The Prepared Mind: February 1, 2016

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

“Chance favors the prepared mind.” — Louis Pasteur

By Frank Fahey

The markets trade in a well defined range the first four days of the week. Equities broke out of the range with gains of about 2% on Friday. Friday’s gains tempered clouds of concern which have been hovering over the markets. The Bank of Japan gave rise to the rally by moving its benchmark interest rate to below zero. This move by the BOJ, coupled with strengthening crude oil prices, tempered the fear in the market place. The markets remain jittery despite Friday’s impressive gains. Earnings announcements have been disappointing as was Friday’s announcement of worse than expected US GDP. Be wary. The average daily trading range is still at elevated levels. Correct trading errors immediately. Small mistakes have the capability of quickly turning into big losses.

Many technical analysts viewed last week’s market behavior as “stabilizing” despite wide price swings. However, the term “stabilizing” should not be confused with bullish.   The SPX has, yet again, confirmed strong support at the 1820 level. The sell-offs in April 2014 and October 2014 found support at the same level. Equity put/call ratios remain on sell signals despite Friday’s 2.6% gain in the S&P 500. Market breadth is weak and remains on sell signals. Volatility, as measured by the VIX and other related products, is still in an upward trend. The consensus among the analysts is short-term bullish within an intermediate-term bearish environment.

Here is an overview of the market behavior last week:

Index 29-Jan Weekly Change % Weekly 2015 YTD Volatility of Index
Dow Jones Industrials (DJIA) 16466.30 372.79 2.32% -5.50% 19.57% (VXD)
S&P 500 (SPX) 1940.24 33.34 1.75% -5.07% 20.20% (VIX)
NASDAQ 100 (NDX) 4264.85 17.89 0.42% -7.23% 23.64% (VXN)
Russell 2000 (RUT) 1034.28 17.78 1.75% -8.79% 24.18% (RVX)
S&P 100 (OEX) 868.34 17.00 2.00% -4.73% 21.1% (VXO)
CBOE Volatility Index (VIX) 20.20 (2.14) -9.58% NA  

Data Source: OptionVue7

 

The VIX front month future is at a premium to the VIX spot for the first time since January 4. The backwardization of front month future versus spot ended at 11 days, the third longest backwardization streak in VIX history. Backwardization continues in the February VIX future versus the March VIX future. Russell Rhoads, Options Institute Director of Program Development, points out the front month futures versus second month futures is the backwardization which VIX traders care the most about.

 

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

Indexes Ticker 29-Jan 22-Jan Change % Change
CBOE Volatility Index VIX 20.20 22.34 (2.14) -9.58%
VIX February Future (2/17/2016) VXG6 21.525 22.725 (1.200) -5.28%
VIX March Future (3/16/2016) VXH6 21.325 22.175 (0.850) -3.83%
VIX April Future (4/20/2016) VXJ6 21.400 23.650 (2.250) -9.51%
CBOE Short-term Volatility Index VXST 19.37 22.59 (3.22) -14.25%
CBOE 3 Month Volatility Index VXV 22.66 24.28 (1.62) -6.67%
CBOE Mid-term Volatility Index (6 month) VXMT 22.82 24.58 (1.76) -7.16%
VIX of VIX VVIX 89.95 98.92 (8.97) -9.07%
Long VIX ETP’s      
iPath S&P 500 VIX Short Term Futures ETN VXX 24.12 25.00 (0.88) -3.52%
ProShares VIX Short Term Futures ETF VIXY 15.99 16.60 (0.61) -3.67%
iPath S&P 500 VIX Mid-Tem Futures ETN VXZ 12.09 12.54 (0.45) -3.59%
Inverse VIX ETP’s      
Daily Inverse VIX Short Term ETN XIV 20.02 19.54 0.48 2.46%
ProShares Short VIX Short Term Future ETF SVXY 39.12 38.19 0.93 2.44%

Data Source: OptionVue7

 

Many minor economic reports will be released next week. The highlights of the coming week center on employment. These reports culminate with Friday’s release of January’s Employment Situation by the Labor Department. Weekly jobless claims have been slowly growing recently. Investors will be very interested in seeing whether or not this growth will be reflected in the monthly numbers..

