (DJIA) and the Russell 2000 (RUT).  The NDX and SPX showed modest gains.  Last week saw the S&P 500 reaching a new closing high of 1,987.50.  The index closed within 10 points of this high.  It is difficult to see last week’s market action as a harbinger of an imminent end to the market uptrend.

Volumes continue to reflect the summer doldrums.  This lack of volume makes the market more susceptible to sudden moves.  This behavior is not unique.  It is common behavior during July and August of every year.  The week ended with concern about earnings at Amazon, Visa, and QUALCOMM.  There have been more earnings surprises to the upside than the down side.  Facebook doubled its IPO with strong quarterly earnings.  Netflix’s profits doubled while Apple showed and increase in iPhone sales of nearly 13%.

Jere is a summary of last week:

Index

July 25 Close

Weekly Change

% Weekly

% YTD

Volatility of  Index

Dow Jones Industrials (DJIA)

16,960.57

-139.61

-0.82%

2.32%

12.04% (VXD)

S&P 500 (SPX)

1,978.34

0.12

0.01%

7.03%

12.60% (VIX)

NASDAQ 100 (NDX)

3,957.80

25.86

0.66%

10.18%

13.36% (VXN)

Russell 2000 (RUT)

1,142.55

-5.05

-0.44%

-1.81%

18.75% (RVX)

S&P 100 (OEX)

879.88

1.39

0.16%

6.81%

11.07% (VXO)

CBOE Volatility Index (VIX)

12.60

0.54

4.48%

NA

 

The VIX and associated products showed concern.  The increase  in implied volatility levels were a reflection of the uncertainty attached to the coming week’s employment reports, the FOMC meeting and the release of estimated Q2 GDP.  The divergence between the VIX and the CBOE Short-term Volatility Index (VXST) is curious.    The VXST was down small while the VIX gained over 4%.  The lack of movement in the VXST seems counterintuitive given the behavior of all the other VIX related products.  The VXST is a new product.  I have a very limited knowledge of how it behaves over price and time.  For me it is a product better observed than traded.

 

Index

Ticker

7/25 Close

Change

% Change

7/18 Close

CBOE Volatility Index VIX

12.60

0.54

4.48%

12.06

VIX August Future VXQ4

13.48

0.50

3.85%

12.98

VIX September Future VXU4

14.28

0.61

4.46%

13.67

VIX October Future VXV4

14.84

0.46

3.20%

14.38

CBOE Short-term Volatility Index VXST

11.82

(0.23)

-1.91%

12.05

CBOE 3 Month Volatility Index VXV

14.00

0.65

4.87%

13.35

CBOE Mid-term Volatility Index VXMT

15.33

0.61

4.14%

14.72

VIX of VIX VVIX

81.08

0.71

0.88%

80.37

Long Vix ETP’s

 S&P 500  VIX Short Term Futures ETN VXX

28.83

0.94

3.37%

27.89

 S&P 500  VIX Mid-Tem Futures ETN VXZ

12.32

0.25

2.07%

12.07

Short Vix ETP’s

Daily Inverse VIX Short Term ETN XIV

43.84

(1.59)

-3.50%

45.43

Short VIX Short Term Futures ETF SVXY

85.92

(3.18)

-3.57%

89.10

 

This week promises to be busy.  The highlight will be the July Employment Situation Report.  This report will be preceded by the estimate for 2nd quarter GDP and a number of other employment related reports.  Anticipation for the GDP estimate high with disparate expectations about the size of the rebound from the weather depressed first quarter  The icing on the cake will be the FOMC meeting on Tuesday and Wednesday.  Wednesday’s FOMC announcement of its policy decision will have an immediate impact on the markets.  Any increase in interest rates or acceleration in reduction bond buying will result in an immediate increase in the VIX and decline the market indexes.  More of the same old same old should provide fuel for a continuation of the bullish trend.  The wild cards will be global flash points – Iran, Ukraine, Russia, and the Middle East.

