The Prepared Mind: February 22, 2016

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

“Chance favors the prepared mind.” — Louis Pasteur

By Frank Fahey

“The optimist proclaims we live in the best of all possible worlds, and the pessimist fears this is true.” – James Branch Cabell

We had a sharp rally this week. Consumer prices and domestic unemployment gave impetus to the rally. The US economy is showing strength which belies the cries of pessimists. Automobile demand is strong and is reflected in auto company profits, domestic production, and average vehicle price, Global risks will remain the wild card. There is a major disconnect between the noise made by the pessimists and US economic data.

The general tenor of the market improved last week. Volatility has declined with market breadth and other technical indicators improving. Buy signals have appeared for the first time in weeks. The 1950 level is very important to the SPX. Market technicians are predicting another bullish push upward if the SPX can break through 1950.

Here is an overview of the market behavior last week:

Index 19-Feb Weekly Change % Weekly 2015 YTD Volatility of Index
Dow Jones Industrials (DJIA) 16391.99 418.15 2.62% -5.93% 19.46% (VXD)
S&P 500 (SPX) 1917.78 53.00 2.84% -6.17% 20.93% (VIX)
NASDAQ 100 (NDX) 4007.88 0.00 0.00% -12.82% 24.91% (VXN)
Russell 2000 (RUT) 1007.98 37.94 3.91% -11.11% 24.53% (RVX)
S&P 100 (OEX) 857.25 21.36 2.56% -5.94% 22.33% (VXO)
CBOE Volatility Index (VIX) 20.53 (4.87) -19.17% NA  

Data Source: OptionVue7

The VIX echoed last week’s market trading range and move up by moving down. Backwardation findally ended ended as March became the front month. The February future closed with the opening of Wednesday’s trade. The front month VIX future finally closed lower than the second month future. This backwardation had occurred every trading day in 2016 until this past Wednesday. Per Russell Rhoads of the CBOE, this is the fourth longest backwardization streak since 2007.

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

Indexes Ticker 19-Feb 12-Feb Change % Change
CBOE Volatility Index VIX 20.53 25.40 (4.87) -19.17%
VIX March Future (3/16/2016) VXH6 22.375 25.125 (2.750) -10.95%
VIX April Future (4/20/2016) VXJ6 22.750 24.850 (2.100) -8.45%
CBOE Short-term Volatility Index VXST 18.22 22.71 (4.49) -19.77%
CBOE 3 Month Volatility Index VXV 22.80 26.23 (3.43) -13.08%
CBOE Mid-term Volatility Index (6 month) VXMT 24.11 25.96 (1.85) -7.13%
VIX of VIX VVIX 86.25 103.25 (17.00) -16.46%
Long VIX ETP’s      
iPath S&P 500 VIX Short Term Futures ETN VXX 26.42 28.56 (2.14) -7.49%
ProShares VIX Short Term Futures ETF VIXY 16.84 18.94 (2.10) -11.09%
iPath S&P 500 VIX Mid-Tem Futures ETN VXZ 12.94 13.63 (0.69) -5.06%
Inverse VIX ETP’s      
Daily Inverse VIX Short Term ETN XIV 18.65 16.68 1.97 11.81%
ProShares Short VIX Short Term Future ETF SVXY 36.14 32.58 3.56 10.94%

Data Source: OptionVue7

 

The coming week is all about US housing. We have the S&P/Case-Shiller Home Price Index, new home sales, and existing home sales. The other major release is on durable goods. Members of the Federal Reserve Board of Governors have a heavy than usual speaking schedule this coming week. Any of these speeches will have the ability to move the markets.

The earnings season is winding down. This is a big week for earnings reports in the retail sector. The earnings highlights for widely held and actively traded stocks are: Allergan, Motorola Solutions, Dollar Tree, Smucker, Home Depot Macys’, TJX, L Brands, HP, Target Transocean, Lowe’s, salesforce.com, Gap, Monster Beverage, Campbell Soup, Apache, Berkshire Hathaway, Intuit, and Kohls. Announcements date and time can and do change. It is your responsibility to confirm these times.

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 22:

 

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

 

International Economic: EMU PMI Composite Flash – 4:00AM.

 

Earnings:

Symbol Company Name Feb 19 Close IV30 B/A
AGN Allergan plc $277.98 31.84 BMO
AWI Armstrong World Industries, Inc. $40.39 41.47 BMO
BHP BHP Billiton Limited (ADR) $23.99 58.34 BMO
CRZO Carrizo Oil & Gas Inc $22.28 95.86 BMO
DDS Dillard’s, Inc. $74.11 49.17 BMO
DF Dean Foods Co $20.73 63.22 BMO
HSBC HSBC Holdings plc (ADR) $32.28 37.64 BMO
MSI Motorola Solutions Inc $64.78 31.14 BMO
PTLA Portola Pharmaceuticals Inc $29.20 131.11 BMO
THC Tenet Healthcare Corp $25.04 74.05 BMO
OKE ONEOK, Inc. $21.19 72.53 AMC
OKS Oneok Partners LP $26.95 72.40 AMC
PDCE PDC Energy Inc $47.32 66.72 AMC
TXRH Texas Roadhouse Inc $36.95 37.79 AMC
XON Intrexon Corp $30.94 80.80 AMC

 

Tuesday February 23:

 

 

Economic: Redbook – 8:55, S&P Case Shiller HPI – 9:00, Existing Home Sales – 10:00, Richmond Fed Manufacturing Index – 10:00, State Street Investor Confidence – 10:00.