The earnings season is in full swing. The earnings highlights for widely held and actively traded stocks are: Alphabet (Google), Anadarko, Aflac, Baxter Int’l, Pfizer, ADM, Exxon Mobil, Yahoo. Dow Chemical, UPS, MetLife, Yum!, Comcast, ADP, Merck, General Motors, Cummins, Philip Morris, Occidental, ConocoPhillips, and Estee Lauder. Last week I decided to avoid simultaneously opening positions which would be effected by two volatility events – a major market sell-off and earnings announcements. I am currently planning on expanding my trading presence by opening new earnings announcement strategies this coming week.

OptionVue7 has the ability to identify stocks 30 days out with a new enhanced Earnings Search feature. I have done a quick search 14to 28 days forward for candidates for double calendars. Here are the results of my initial scan for double calendar candidates. You should further filter any of the stocks with your own risk/reward criteria.

Symbol Company Name Jan 29 Close IV30 B/A DATE
A Agilent Technologies Inc $36.11 32.52 BMO 16-Feb
BXLT Baxalta Inc $39.85 27.20 BMO 16-Feb
CERN Cerner Corporation $55.96 35.58 AMC 16-Feb
HRL Hormel Foods Corp $78.33 27.13 BMO 16-Feb
NCLH Norwegian Cruise Line Holdings Ltd $42.46 47.90 AMC 16-Feb
XEC Cimarex Energy Co $88.88 59.71 BMO 16-Feb
ZTS Zoetis Inc $42.84 31.69 BMO 16-Feb
ADI Analog Devices, Inc. $51.76 33.87 AMC 17-Feb
FANG Diamondback Energy Inc $72.79 52.41 AMC 17-Feb
JACK Jack in the Box Inc. $76.43 35.69 AMC 17-Feb
MAR Marriott International Inc $59.21 36.13 BMO 17-Feb
NTES NetEase Inc (ADR) $153.75 46.07 AMC 17-Feb
PCLN Priceline Group Inc $1,043.13 41.78 AMC 17-Feb
TMUS T-Mobile Us Inc $38.67 36.77 BMO 17-Feb
ANET Arista Networks Inc $59.45 63.99 AMC 18-Feb
CAB Cabelas Inc $40.14 57.43 BMO 18-Feb
DWRE Demandware Inc $40.59 65.58 AMC 18-Feb
EQIX Equinix Inc $300.22 32.65 AMC 18-Feb
FLR Fluor Corporation (NEW) $43.55 35.89 AMC 18-Feb
HCN Welltower Inc $60.43 28.09 AMC 18-Feb
HII Huntington Ingalls Industries Inc $122.45 35.55 BMO 18-Feb
HOT Starwood Hotels & Resorts Worldwide Inc $60.32 34.28 BMO 18-Feb
IDCC InterDigital, Inc. $43.77 37.07 AMC 18-Feb
JWN Nordstrom, Inc. $47.99 40.74 AMC 18-Feb
LH Laboratory Corp. of America Holdings $109.79 28.45 BMO 18-Feb
POOL Pool Corporation $79.90 26.07 BMO 18-Feb
DE Deere & Company $74.81 30.41 BMO 19-Feb
VFC VF Corp $60.07 31.52 BMO 19-Feb
AGN Allergan plc $281.76 27.89 BMO 22-Feb
AWI Armstrong World Industries, Inc. $37.94 34.18 BMO 22-Feb
ESRX Express Scripts Holding Co $69.86 35.29 AMC 22-Feb
BMO Bank of Montreal (USA) $53.04 26.60 BMO 23-Feb
CBI Chicago Bridge & Iron Company N.V. $37.08 42.02 AMC 23-Feb
