The Prepared Mind: November 3, 2014

"Chance favors the prepared mind." -- Louis Pasteur

“Chance favors the prepared mind.” — Louis Pasteur

By Frank Fahey

Last week’s blog asked the question “Trick or treat?” The answer for investors was a Halloween treat. Last week was a treat for investors in equities. The week before last equity indexes finished with their best week in nearly two years. The upward trend is the most amazing I have ever witnessed in nearly 30 years as a professional trader. On Wednesday, October 15, the S&P 500 printed 1820. In a little over two weeks, the SPX has moved upwards nearly 11%. The S&P 500 and the Dow Jones Industrials both finished the week at all-time highs. This week’s push upwards started with the FOMC’s announcing positive views of the economy and jobs. The announcement, combined with continuing strong third quarter earnings announcements, assuaged any lingering fears about the end of QE2. On Thursday, it was announced the US GDP grew at a faster than expected 3.5% annual rate. The final push to the upside cam with Friday’s surprise announcement from the Bank of Japan that it would boost the Japanese economy through asset purchases

Here is an overview of last week’s market performance:

Index Nov 1 Close Weekly Change % Weekly % YTD Volatility of Index
Dow Jones Industrials (DJIA) 17,390.52 585.11 3.48% 4.91% 13.21%(VXD)
S&P 500 (SPX) 2,018.05 53.47 2.72% 9.18% 14.03% (VIX)
NASDAQ 100 (NDX) 4,144.13 108.48 2.69% 15.37% 15.81% (VXN)
Russell 2000 (RUT) 1,171.04 54.23 4.86% 0.64% 19.32% (RVX)
S&P 100 (OEX) 895.79 22.46 2.57% 8.74% 13.73%(VXO)
CBOE Volatility Index (VIX) 14.03 -2.08 -12.91% NA

 

Volatility indexes and long volatility products continued their downward trend. The November and December VIX Futures hovered around 16 while the VIX cash was down 13% to 14. Volatility on the VIX (VVIX) closed at 94, well above its usual range of 70 to 80. The higher implied volatility of the VIX options may be interpreted as a forward looking opinion or fear about future volatility and market direction in the SPX.

 

Here is an overview of last week for the VIX and related products:

 

Index Ticker 31-Oct Change % Change 24-Oct
CBOE Volatility Index VIX 14.03 (2.08) -12.91% 16.11
VIX November Future VXX4 15.80 (1.15) -6.78% 16.95
VIX December Future VXZ4 16.05 (1.00) -5.87% 17.05
VIX January Future VXF5 16.80 (0.95) -5.35% 17.75
CBOE Short-term Volatility Index VXST 13.80 (0.93) -6.31% 14.73
CBOE 3 Month Volatility Index VXV 16.51 (1.41) -7.87% 17.92
CBOE Mid-term Volatility Index VXMT 18.16 (1.03) -5.37% 19.19
VIX of VIX VVIX 94.10 (10.28) -9.85% 104.38
Long VIX ETP’s
S&P 500 VIX Short Term Futures ETN VXX 30.32 (2.85) -8.59% 33.17
S&P 500 VIX Mid-Tem Futures ETN VXZ 12.79 (0.60) -4.48% 13.39
Short VIX ETP’s
Daily Inverse VIX Short Term ETN XIV 35.06 2.69 8.31% 32.37
Short VIX Short Term Futures ETF SVXY 68.82 5.39 8.50% 63.43

 

The major 2014 election is on Tuesday. While the Republicans are expected to pick up 6 seats needed for them to control the Senate, do not expect an end to gridlock. This is also “employment week.”Numerous employment reports lead up to Friday’s announcement of the October employment situation. Markets are focused on this report. In addition to giving us a snapshot of the strength of the economy, it also provides indicators for the timing of the next Fed policy rate hike. Manufacturing reports will garner headlines this week. Will slowing global growth have an effect on US manufacturing? The European Central Bank and the Bank of England hold monetary policy discussions this week, Traders are focusing on on if these central banks will respond in kind to the Bank of Japan expansion of asset buying.

