The Prepared Mind: April 4, 2016

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

“Chance favors the prepared mind.” — Louis Pasteur

By Frank Fahey

“Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.”  — Sir John Templeton

“Imagination will often carry us to worlds that never were. But without it we go nowhere.” –  Carl Sagan

“‘A bull market is like sex. It feels best just before it ends.'” – Warren Buffet

“It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong.” – George Soros

The major indexes have been up 6 of the last 7 weeks.  The Dow Jones Industrials and the S&P 500 are up for the year.  The NASDAQ 100(NDX) and the Russell 2000(RUT) are within striking range of breakeven for 2016.  The impetus for this week’s rally came from dovish comments from Fed Chair Janet Yellen about interest rate hikes, a weaker dollar, expansion of domestic manufacturing for the first time in six months, solid jobs growth, and an increase in hourly earnings.   The markets broke the pattern of performing in lock step with the price of crude oil.  Last week markets were up with crude oil down 7% to $36.79 per barrel.

Here is the link to this week’s Prepared Mind video:

First quarter profits for the S&P 500 will be announced over the next month.  Analysts have tempered their expectations for these earnings.  The general consensus year-to-year profit performance is down 7% for the first quarter, down 2% for the second quarter, and up 5% for the third quarter.  These are moving targets.  Six months ago the general consensus for the third quarter was a gain of 14%.

Here is an overview of the market behavior last week:

Index 1-Apr Weekly Change % Weekly  2015 YTD Volatility of  Index
Dow Jones Industrials (DJIA) 17792.75 277.02 1.58% 2.11% 13.59% (VXD)
S&P 500 (SPX) 2072.78 36.84 1.81% 1.41% 13.10% (VIX)
NASDAQ 100 (NDX) 4535.11 131.43 2.98% -1.35% 15.84% (VXN)
Russell 2000 (RUT) 1116.34 38.54 3.58% -1.55% 17.88% (RVX)
S&P 100 (OEX) 919.33 15.27 1.69% 0.87% 13.16% (VXO)
CBOE Volatility Index (VIX) 13.10 (1.64) -11.13% NA  

Data Source: OptionVue7

Friday’s rally in the indexes had a major effect on the VIX and the associated long ETP’s, listed below.  These products took a drubbing last week with the shorter  term products taking the biggest hits.  It appears there has been traders with expectations of higher near-term volatility have capitulated.  The steepness of the VIX futures curve (difference in prices between the different monthly futures) sill shows market concern for the longer term.  Russell Rhoads, CBOE VIX gure, pointed out that the  “VVIX is still above 80 and SKEW over 120, both levels indicating a little market concern, despite low VIX.

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

Indexes Ticker 1-Apr 25-Mar Change % Change
CBOE Volatility Index VIX 13.10 14.74 (1.64) -11.13%
VIX April Future (4/20/2016) VXH6 15.425 17.375 (1.950) -11.22%
VIX May  Future (5/18/2016) VXJ6 17.750 19.075 (1.325) -6.95%
VIX June  Future (6/15/2016) VXM6 18.025 19.825 (1.800) -9.08%
CBOE Short-term Volatility Index VXST 10.92 12.35 (1.43) -11.58%
CBOE 3 Month Volatility Index VXV 16.50 18.27 (1.77) -9.69%
CBOE Mid-term Volatility Index (6 month) VXMT 18.58 20.06 (1.48) -7.38%
VIX of VIX VVIX 81.57 84.20 (2.63) -3.12%
Long VIX ETP’s          
 iPath S&P 500  VIX Short Term Futures ETN VXX 17.12 19.30 (2.18) -11.30%
ProShares VIX Short Term Futures ETF VIXY 11.32 12.75 (1.43) -11.22%
 iPath S&P 500  VIX Mid-Tem Futures ETN VXZ 10.70 11.53 (0.83) -7.20%
Inverse VIX ETP’s          
ProShares Short VIX Short Term Future ETF SVXY 52.00 46.29 5.71 12.34%
Daily Inverse VIX Short Term ETN XIV 26.61 23.69 2.92 12.33%

Data Source: OptionVue7

 

The week is is very light on economic reports.  The highlight of the week will be Wednesday afternoon’s release of the minutes from the last FOMC meeting.  Analysts and traders primary areas of interest in the minutes are inflation forecasts and the Fed’s assessment of the global risks upon the market.

It is time to look at longer term strategies based earnings announcements for individual equities. The first quarter earnings season starts in a few weeks with the earnings announcement by Alcoa (AA) on April 11.  Alcoa’s announcement has been historically regarded as the beginning of the earnings season.  It is time to start preparing target equities and strategies for the next earning cycle.  We are entering the final weeks of the earnings doldrums – the time between earnings announcement cycles.  The earnings highlights this week for widely held and actively traded stocks are: Int’l Speedway. Darden Restaurants, Walgreen, Greenbrier, Acuity Brands, Monsanto, Constellation Brands, Bed Bath and Beyond, WD-40, Ruby Tuesday, and ConAgra Foods.   Announcement dates and times can and do change.  It is your responsibility to confirm these times.