DISH DISH Network Corp $47.00 39.20 BMO 23-Feb
DY Dycom Industries, Inc. $62.18 50.74 AMC 23-Feb
FSLR First Solar, Inc. $65.88 50.27 AMC 23-Feb
M Macy’s, Inc. $39.57 41.22 BMO 23-Feb
PCRX Pacira Pharmaceuticals Inc $57.56 68.49 BMO 23-Feb
SNI Scripps Networks Interactive, Inc. $59.31 29.65 BMO 23-Feb
WLK Westlake Chemical Corporation $46.57 46.18 BMO 23-Feb
AVGO Avago Technologies Ltd $126.37 43.11 AMC 24-Feb
BLUE bluebird bio Inc $39.66 79.67 AMC 24-Feb
CXO Concho Resources Inc $91.08 57.61 AMC 24-Feb
JAZZ Jazz Pharmaceuticals PLC $124.60 46.54 AMC 24-Feb
LB L Brands Inc $94.48 26.37 AMC 24-Feb
RY Royal Bank of Canada $50.55 27.53 BMO 24-Feb
TGT Target Corporation $70.99 26.29 BMO 24-Feb
WBMD WebMD Health Corp. $49.11 48.08 AMC 24-Feb
ADSK Autodesk, Inc. $45.27 37.63 AMC 25-Feb
APA Apache Corporation $40.60 55.51 BMO 25-Feb
BMRN BioMarin Pharmaceutical Inc. $73.38 60.80 AMC 25-Feb
CKH Seacor Holdings, Inc. $45.29 42.87 AMC 25-Feb
CNL Cleco Corporation $53.07 32.23 AMC 25-Feb
CRM salesforce.com, inc. $65.69 43.32 AMC 25-Feb
DLTR Dollar Tree, Inc. $78.91 27.35 BMO 25-Feb
DPZ Domino’s Pizza, Inc. $112.20 26.56 BMO 25-Feb
EOG EOG Resources Inc $68.63 45.29 AMC 25-Feb
HLF Herbalife Ltd. $45.24 62.92 AMC 25-Feb
INTU Intuit Inc. $92.03 26.50 AMC 25-Feb
IONS Ionis Pharmaceuticals Inc $39.73 81.20 BMO 25-Feb
KSS Kohl’s Corporation $47.99 37.10 BMO 25-Feb
MELI Mercadolibre Inc $96.86 48.50 AMC 25-Feb
MHK Mohawk Industries, Inc. $163.38 29.29 AMC 25-Feb
MNST Monster Beverage Corp $137.20 48.48 AMC 25-Feb
NXST Nexstar Broadcasting Group, Inc. $43.40 48.48 BMO 25-Feb
OLED Universal Display Corporation $44.30 53.27 AMC 25-Feb
PANW Palo Alto Networks Inc $139.78 48.41 AMC 25-Feb
SBAC SBA Communications Corporation $95.07 31.75 AMC 25-Feb
SERV Servicemaster Global Holdings Inc $40.56 31.92 AMC 25-Feb
SPLK Splunk Inc $44.34 60.19 AMC 25-Feb
W Wayfair Inc $44.43 89.52 AMC 25-Feb
WDAY Workday Inc $62.03 47.77 AMC 25-Feb

 

Once again, it is your responsibility to confirm these earnings dates. The date and time of earnings announcements can and do change.

Advice to stimulate your imagination:

 

“Chance favors the Prepared Mind.” – Louis Pasteur

“It is not certain that everything is uncertain.” – Blaise Pascal

 

“I’m not afraid of death; I just don’t want to be there when it happens.” – Woody Allen

 

Monday February 1:

 

Economic: Personal Income and Outlays – 8:30, Gallup US Consumer Spending Measure – 8:30, PMI Manufacturing Index – 9:45, ISM Manufacturing Index – 10:00, Construction Spending 10:00.

 

International Economic: China PMI Manufacturing Index – 9:00PM Sunday, Germany PMI Manufacturing Index – 4:00AM, Global Manufacturing PMI – 11:00AM.