This is the last big week of the earnings cycle. Earnings include AIG, Sysco, Transocean, Loews, Marathon Oil, Priceline, ADM, CVS Caremark, Motorola Solutions, CBS, Duke Energy, Whole Foods, QUALCOMM, Time Warner, Disney, Apache and Berkshire Hathaway. A number of other stocks with high implied volatility and higher prices will be announcing earnings this week. I have scanned for 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

“Never think that lack of variability is stability. Don’t confuse lack of volatility with stability, ever.”

Nassim Nicholas Taleb

 

Monday November 3:

Economic: Motor Vehicle Sales, Gallup US Consumer Spending Measure – 8:30, PMI Manufacturing Index – 9:45, ISM Manufacturing Index – 10:00, Construction Spending – 10:00, Global Manufacturing PMI – 11:00.

International Economic: German PMI Manufacturing Index – 3:55 AM, EMU PMI Manufacturing Index – 4:00.

Other: Chicago Federal Reserve Bank President Charles Evans gives opening remarks at infrastructure conference in Chicago – 9:30 AM, Dallas Federal Reserve Bank President Richard Fisher speech to the Shadow Open Market Committee, in New York – 12:40 PM.

Optionable Earnings:

Symbol Company Name Oct 31 Close IV30 B/A XEPS
EEP Enbridge Energy Partners, L.P. $36.43 27.5 B $0.29
SOHU Sohu.com Inc $45.80 44.6 B ($1.21)
SYY SYSCO Corporation $38.57 33.1 B $0.50
A Lannett Company, Inc. $55.89 56.3 A $0.93
AGU Agrium Inc. (USA) $96.60 22.5 A $0.50
APL Atlas Pipeline Partners, L.P. $35.98 35.1 A ($0.10)
CYH Community Health Systems $53.12 41.9 A $0.75
HLF Herbalife Ltd. $50.56 106.3 A $1.52
MR Mindray Medical International Ltd $29.29 46.3 A $0.43
MRO Marathon Oil Corporation $34.11 26.6 A $0.58
NWPX Northwest Pipe Company $35.44 25.8 A $0.69
RKT Rock-Tenn Company $50.54 37.7 A $1.06
SALE RetailMeNot Inc $20.53 83.7 A $0.06
SGY Stone Energy Corporation $24.24 58.8 A $0.10
SSW Seaspan Corporation $20.63 26.5 A $0.26
THC Tenet Healthcare Corp $55.43 47.3 A $0.10
VNR Vanguard Natural Resources, LLC $24.99 40.4 A $0.27

 

 

Tuesday November 4:           

Economic: ICSC – Goldman Sachs Store Sales – 7:45, Gallup US ECI – 8:30, International Trade – 8:30, Redbook – 8:55, Factory Orders – 10:00.

International Economic: China PMI Composite 8:45 PM.

Other: US Elections

Optionable Earnings:

Symbol Company Name Oct 31 Close IV30 B/A XEPS
ADM Archer Daniels Midland Company $46.58 24.1 B $0.75
AER AerCap Holdings N.V. $42.09 34.3 B $1.03
AFSI AmTrust Financial Services Inc $44.11 87.6 B $1.16
BABA Alibaba Group Holding Ltd $98.73 46.0 B $0.37
BKW Burger King Worldwide Inc $32.04 29.7 B $0.27
DISCA Discovery Communications Inc. $35.94 32.7 B $0.41
DISH DISH Network Corp $62.29 48.2 B $0.41
DWRE Demandware Inc $56.98 65.8 B ($0.29)
EL Estee Lauder Companies Inc $74.94 24.9 B $0.55
EOG EOG Resources Inc $92.22 36.9 B $1.28
EXH Exterran Holdings, Inc. $38.39 42.7 B $0.28
HCLP Hi-Crush Partners LP $42.43 63.9 B $0.86
HMSY HMS Holdings Corp $22.39 60.3 B $0.12
ICE Intercontinental Exchange Inc $203.73 25.9 B $2.00
IEP Icahn Enterprises LP $103.53 29.0 B $2.61
IP International Paper Co $50.30 28.3 B $0.88
IPXL Impax Laboratories Inc $28.62 42.0 B $0.40
KORS Michael Kors Holdings Ltd $77.90 43.5 B $0.88
LINE Linn Energy LLC $24.75 46.6 B $0.42
LNCO LinnCo LLC $23.66 44.7 B $0.52
MSI Motorola Solutions Inc $64.08 31.4 B $0.36
NGLS Targa Resources Partners LP $61.00 33.7 B $0.68
NTI Northern Tier Energy LP $25.27 35.2 B $0.93
PCLN Priceline Group Inc $1,146.59 28.5 B $0.50
RCPT Receptos Inc $101.72 61.9 B ($0.96)
REGN Regeneron Pharmaceuticals Inc $392.80 37.4 B $2.10
RESI Altisource Residential Corp $22.91 59.0 B $0.67
RHP Ryman Hospitality Properties Inc $48.76 23.9 B $0.79
ROSE Rosetta Resources Inc. $37.17 48.7 B $0.77
RRGB Red Robin Gourmet Burgers, Inc. $54.25 48.8 B $0.33
TIME Time Inc. $22.39 40.1 B $0.36
TRP TransCanada Corporation (USA) $49.31 31.9 B $0.54
VLO Valero Energy Corporation $48.85 30.2 B $1.57
VMC Vulcan Materials Company $60.29 34.4 B $0.51
VSI Vitamin Shoppe Inc $47.47 46.8 B $0.52
WLK Westlake Chemical Corporation $70.16 36.8 B $1.55
WNR Western Refining, Inc. $44.71 37.6 B $1.43
ZBRA Zebra Technologies Corp. $71.17 39.9 B $0.85
ZTS Zoetis Inc $37.32 26.2 B $0.37
AWAY HomeAway, Inc. $34.06 57.7 A $0.07
AXLL Axiall Corp $38.93 39.4 A $0.59
BOFI BofI Holding, Inc. $73.05 30.9 A $1.11
CBSO CBS Outdoor Americas Inc $30.49 27.8 A $0.26
CLNY Colony Financial Inc $21.98 30.8 A $0.33
CRTO Criteo SA (ADR) $30.96 63.8 A $0.07
CSU Capital Senior Living Corporation $22.01 33.4 A $0.01
DVN Devon Energy Corp $58.30 32.3 A $1.27
FANG Diamondback Energy Inc $67.68 51.4 A $0.61
FEYE FireEye Inc $33.63 70.0 A ($0.87)
FOXA Twenty-First Century Fox Inc $34.56 25.7 A $0.36
JAZZ Jazz Pharmaceuticals PLC $169.82 40.8 A $1.97
KAR KAR Auction Services Inc $30.03 43.6 A $0.31
MYGN Myriad Genetics, Inc. $38.00 53.9 A $0.33
OAS Oasis Petroleum Inc. $29.37 53.3 A $0.71
OKE ONEOK, Inc. $58.67 30.4 A $0.38
OKS Oneok Partners LP $49.64 26.1 A $0.62
PCYC Pharmacyclics, Inc. $134.60 49.9 A $0.45
PHH PHH Corporation $23.27 34.9 A ($0.23)
PXD Pioneer Natural Resources $185.36 41.0 A $1.25
QVCA Liberty Interactive Corp $25.82 32.9 A $0.19
SBAC SBA Communications $114.40 24.0 A ($0.01)
TNET TriNet Group Inc $29.23 48.8 A $0.25
TRIP Tripadvisor Inc $86.31 45.2 A $0.51
XEC Cimarex Energy Co $109.85 42.5 A $1.53
ZU Zulily Inc $35.46 78.0 A ($0.06)

 

 

Wednesday November 5:

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

International: EMU Retail Sales – 5:00.