The earnings is in full force.  Last week earnings for QUALCOMM and Amazon showed the cracks in earning optimism.    Any negative surprises will have the ability to move the markets south.   Major announcements include:  Cummins, Herbalife , Synchrony ,, UPS, Buffalo Wild Wings , Twitter, Panera, Whole Foods, Yelp, Exxon Mobil , Apache , GoPro , Procter & Gamble, Clorox, Caterpillar, General Electric, Facebook, Zillow , Trulia, Dick’s Sporting Goods , Skechers , U.S. Steel, Timken, Nucor and NUE. Earnings announcements can sneak up on a trader. Determine the earnings dates for all open strategies and any new strategies.  I scan stocks announcing earnings the coming week using the following criteria:  Price > 20, 30 Day Implied Volatility > 22, and Average Daily Option Volume > 400 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

“Stock market bubbles don’t grow out of thin air. They have a solid basis in reality, but reality as distorted by a misconception.” – George Soros

 

Economic:  PMI Services Flash – 9:45, Pending Home Sales Index – 10:00, Dallas Fed Manufacturing Survey – 10:30.

International Economic:  No major announcements.

Optionable Earnings: 

Symbol

Company Name

July 25 Close

IV30

B/A

XEPS

CYOU

Changyou.Com Ltd (ADR)

$24.65

56.6

B

($0.19)

SOHU

Sohu.com Inc

$56.15

47.7

B

($1.21)

TSN

Tyson Foods, Inc.

$39.77

30.3

B

$0.83

HLF

Herbalife Ltd.

$65.85

52.8

A

$1.57

MAS

Masco Corporation

$20.60

33.4

A

$0.28

MSTR

MicroStrategy Incorporated

$141.45

48.4

A

($0.16)

RRC

Range Resources Corp.

$77.40

29.4

A

$0.37

SIMO

Silicon Motion Technology Corp.

$23.35

49.6

A

$0.31

 

Tuesday July 29:

Economic:   ICSC – Goldman Sachs Store Sales – 7:45,  Redbook – 8:55, S&P Case-Shiller HPI – 9:00Consumer Confidence – 10:00, State Street Investor Confidence Index – 10:00.

International Economic:  Great Britain CBI Industrial Trends Survey – 5:00.

Other:  FOMC meeting begins.

 

Optionable Earnings: 

Symbol

Company Name

July 25 Close

IV30

B/A

XEPS

AGCO

AGCO Corporation

$52.88

25.1

B

$1.68

CNX

CONSOL Energy Inc.

$40.74

26.1

B

$0.25

CVLT

CommVault Systems, Inc.

$48.00

52.9

B

$0.20

GLPI

Gaming and Leisure Properties Inc

$35.06

26.3

B

$0.51

GNC

GNC Holdings Inc

$34.65

50.9

B

$0.79

HCA

HCA Holdings Inc

$61.50

30.8

B

$1.37

IP

International Paper Company

$50.65

32.1

B

$0.82

LVLT

Level 3 Communications, Inc.

$45.75

39.2

B

$0.34

MDC

M.D.C. Holdings, Inc.

$28.83

28.9

B

$0.44

MDSO

Medidata Solutions Inc

$40.29

71.3

B

$0.07

MLM

Martin Marietta Materials, Inc.

$131.90

28.7

B

$1.23

SAVE

Spirit Airlines Incorporated

$67.35

34.1

B

$0.85

UTHR

United Therapeutics Corporation

$92.33

46.1

B

$1.66

XYL

Xylem Inc

$37.21

35.8

B

$0.44

YNDX

Yandex NV

$31.19

52.1

B

$0.28

AEGR

Aegerion Pharmaceuticals, Inc.

$29.09

85.4

A

($0.42)

APC

Anadarko Petroleum Corporation

$111.00

35.7

A

$1.33

BWLD

Buffalo Wild Wings

$160.98

37.6

A

$1.19

CBG

CBRE Group Inc

$33.62

26.5

A

$0.36

CHMT

Chemtura Corp

$25.50

31.2

A

$0.37

CHRW

C.H. Robinson Worldwide, Inc.

$66.52

28.4

A

$0.77

CRAY

Cray Inc.

$29.25

71.7

A

($0.38)

DWA

Dreamworks Animation Skg Inc

$22.78

46.8

A

$0.00

ESRX

Express Scripts Holding Co

$66.52

27.9

A

$1.22

EW

Edwards Lifesciences Corp

$85.17

33.9

A

$0.77

EXAM

Examworks Group, Inc.

$31.92

45.9

A

$0.04

GPRE

Green Plains Inc

$38.66

48.3

A

$1.03

INVN

InvenSense Inc

$25.51

65.9

A

$0.00

NCR

NCR Corporation

$32.26

42.3

A

$0.66

NEM

Newmont Mining Corp

$24.78

25.9

A

$0.20

NFX

Newfield Exploration Co.