 

Other: Federal Reserve Vice-Chair Stanley Fischer speech, in New York – 1:00PM.

 

Earnings:

Symbol Company Name Jan 22 Close IV30 B/A
AET Aetna Inc $98.79 34.15 BMO
APU AmeriGas Partners, L.P. $37.50 39.94 BMO
CAH Cardinal Health Inc $79.00 27.96 BMO
MAT Mattel, Inc. $27.18 44.28 BMO
SOHU Sohu.com Inc $49.51 47.77 BMO
SYY SYSCO Corporation $39.50 22.92 BMO
AFL AFLAC Incorporated $58.31 24.65 AMC
GOOGL Alphabet Inc $748.30 36.25 AMC
APC Anadarko Petroleum Corporation $37.25 68.65 AMC
GGP General Growth Properties Inc $27.56 47.08 AMC
GOOG Google Inc. $730.96 36.20 AMC
HAIN Hain Celestial Group Inc $34.55 51.20 AMC
IDTI Integrated Device Technology Inc $24.29 51.14 AMC
LEG Leggett & Platt, Inc. $39.70 29.22 AMC
ROP Roper Technologies Inc $169.72 26.55 AMC
TSO Tesoro Corporation $83.75 46.67 AMC

 

 

 

 

Tuesday February 2:

 

 

Economic: US Motor Vehicle Sales, Gallup US ECI – 8:30, Redbook – 8:55.

 

International Economic: Germany Unemployment Rate – 3:55AM, EMU PPI – 5:00AM, EMU Unemployment Rate – 5:00AM.

 

Other: Kansas City Federal Reserve Bank President Esther George speech on the economy, in Kansas City, Missouri – 1:00PM.

 

Earnings:

Symbol Company Name Jan 22 Close IV30 B/A
ADT ADT Corp $28.59 38.40 BMO
ADM Archer Daniels Midland Company $34.70 34.90 BMO
BEAV B/E Aerospace Inc $39.76 39.92 BMO
BAX Baxter International Inc $35.70 26.28 BMO
BP BP plc (ADR) $31.89 34.09 BMO
CIT CIT Group Inc. $29.14 42.11 BMO
DOW Dow Chemical Co $41.55 35.12 BMO
EMR Emerson Electric Co. $44.60 35.36 BMO
IAC IAC/InterActiveCorp $50.50 40.83 BMO
LYB LyondellBasell Industries NV $77.39 37.45 BMO
MNK Mallinckrodt PLC $57.30 70.73 BMO
KORS Michael Kors Holdings Ltd $38.73 49.55 BMO
RCL Royal Caribbean Cruises Ltd $78.33 50.83 BMO
R Ryder System, Inc. $50.90 43.06 BMO
ST Sensata Technologies Holding N.V. $35.78 39.89 BMO
SLGN Silgan Holdings Inc. $51.84 41.00 BMO
UPS United Parcel Service, Inc. $91.00 24.37 BMO
ATO Atmos Energy Corporation $67.19 22.50 AMC
CHRW C.H. Robinson Worldwide, Inc. $63.05 30.37 AMC
CMG Chipotle Mexican Grill, Inc. $453.08 50.71 AMC
EW Edwards Lifesciences Corp $75.88 38.08 AMC
GILD Gilead Sciences, Inc. $87.53 41.04 AMC
HRS Harris Corporation $84.79 27.87 AMC
ILMN Illumina, Inc. $154.25 48.47 AMC
JKHY Jack Henry & Associates, Inc. $78.15 22.60 AMC
MYGN Myriad Genetics, Inc. $38.45 48.40 AMC
SCCO Southern Copper Corp $24.98 36.92 AMC
YHOO Yahoo! Inc. $28.75 50.24 AMC

 

Wednesday February 3:

 

Economic: MBA Mortgage Applications – 7:00, ADP Employment Report 8:15, Gallup US Job Creation Index – 8:30, PMI Services Index – 9:45, ISM Non-Mfg Index – 10:00, EIA Petroleum Status Report – 10:30AM.