Other: Minneapolis Federal Reserve Bank President Narayana Kocherlakota speech to Chamber of Commerce on clarifying monetary policy objectives in Virginia, Minnesota – 9:15 AM, Richmond Federal Reserve Bank President Jeffrey Lacker speech on financial stability at George Washington University in DC – 9:30 AM, Boston Federal Reserve Bank President Eric Rosengren speech at Global Standards and Regulatory and Supervision Priorities in the Americas meeting in Lima, Peru – 10:00 AM.

Optionable Earnings:

Symbol Company Name Oct 31 Close IV30 B/A XEPS
ACT Actavis PLC $243.21 30.3 B $3.12
ATHM Autohome Inc (ADR) $50.57 69.7 B $0.26
BSFT BroadSoft Inc $21.88 63.3 B ($0.03)
CHK Chesapeake Energy Corporation $21.35 40.3 B $0.32
CLH Clean Harbors Inc $49.11 37.6 B $0.63
CLMT Calumet Specialty Products Partners, $27.95 34.9 B $0.14
CMLP Crestwood Midstream Partners LP $20.21 36.1 B $0.06
COV Covidien plc $91.61 38.8 B $1.01
CSTE Caesarstone Sdot-Yam Ltd $55.28 44.1 B $0.57
CTSH Cognizant Technology Solutions Corp $47.98 31.3 B $0.59
ENB Enbridge Inc (USA) $47.28 22.0 B $0.36
HFC HollyFrontier Corp $44.79 27.2 B $0.96
INXN InterXion Holding NV $27.33 37.0 B $0.17
LVLT Level 3 Communications, Inc. $45.41 41.0 B $0.31
MEMP Memorial Production Partners LP $21.11 32.2 B $0.53
MGA Magna International Inc. (USA) $96.32 29.2 B $1.94
NRG NRG Energy Inc $29.75 34.5 B $0.69
NUS Nu Skin Enterprises, Inc. $52.82 75.3 B $0.93
PWR Quanta Services Inc $33.14 29.1 B $0.55
RDC Rowan Companies PLC $23.72 34.7 B $0.57
RLGY Realogy Holdings Corp $39.52 38.3 B $0.66
ROC Rockwood Holdings, Inc. $76.55 28.0 B $0.57
SBGI Sinclair Broadcast Group Inc $28.94 39.4 B $0.33
SE Spectra Energy Corp. $38.83 22.4 B $0.28
SMG Scotts Miracle-Gro Co $58.61 24.6 B ($0.24)
SSYS Stratasys Ltd $115.41 50.8 B $0.45
TWX Time Warner Inc $79.65 26.6 B $0.94
VOYA Voya Financial Inc $38.53 22.7 B $0.73
WCG WellCare Health Plans, Inc. $64.42 43.4 B $0.66
ALNY Alnylam Pharmaceuticals, Inc. $94.72 63.2 A ($0.65)
AR Antero Resources Corp $51.25 38.6 A $0.33
ASH Ashland Inc $106.54 27.3 A $1.36
BKD Brookdale Senior Living, Inc. $33.07 30.0 A ($0.07)
BWC Babcock & Wilcox Co $28.18 25.9 A $0.44
CAPL Crossamerica Partners LP $33.84 42.0 A $0.26
CF CF Industries Holdings, Inc. $259.24 30.2 A $3.40
CLR Continental Resources, Inc. $55.12 46.6 A $0.81
CTL CenturyLink, Inc. $41.49 24.8 A $0.62
CXO Concho Resources Inc $106.76 44.2 A $0.94
DATA Tableau Software Inc $80.69 60.9 A ($0.12)
DYN Dynegy Inc $29.62 41.4 A $0.05
ETE Energy Transfer Equity LP $57.96 40.0 A $0.36
ETP Energy Transfer Partners LP $64.02 31.6 A $0.66
GPOR Gulfport Energy Corporation $47.13 60.5 A $0.08
HOLX Hologic, Inc. $25.92 37.7 A $0.37
LBTYA Liberty Global PLC $45.49 30.0 A $0.14
MED Medifast Inc $31.82 51.8 A $0.37
MTDR Matador Resources Co $23.65 53.2 A $0.30
MWE Markwest Energy Partners LP $69.59 30.9 A $0.26
NDLS Noodles & Co $22.27 65.4 A $0.10
PAA Plains All American Pipeline, L.P. $55.97 25.7 A $0.51
PRU Prudential Financial Inc $87.49 24.5 A $2.41
QEP QEP Resources Inc $24.11 41.9 A $0.28
RGP Regency Energy Partners LP $30.41 33.8 A $0.06
SCTY SolarCity Corp $56.33 63.1 A ($1.09)
SUN Sunoco LP $45.79 35.0 A $0.50
SWIR Sierra Wireless, Inc. (USA) $26.70 56.4 A ($0.04)
SXL Sunoco Logistics Partners L.P. $46.58 35.3 A $0.40
SYMC Symantec Corporation $24.85 31.0 A $0.37
THOR Thoratec Corporation $26.40 48.0 A $0.09
TROX Tronox Ltd $23.58 48.7 A ($0.18)
TS Tenaris SA (ADR) $39.08 26.3 A $0.63
TSLA Tesla Motors Inc $238.66 54.9 A ($0.15)
TXTR Textura Corp $25.29 74.2 A ($0.14)
WBMD WebMD Health Corp. $41.62 52.1 A $0.24
WFM Whole Foods Market, Inc. $38.77 35.8 A $0.32
WMGI Wright Medical Group Inc $31.78 44.7 A ($0.33)
XPO XPO Logistics Inc $39.60 48.6 A ($0.18)
Z Zillow Inc $104.24 55.8 A ($0.11)