$44.98

34.5

A

$0.50

PNRA

Panera Bread Co

$145.63

35.7

A

$1.75

QGEN

Qiagen NV

$24.88

38.1

A

$0.25

RGR

Sturm, Ruger & Company

$58.13

34.4

A

$1.28

RKT

Rock-Tenn Company

$103.08

37.3

A

$1.82

SLCA

U.S. Silica Holdings Inc

$60.99

45.6

A

$0.46

TRN

Trinity Industries Inc

$45.48

38.3

A

$0.75

TWTR

Twitter Inc

$38.71

67.2

A

($0.29)

ULTI

The Ultimate Software Group, Inc.

$132.20

39.1

A

$0.22

VRTX

Vertex Pharmaceuticals Inc.

$95.77

42.5

A

($0.74)

X

United States Steel Corporation

$27.48

37.4

A

($0.32)

XPO

XPO Logistics Inc

$27.37

43.0

A

($0.24)

DB

Deutsche Bank AG (USA)

$36.31

26.9

$0.50

 

Wednesday July 30:

Economic:  MBA Purchase Application – 7:00, ADP Employment Report – 8:15, GDP – 8:30, EIA Petroleum Status Report – 10:30.

International:   Germany CPI – 8:00 AM.

Other: FOMC Meeting Announcement – 2:00.

Optionable Earnings:

Symbol

Company Name

July 25 Close

IV30

B/A

XEPS

ADT

ADT Corp

$33.48

35.1

B

$0.46

ENR

Energizer Holdings, Inc.

$119.26

33.7

B

$1.55

GRMN

Garmin Ltd.

$57.90

32.9

B

$0.75

GT

The Goodyear Tire & Rubber

$28.38

40.6

B

$0.80

HSP

Hospira, Inc.

$51.82

35.7

B

$0.56

HUM

Humana Inc

$132.90

30.0

B

$2.19

HUN

Huntsman Corporation

$27.28

29.8

B

$0.48

IACI

IAC/InterActiveCorp

$66.88

33.5

B

$0.73

LL

Lumber Liquidators Holdings Inc

$55.14

49.5

B

$0.60

PBI

Pitney Bowes Inc.

$27.11

42.1

B

$0.46

RYAM

Rayonier Advanced Materials Inc.

$39.94

34.8

B

$0.74

SEE

Sealed Air Corp

$32.44

29.6

B

$0.38

SODA

Sodastream International Ltd

$31.63

72.3

B

$0.32

VLO

Valero Energy Corporation

$48.68

29.3

B

$1.20

WLP

WellPoint Inc

$115.25

26.7

B

$2.27

AEM

Agnico Eagle Mines Ltd (USA)

$40.75

41.4

A

$0.29

AKAM

Akamai Technologies, Inc.

$59.80

44.3

A

$0.46

ALLE

Allegion PLC

$54.97

31.2

A

$0.64

AMC

AMC Entertainment Holdings Inc

$22.60

31.9

A

$0.37

ARII

American Railcar Industries, Inc.

$68.55

46.6

A

$1.17

AVG

AVG Technologies NV

$20.09

43.9

A

$0.40

BMRN

BioMarin Pharmaceutical Inc.

$61.46

43.0

A

($0.41)

CAVM

Cavium Inc

$46.94

46.6

A

$0.17

CODE

Spansion Inc.

$22.30

56.4

A

$0.12

CTRP

Ctrip.com International, Ltd. (ADR)

$62.22

59.1

A

$0.12

EGN

Energen Corporation

$89.02

29.4

A

$0.41

EQIX

Equinix Inc

$217.11

26.8

A

$0.81

FBHS

Fortune Brands Home & Security Inc

$38.64

36.7

A

$0.56

HOLX

Hologic, Inc.

$25.63

32.8

A

$0.34

HOS

Hornbeck Offshore Services, Inc.

$42.40

39.9

A

$0.47

KS

KapStone Paper and Packaging Corp.

$32.05

51.6

A

$0.60

LRCX

Lam Research Corporation

$69.90

34.2

A

$1.22

MEOH

Methanex Corporation (USA)

$65.62

32.6

A

$1.02

MTW

Manitowoc Company, Inc.