 

International Economic: Germany GDP – 2:00AM.

 

Other: Federal Reserve Vice Chair Stanley Fischer speech on monetary policy, in Houston – 8:30PM.

 

Earnings:

Symbol Company Name Feb 19 Close IV30 B/A
AER AerCap Holdings N.V. $32.00 60.01 BMO
BMO Bank of Montreal (USA) $54.29 30.27 BMO
CBRL Cracker Barrel Old Country Store, Inc. $137.83 33.28 BMO
ECL Ecolab Inc. $108.76 33.27 BMO
EXAM Examworks Group, Inc. $25.60 61.44 BMO
HAWK Blackhawk Network Holdings Inc $37.17 48.24 BMO
HD Home Depot Inc $119.97 26.78 BMO
LECO Lincoln Electric Holdings, Inc. $58.58 36.05 BMO
LXK Lexmark International Inc $30.75 63.49 BMO
M Macy’s, Inc. $41.13 45.22 BMO
SNI Scripps Networks Interactive, Inc. $55.32 36.14 BMO
TOL Toll Brothers Inc $25.03 39.27 BMO
ABCO The Advisory Board Company $37.68 78.50 AMC
CAR Avis Budget Group Inc. $29.25 67.69 AMC
DXCM DexCom, Inc. $61.70 71.45 AMC
DY Dycom Industries, Inc. $54.51 66.67 AMC
EXPD Expeditors International of Washington $46.73 27.95 AMC
EXR Extra Space Storage, Inc. $84.55 29.34 AMC
FSLR First Solar, Inc. $63.54 63.74 AMC
ICPT Intercept Pharmaceuticals Inc $124.78 89.49 AMC
NCLH Norwegian Cruise Line Holdings Ltd $41.85 56.05 AMC
PLKI Popeyes Louisiana Kitchen Inc $60.44 38.78 AMC
QIHU Qihoo 360 Technology Co Ltd $71.22 24.87 AMC
VRSK Verisk Analytics, Inc. $68.45 33.71 AMC
WBMD WebMD Health Corp. $52.72 68.57 AMC

 

 

Wednesday February 24:

 

Economic: MBA Mortgage Applications – 7:00, PMI Services Flash – 9:45, New Home Sales – 10:00, EIA Petroleum Status Report – 10:30.

 

International Economic: Great Britain GDP – 4:30AM.

 

Earnings:

Symbol Company Name Feb 19 Close IV30 B/A
ETP Energy Transfer Partners LP $28.81 75.10 BMO
HFC HollyFrontier Corp $30.03 51.76 BMO
IMAX IMAX Corporation (USA) $30.94 45.59 BMO
LOW Lowe’s Companies, Inc. $67.72 30.28 BMO
MBLY Mobileye NV $28.38 84.43 BMO
OPHT Ophthotech Corp $45.74 84.50 BMO
RSPP RSP Permian Inc $20.18 72.85 BMO
RY Royal Bank of Canada $51.64 35.32 BMO
SBGI Sinclair Broadcast Group Inc $28.08 45.87 BMO
TGT Target Corporation $72.53 29.84 BMO
TJX TJX Companies Inc $71.61 32.25 BMO
XPO XPO Logistics Inc $26.41 83.92 BMO
AR Antero Resources Corp $24.64 67.03 AMC
AWK American Water Works Company Inc $65.81 22.02 AMC
BLUE bluebird bio Inc $52.10 76.73 AMC
BWXT BWX Technologies Inc $29.36 27.30 AMC
CRM salesforce.com, inc. $61.70 56.41 AMC
CXO Concho Resources Inc $93.96 55.76 AMC
LB L Brands Inc $83.70 32.01 AMC
NFX Newfield Exploration Co. $22.60 71.75 AMC
NTES NetEase Inc (ADR) $152.27 52.12 AMC
RGR Sturm, Ruger & Company $66.49 47.63 AMC
RLGY Realogy Holdings Corp $31.04 45.89 AMC
SSTK Shutterstock Inc $31.16 78.42 AMC
SUN Sunoco LP $29.78 58.74 AMC
TS Tenaris SA (ADR) $21.23 52.49 AMC
WES Western Gas Partners, LP $32.89 62.63 AMC

 

 

 

Thursday February 25:

 

Economic: Durable Goods Orders – 8:30, Weekly Jobless Claims – 8:30, FHFA House Price Index – 9:00, Bloomberg Consumer Comfort Index – 9:45, EIA Natural Gas Report – 10:30.