 

International Economic: EMU Retail Sales – 5:00AM.

 

Other:

 

Earnings:

Symbol Company Name Jan 22 Close IV30 B/A date
ALXN Alexion Pharmaceuticals, Inc. $145.61 49.80 BMO 3-Feb
CMCSA Comcast Corporation $54.11 25.93 BMO 3-Feb
ETN Eaton Corporation PLC $50.19 32.14 BMO 3-Feb
EPC Edgewell Personal Care Co $72.02 38.31 BMO 3-Feb
EXC Exelon Corporation $28.71 26.40 BMO 3-Feb
BEN Franklin Resources, Inc. $33.31 32.90 BMO 3-Feb
GM General Motors Company $29.02 33.50 BMO 3-Feb
GSK GlaxoSmithKline plc (ADR) $40.64 27.14 BMO 3-Feb
IP International Paper Co $32.65 31.55 BMO 3-Feb
MAN ManpowerGroup Inc. $72.97 38.14 BMO 3-Feb
NOV National-Oilwell Varco, Inc. $31.06 43.95 BMO 3-Feb
NVO Novo Nordisk A/S (ADR) $54.53 30.74 BMO 3-Feb
RGLD Royal Gold, Inc USA) $28.76 59.27 BMO 3-Feb
SE Spectra Energy Corp. $27.11 38.16 BMO 3-Feb
SU Suncor Energy Inc. (USA) $23.34 43.51 BMO 3-Feb
VNTV Vantiv Inc $44.35 33.00 BMO 3-Feb
ALL Allstate Corp $59.22 24.31 AMC 3-Feb
AVB AvalonBay Communities Inc $170.74 25.21 AMC 3-Feb
BWLD Buffalo Wild Wings $148.23 57.07 AMC 3-Feb
CBOE CBOE Holdings, Inc $64.51 23.02 AMC 3-Feb
CBG CBRE Group Inc $27.10 37.95 AMC 3-Feb
IMPV Imperva Inc $51.18 76.12 AMC 3-Feb
LCI Lannett Company, Inc. $24.42 75.42 AMC 3-Feb
LNC Lincoln National Corporation $38.57 35.70 AMC 3-Feb
MET Metlife Inc $43.78 28.22 AMC 3-Feb
MCHP Microchip Technology Inc. $43.16 36.72 AMC 3-Feb
MDLZ Mondelez International Inc $41.55 30.82 AMC 3-Feb
SEDG Solaredge Technologies Inc $27.85 89.28 AMC 3-Feb
TTWO Take-Two Interactive Software, Inc. $33.61 43.29 AMC 3-Feb
WYNN Wynn Resorts, Limited $63.15 63.99 AMC 3-Feb
YUM Yum! Brands, Inc. $70.41 34.31 AMC 3-Feb

 

 

Thursday February 4:

 

 

Economic: Challenger Job-Cut Report – 7:30, Weekly Jobless Claims – 8:30, Bloomberg Consumer Comfort Index – 9:45, Factory Orders – 10:00,, EIA Natural Gas Report – 10:30.

 

International Economic: No major announcements.

 

Other: Cleveland Federal Reserve Bank President Loretta Mester speech to MNI event, in New York. To register email caroline.odea@mni-news.com – 5:00PM.