$31.41

36.3

A

$0.40

NE

Noble Corporation PLC

$32.42

29.3

A

$0.67

NOW

ServiceNow Inc

$59.43

56.1

A

($0.26)

OTEX

Open Text Corporation (USA)

$47.64

42.6

A

$0.92

PPC

Pilgrim’s Pride Corporation

$31.71

42.7

A

$0.70

SAM

Boston Beer Co Inc

$222.35

37.3

A

$1.67

SFLY

Shutterfly, Inc.

$47.53

54.4

A

($0.74)

SPN

Superior Energy Services, Inc.

$35.89

27.7

A

$0.41

TGI

Triumph Group Inc

$65.40

25.7

A

$1.20

TSO

Tesoro Corporation

$59.81

33.7

A

$1.83

VECO

Veeco Instruments Inc.

$34.79

43.8

A

($0.29)

VPRT

VistaPrint Limited

$38.66

49.7

A

$0.35

WDC

Western Digital Corp

$99.60

32.6

A

$1.74

WFM

Whole Foods Market, Inc.

$37.33

43.1

A

$0.39

WLL

Whiting Petroleum Corp

$89.53

32.4

A

$1.26

WTW

Weight Watchers International, Inc.

$20.10

67.6

A

$0.77

YELP

Yelp Inc

$69.77

71.7

A

($0.03)

 

Thursday July 31:

Economic:  Challenger Job-Cut Report – 7:30, Gallup US Payroll to Population – 8:30, Weekly Jobless Claims – 8:30, Employment Cost Index – 8:30, Chicago PMI – 9:45, EIA Natural Gas Status Report – 10.30.

International Economic:  Germany Unemployment Rate – 3:30 AM, EMU Unemployment Rate – 5:00 AM.

Other

Optionable Earnings: 

Symbol

Company Name

July 25 Close

IV30

B/A

XEPS

CYH

Community Health Systems

$45.90

42.7

S

$0.34

DATA

Tableau Software Inc

$63.98

61.8

S

($0.08)

ALKS

Alkermes Plc

$45.71

42.0

B

$0.04

ATK

Alliant Techsystems Inc.

$132.06

32.7

B

$2.45

CCJ

Cameco Corporation (USA)

$21.30

30.1

B

$0.14

CHTR

Charter Communications, Inc.

$163.86

28.5

B

$0.08

COMM

Commscope Holding Company

$23.06

47.0

B

$0.65

CRR

CARBO Ceramics Inc.

$146.17

50.9

B

$0.95

CVI

CVR Energy, Inc.

$48.52

33.8

B

$1.36

CVRR

CVR Refining LP

$26.07

28.5

B

$0.96

DDD

3D Systems Corporation

$53.16

60.4

B

$0.14

DISCA

Discovery Communications Inc.

$82.88

27.2

B

$0.92

ENDP

Endo International PLC

$69.34

33.5

B

$0.90

FCN

FTI Consulting, Inc.

$37.58

42.6

B

$0.51

GG

Goldcorp Inc. (USA)

$27.24

28.3

B

$0.14

GNRC

Generac Holdings Inc.

$43.77

44.8

B

$0.79

GTLS

Chart Industries, Inc.

$79.65

42.6

B

$0.75

INCY

Incyte Corporation

$47.95

48.1

B

($0.04)

MD

MEDNAX Inc

$57.95

25.6

B

$0.78

MPC

Marathon Petroleum Corp

$77.43

29.3

B

$2.21

OCN

Ocwen Financial Corp

$35.76

44.5

B

$0.85

PCRX

Pacira Pharmaceuticals Inc

$86.73

47.0

B

($0.24)

PNR

Pentair PLC

$71.78

26.5

B

$1.04

PWR

Quanta Services Inc

$34.97

28.0

B

$0.39

RYL

The Ryland Group, Inc.

$37.44

35.2

B

$0.70

SBH

Sally Beauty Holdings, Inc.

$24.72

39.3

B

$0.43

STRZA

Starz

$29.99

31.2

B

$0.50

TKR

Timken Co

$48.65

30.9

B

$0.06

UPL

Ultra Petroleum Corp.