 

Thursday November 6:

Economic: Chain Store Sales, Challenger Job-Cut Report – 7:30, Weekly Jobless Claims – 8:30, Gallup US Payroll to Population – 8:30, Productivity and Costs – 8:30, Bloomberg Consumer Comfort Index – 9:45, EIA Natural Gas Status Report – 10:30, Global Composite PMI – 11:00.

International Economic: Germany Manufacturer2:00 AM, Great Britain Industrial Production – 4:30, Bank of England Announcement – 7:00 AM, European Central Bank Announcement 7:45 AM.

Other: Federal Reserve Gov. Jerome Powell speech to Chicago Fed International Banking Conference – 12:45 PM, Cleveland Federal Reserve Bank President Loretta Mester speech to NYU Money Marketeers, in New York – 7:05 PM.

Optionable Earnings:

Symbol Company Name Oct 31 Close IV30 B/A XEPS
AAP Advance Auto Parts, Inc. $145.71 30.1 B $1.87
AKRX Akorn, Inc. $43.64 45.4 B $0.22
AMCX AMC Networks Inc $60.48 38.3 B $0.75
AOL AOL, Inc. $42.92 46.8 B $0.39
APA Apache Corporation $75.81 32.0 B $1.42
AZN AstraZeneca plc (ADR) $72.60 27.1 B $1.04
CNQ Canadian Natural Resource Ltd $34.17 33.6 B $0.74
CPN Calpine Corporation $22.60 31.0 B $0.45
CRZO Carrizo Oil & Gas, Inc. $49.70 48.4 B $0.46
DNOW NOW Inc. $29.91 45.0 B $0.33
GNRC Generac Holdings Inc. $44.61 49.4 B $1.02
GOLD Randgold Resources Ltd. (ADR) $59.76 42.2 B $0.79
GSJK Compressco Partners LP $21.68 40.6 B $0.29
HAIN The Hain Celestial Group, Inc. $106.66 31.6 B $0.65
KATE Kate Spade & Co $27.16 57.2 B $0.01
MPEL Melco Crown Entertainment Ltd $26.36 46.5 B $0.29
NLNK NewLink Genetics Corp $33.88 109.5 B ($0.41)
NSM Nationstar Mortgage Holdings Inc $34.40 53.4 B $1.05
PDCE PDC Energy Inc $42.30 65.0 B $0.25
PNK Pinnacle Entertainment, Inc $25.28 76.2 B $0.44
PRGO Perrigo Company PLC $161.33 28.1 B $1.45
RGEN Repligen Corporation $25.49 49.1 B $0.05
SNI Scripps Networks Interactive, Inc. $76.53 31.3 B $0.84
TAP Molson Coors Brewing Company $72.92 35.6 B $1.50
TDC Teradata Corporation $41.40 39.2 B $0.62
TGP Teekay LNG Partners L.P. $38.35 27.1 B $0.56
TK Teekay Corporation $57.74 39.6 B $0.10
VC Visteon Corp $92.18 40.7 B $0.67
WAC Walter Investment Management Corp $22.61 51.3 B $0.94
AGO Assured Guaranty Ltd. $22.69 35.3 A $0.60