                                                                                                                                                                     

International Economic: EMU HICP – 5:00AM.

 

Earnings:

Symbol Company Name Feb 19 Close IV30 B/A
APA Apache Corporation $38.80 58.00 BMO
ASPS Altisource Portfolio Solutions S.A. $31.92 82.57 BMO
BBY Best Buy Co Inc $30.75 46.37 BMO
CPB Campbell Soup Company $60.96 24.29 BMO
CRI Carter’s, Inc. $91.14 38.42 BMO
DLR Digital Realty Trust, Inc. $79.90 29.41 BMO
DLTR Dollar Tree, Inc. $79.29 40.51 BMO
DPZ Domino’s Pizza, Inc. $112.04 39.51 BMO
IONS Ionis Pharmaceuticals Inc $36.99 80.16 BMO
KSS Kohl’s Corporation $44.82 47.08 BMO
LKQ LKQ Corporation $25.94 39.66 BMO
NXST Nexstar Broadcasting Group, Inc. $37.90 56.09 BMO
PCRX Pacira Pharmaceuticals Inc $60.17 70.83 BMO
SAFM Sanderson Farms, Inc. $85.69 38.04 BMO
STRZA Starz $22.03 61.28 BMO
TD Toronto-Dominion Bank $38.26 30.09 BMO
TREE Lendingtree Inc $64.69 93.82 BMO
TRGP Targa Resources Corp $23.03 99.35 BMO
UTHR United Therapeutics Corporation $127.89 56.20 BMO
VC Visteon Corp $67.26 33.59 BMO
WNR Western Refining, Inc. $24.81 61.95 BMO
ADSK Autodesk, Inc. $47.75 52.33 AMC
AGO Assured Guaranty Ltd. $23.90 38.81 AMC
AIRM Air Methods Corp $37.69 55.75 AMC
ALKS Alkermes Plc $32.85 58.22 AMC
ANSS ANSYS, Inc. $85.57 34.43 AMC
BIDU Baidu Inc (ADR) $160.70 56.90 AMC
BMRN BioMarin Pharmaceutical Inc. $74.87 64.51 AMC
EOG EOG Resources Inc $69.46 48.56 AMC
GPS Gap Inc $26.18 46.17 AMC
HLF Herbalife Ltd. $47.75 79.49 AMC
IEP Icahn Enterprises LP $54.85 60.33 AMC
INTU Intuit Inc. $96.47 39.86 AMC
ITC ITC Holdings Corp. $40.49 22.77 AMC
ITCI Intra-Cellular Therapies Inc $29.85 103.06 AMC
KHC Kraft Heinz Co $73.45 26.73 AMC
MAIN Main Street Capital Corporation $28.45 37.70 AMC
MDVN Medivation Inc $31.92 68.56 AMC
MELI Mercadolibre Inc $98.80 61.03 AMC
MNST Monster Beverage Corp $126.07 48.40 AMC
OLED Universal Display Corporation $48.54 78.64 AMC
PANW Palo Alto Networks Inc $123.06 64.66 AMC
RRC Range Resources Corp. $26.04 84.41 AMC
SFM Sprouts Farmers Market Inc $24.44 54.75 AMC
SPLK Splunk Inc $33.74 83.47 AMC
STMP Stamps.com Inc. $92.07 78.56 AMC
W Wayfair Inc $38.33 91.07 AMC
ZOES Zoe’s Kitchen Inc $27.42 70.92 AMC

 

 

Friday February 26:

 

Economic: GDP – 8:30, International Trade in Good – 8:30, Personal Income and Outlays – 8:30, Consumer Sentiment – 10:00, Baker Hughes Rig Count – 1:00.

 

International Economic: Germany CPI – 8:00AM.

 

Earnings:

Symbol Company Name Feb 19 Close IV30 B/A
AMT American Tower Corp $87.50 28.31 BMO
LMCA Liberty Media Corp $33.28 33.90 BMO
LVNTA Liberty Ventures $35.52 35.08 BMO
MGA Magna International Inc. (USA) $34.76 42.54 BMO
SRE Sempra Energy $96.88 22.90 BMO

 

 

Monday February 29:

 

Economic: Chicago PMI – 8:30, Pending Home Sales Index – 10:00, Dallas Fed Manufacturing Survey – 10:30.

 

International Economic: Germany Retail Sales – 2:00AM.

 

Earnings:

Symbol Company Name Feb 19 Close IV30 B/A
ENDP Endo International PLC $51.03 63.65 BMO
OA Orbital ATK Inc $83.16 37.76 BMO
NLNK NewLink Genetics Corp $20.80 93.43 AMC
NVRO Nevro Corp $54.92 75.51 AMC
PTCT PTC Therapeutics, Inc. $29.23 95.79 AMC
SINA SINA Corp $43.12 52.33 AMC
WDAY Workday Inc $54.04 65.18 AMC

 

 

                                                                                                          

 

 

 

 

 

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