$24.72

33.7

B

$0.59

VRX

Valeant Pharmaceuticals Intl Inc

$124.36

33.5

B

$1.91

ARRS

Arris Group Inc

$33.77

44.4

A

$0.64

ASH

Ashland Inc

$107.51

25.7

A

$1.53

BBG

Bill Barrett Corporation

$25.61

45.4

A

$0.03

DGI

DigitalGlobe Inc

$27.31

45.2

A

($0.01)

EXPE

Expedia Inc

$79.90

52.9

A

$0.68

FLDM

Fluidigm Corporation

$28.34

82.1

A

($0.52)

FLT

FleetCor Technologies, Inc.

$132.48

33.9

A

$1.20

GPRO

GoPro Inc

$42.19

78.7

A

($0.12)

IMPV

Imperva Inc

$23.60

76.0

A

($0.72)

LNKD

LinkedIn Corp

$178.05

49.4

A

$0.00

LYV

Live Nation Entertainment, Inc.

$24.21

38.8

A

$0.17

MHK

Mohawk Industries, Inc.

$130.43

30.0

A

$2.20

OIS

Oil States International, Inc.

$63.63

26.0

A

$0.89

OUTR

Outerwall Inc

$54.09

45.8

A

$1.46

RMD

ResMed Inc.

$50.28

34.9

A

$0.65

SGEN

Seattle Genetics, Inc.

$34.69

52.0

A

($0.22)

SPWR

SunPower Corporation

$38.09

56.8

A

$0.25

SWN

Southwestern Energy Company

$41.56

27.3

A

$0.58

SYNA

Synaptics, Incorporated

$80.16

55.1

A

$1.23

WWWW

Web.com Group Inc

$27.44

54.1

A

$0.54

YRCW

YRC Worldwide Inc

$27.25

53.0

A

$0.09

TSLA

Tesla Motors Inc

$223.54

52.2

($0.24)

 

Friday August 1:

Economic:  Motor Vehicle Sales , July Employment Situation -8:30, Personal Income and Outlays – 8:30, PMI Manufacturing Index – 9:45, University of Michigan Consumer Sentiment – 9:55, ISM Manufacturing Index – 10:00, Construction Spending – 10:00, Global PMI – 11:00. .

International Economic:  EMU PMI Manufacturing Index – 4:00 AM.

Optionable Earnings: 

Symbol

Company Name

July 25 Close

IV30

B/A

XEPS

CTRX

Catamaran Corp (USA)

$44.69

34.2

B

$0.51

HLT

Hilton Worldwide Holdings Inc

$25.29

30.1

B

$0.19

NGLS

Targa Resources Partners LP

$68.64

25.3

B

$0.43

PBF

PBF Energy Inc

$26.99

36.5

B

$0.76

SPR

Spirit AeroSystems Holdings, Inc.

$33.88

35.9

B

$0.69

TRGP

Targa Resources Corp

$135.47

30.6

B

$0.57

 

Monday August 4:

Economic:  PMI Gallup US Consumer Spending Measure – 8:30.

International Economic:  Japan PMI Composite – 7:15 PM, China PMI Composite – 9:45 PM..

Optionable Earnings:

Symbol

Company Name

July 25 Close

IV30

B/A

XEPS

BSFT

BroadSoft Inc

$24.40

65.4

B

($0.09)

KORS

Michael Kors Holdings Ltd

$82.04

42.8

B

$0.81

LGND

Ligand Pharmaceuticals Inc.

$51.08

56.5

B

$0.08

RLGY

Realogy Holdings Corp

$38.38

37.6

B

$0.56

TREX

Trex Company, Inc.

$28.55

43.5

B

$0.44

AREX

Approach Resources Inc.

$22.76

45.7

A

$0.22

CAR

Avis Budget Group Inc.

$60.00

35.6

A

$0.63

CNQR

Concur Technologies, Inc.

$92.13

47.5

A

($0.07)

CRK

Comstock Resources Inc

$26.18

42.2

A

$0.09

ECOM

ChannelAdvisor Corp

$23.38

80.3

A

($0.37)

ININ

Interactive Intelligence Group Inc

$44.40

54.4

A

($0.39)

PXD

Pioneer Natural Resources

$232.28

31.0

A

$1.24

ROSE

Rosetta Resources Inc.

$53.28

37.3

A

$0.83

SALE

RetailMeNot Inc

$25.38

68.0

A

$0.11

THC

Tenet Healthcare Corp

$49.22

43.5

A

$0.00

TSRA

Tessera Technologies, Inc.

$23.14

31.1

A

$0.00

 

 

 

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