AIRM Air Methods Corp $46.40 50.4 A $0.85
AL Air Lease Corp $36.07 35.1 A $0.58
ANAC Anacor Pharmaceuticals Inc $30.08 51.1 A $0.65
ANET Arista Networks Inc $73.89 67.0 A $0.24
BCEI Bonanza Creek Energy Inc $43.23 58.0 A $0.54
BRKR Bruker Corporation $20.64 45.8 A $0.15
CLVS Clovis Oncology Inc $59.16 90.3 A ($1.03)
FSLR First Solar, Inc. $56.10 59.1 A $0.64
LGF Lions Gate Entertainment Corp. $33.08 39.3 A $0.13
LOCO El Pollo LoCo Holdings Inc $36.64 67.7 A $0.12
MDVN Medivation Inc $102.74 53.0 A $1.09
MNST Monster Beverage Corp $99.10 35.1 A $0.68
OLED Universal Display Corporation $30.95 64.0 A $0.09
RIG Transocean LTD $29.49 47.5 A $0.77
SFM Sprouts Farmers Market Inc $28.76 44.3 A $0.16
SLXP Salix Pharmaceuticals, Ltd. $144.50 55.0 A $0.73
SWKS Skyworks Solutions Inc $56.04 48.3 A $0.98
UBNT Ubiquiti Networks Inc $35.19 71.6 A $0.52

 

Friday November 7:

Economic: Monthly Employment Situation – 8:30.

International Economic: Germany Industrial Production – 2:00 AM, France Industrial Production – 2:45 AM, Great Britain Merchandise Trade – 4:30..

Optionable Earnings:

Symbol Company Name Oct 31 Close IV30 B/A XEPS
AGIO Agios Pharmaceuticals Inc $84.37 80.5 B ($52.00)
BPL Buckeye Partners, L.P. $77.00 28.1 B $0.89
CTB Cooper Tire & Rubber Co $31.83 33.2 B $0.72
HUM Humana Inc $137.18 28.4 B $2.01
ICPT Intercept Pharmaceuticals Inc $256.73 80.1 B ($1.10)
ISIS ISIS Pharmaceuticals, Inc. $45.88 54.8 B ($0.20)
NXST Nexstar Broadcasting Group, Inc. $43.94 42.7 B $0.51

 

Monday November 10:

Economic: No major announcements.

International Economic: No China PPI – 8:30 PM Sunday November 9.

Other: Dallas Federal Reserve Bank President Richard Fisher speech to the Shadow Open Market Committee, in New York – 12:40 PM.

Optionable Earnings:

Symbol Company Name Oct 31 Close IV30 B/A XEPS
BID Sothebys $38.71 38.2 B ($0.37)
DDD 3D Systems Corporation $37.00 55.7 B $0.15
EVEP EV Energy Partners, L.P. $32.80 37.1 B $0.25
WWAV WhiteWave Foods Co $37.00 39.7 B $0.26
ATLS Atlas Energy LP $38.45 35.1 A $0.16
ATW Atwood Oceanics, Inc. $40.42 32.3 A $1.54
RAX Rackspace Hosting, Inc. $37.57 54.1 A $0.15

 

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