 

Earnings:

Symbol Company Name Jan 22 Close IV30 B/A
ABC AmerisourceBergen Corp. $87.29 28.32 BMO
ARW Arrow Electronics, Inc. $49.31 35.84 BMO
AZN AstraZeneca plc (ADR) $31.23 29.24 BMO
CI CIGNA Corporation $129.83 27.23 BMO
CFX Colfax Corp $21.10 51.10 BMO
COP ConocoPhillips $38.02 52.03 BMO
CMI Cummins Inc. $86.95 35.44 BMO
DNKN Dunkin Brands Group Inc $39.00 33.73 BMO
EQT EQT Corporation $59.95 48.77 BMO
GWPH GW Pharmaceuticals PLC- ADR $52.01 114.25 BMO
ICE Intercontinental Exchange Inc $254.54 25.39 BMO
LVLT Level 3 Communications, Inc. $47.18 44.12 BMO
MMP Magellan Midstream Partners, L.P. $63.24 45.61 BMO
MSI Motorola Solutions Inc $64.74 27.45 BMO
OXY Occidental Petroleum Corporation $65.87 33.61 BMO
RL Ralph Lauren Corp $109.63 39.93 BMO
RDS.A Royal Dutch Shell plc (ADR) $43.33 38.15 BMO
RDS.B Royal Dutch Shell Plc CL B $43.49 38.77 BMO
SPR Spirit AeroSystems Holdings, Inc. $42.25 43.41 BMO
SPH Suburban Propane Partners LP $26.80 43.31 BMO
ATHN athenahealth, Inc $138.29 52.19 AMC
DECK Deckers Outdoor Corp $48.04 65.95 AMC
DLPH Delphi Automotive PLC $64.14 36.53 AMC
ECHO Echo Global Logistics, Inc. $20.94 76.02 AMC
ES Eversource Energy $53.09 22.13 AMC
HBI Hanesbrands Inc. $29.62 48.49 AMC
HIG Hartford Financial Services Group Inc $38.90 28.68 AMC
LNKD LinkedIn Corp $191.14 62.18 AMC
LGF Lions Gate Entertainment Corp. $25.82 43.80 AMC
NTGR NetGear, Inc. $36.57 56.50 AMC
NSR Neustar Inc $24.71 49.86 AMC
OUTR Outerwall Inc $32.88 66.56 AMC
POST Post Holdings Inc $55.28 60.01 AMC
QRVO Qorvo Inc $36.67 73.68 AMC
RNG RingCentral Inc $21.01 62.33 AMC
SLH Solera Holdings Inc $54.60 29.91 AMC
DATA Tableau Software Inc $77.85 69.51 AMC
TPX Tempur Sealy International Inc $57.95 54.71 AMC
UBNT Ubiquiti Networks Inc $28.41 73.45 AMC
VMC Vulcan Materials Company $83.24 40.66 AMC

 

 

Friday February 5:

 

 

Economic: January Employment Situation -8:30, International Trade – *:30, Baker-Hughes Rig Count – 1:00.

 

International Economic: Germany Manufacturers Orders – 2:00AM.

 

Other:

 

Earnings:

Symbol Company Name Jan 22 Close IV30 B/A
NTT Nippon Telegraph & Telephone Corp $41.57 22.56 DMT
CME CME Group Inc $87.09 26.01 BMO
EL Estee Lauder Companies Inc $83.69 31.85 BMO
MCO Moody’s Corporation $87.13 30.58 BMO
TM Toyota Motor Corp (ADR) $116.12 24.80 BMO
TSN Tyson Foods, Inc. $52.59 33.76 BMO
WY Weyerhaeuser Co $24.42 30.83 BMO

 

 

 

 

Monday February 8:

 

Economic: Labor Market Conditions Index – 10:00, TD Ameritrade IMX – 12:30.

 

International Economic: Germany Industrial Production – 2:00AM.

 

Earnings:

Symbol Company Name Jan 22 Close IV30 B/A
BPT BP Prudhoe Bay Royalty Trust $24.31 59.20 BMO
CTSH Cognizant Technology Solutions Corp $61.34 34.77 BMO
HAS Hasbro, Inc. $72.35 35.39 BMO
GOLD Randgold Resources Ltd. (ADR) $69.49 36.47 BMO
PAA Plains All American Pipeline, L.P. $20.20 75.67 AMC
FOXA Twenty-First Century Fox Inc $26.13 33.08 AMC
YELP Yelp Inc $20.79 93.52 AMC

 

 

 

 

 

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