The following table will assist you in preparing for the upcoming earnings announcement cycle.  OptionVue7 has the ability to identify stocks 30 days out with a new enhanced Earnings Search feature.  I have done a quick search 7 to 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 $42,461.00 IV30 B/A DATE
FAST Fastenal Company $49.00 31.92 BMO 12-Apr
DAL Delta Air Lines, Inc. $48.68 34.68 BMO 13-Apr
NOW ServiceNow Inc $61.18 53.38 AMC 13-Apr
C Citigroup Inc $41.75 28.33 BMO 15-Apr
IBM International Business Machines Corp. $151.45 26.01 AMC 18-Apr
NFLX Netflix, Inc. $102.23 64.61 AMC 18-Apr
PKG Packaging Corp Of America $60.40 29.22 AMC 18-Apr
CMA Comerica Incorporated $37.87 31.96 BMO 19-Apr
HOG Harley-Davidson Inc $51.33 31.17 BMO 19-Apr
ILMN Illumina, Inc. $162.11 45.66 AMC 19-Apr
ISRG Intuitive Surgical, Inc. $601.05 31.39 AMC 19-Apr
KSU Kansas City Southern $85.45 33.49 BMO 19-Apr
PRGO Perrigo Company PLC $127.93 29.41 BMO 19-Apr
VMW VMware, Inc. $52.31 43.40 AMC 19-Apr
YHOO Yahoo! Inc. $36.81 38.45 AMC 19-Apr
AMP Ameriprise Financial, Inc. $94.01 27.32 AMC 20-Apr
ARMH ARM Holdings plc (ADR) $43.69 27.91 BMO 20-Apr
AXP American Express Company $61.40 25.55 AMC 20-Apr
CLB Core Laboratories N.V. $112.41 42.23 AMC 20-Apr
CP Canadian Pacific Railway Limited $132.69 31.96 BMO 20-Apr
CTXS Citrix Systems, Inc. $78.58 29.45 AMC 20-Apr
FB Facebook Inc $114.10 34.32 AMC 20-Apr
FFIV F5 Networks, Inc. $105.85 34.25 AMC 20-Apr
LRCX Lam Research Corporation $82.60 25.23 AMC 20-Apr
LVS Las Vegas Sands Corp. $51.68 34.38 AMC 20-Apr
QCOM QUALCOMM, Inc. $51.14 31.95 AMC 20-Apr
SIX Six Flags Entertainment Corp $55.49 28.31 BMO 20-Apr
URI United Rentals, Inc. $62.19 50.26 AMC 20-Apr
XLNX Xilinx, Inc. $47.43 29.59 AMC 20-Apr
YUM Yum! Brands, Inc. $81.85 31.56 AMC 20-Apr
AAL American Airlines Group Inc $41.01 34.44 BMO 21-Apr
ABG Asbury Automotive Group, Inc. $59.84 40.58 BMO 21-Apr
ALK Alaska Air Group, Inc. $82.02 29.23 BMO 21-Apr
ALXN Alexion Pharmaceuticals, Inc. $139.22 40.49 BMO 21-Apr
AMZN Amazon.com, Inc. $593.64 41.44 AMC 21-Apr
AN AutoNation, Inc. $46.68 31.86 BMO 21-Apr
BIIB Biogen Inc $260.32 42.40 BMO 21-Apr
CAB Cabelas Inc $48.69 35.13 BMO 21-Apr
CBI Chicago Bridge & Iron Company N.V. $36.59 40.95 AMC 21-Apr
GMT GATX Corporation $47.50 34.09 BMO 21-Apr
GOOG Google  Inc. $744.95 28.16 AMC 21-Apr
GOOGL Alphabet Inc $762.90 28.18 AMC 21-Apr
HA Hawaiian Holdings, Inc. $47.19 43.44 AMC 21-Apr
LUV Southwest Airlines Co $44.80 30.81 BMO 21-Apr
MSFT Microsoft Corporation $55.23 25.93 AMC 21-Apr
MXIM Maxim Integrated Products Inc. $36.78 28.42 AMC 21-Apr
NSC Norfolk Southern Corp. $83.25 30.86 AMC 21-Apr
NUE Nucor Corporation $47.30 27.95 BMO 21-Apr
PNK Pinnacle Entertainment, Inc $35.10 30.01 BMO 21-Apr
RCL Royal Caribbean Cruises Ltd $82.15 33.32 BMO 21-Apr
RS Reliance Steel & Aluminum Co $69.19 26.92 BMO 21-Apr
SLB Schlumberger Limited. $73.75 27.86 BMO 21-Apr
SYNA Synaptics, Incorporated $79.74 54.22 AMC 21-Apr
UA Under Armour Inc $84.83 40.52 BMO 21-Apr
UAL United Continental Holdings Inc $59.86 35.58 BMO 21-Apr
UNP Union Pacific Corporation $79.55 27.61 BMO 21-Apr
ABBV AbbVie Inc $57.12 28.22 BMO 22-Apr
CAT Caterpillar Inc. $76.54 31.22 BMO 22-Apr
LEA Lear Corporation $111.17 26.37 BMO 22-Apr
LYB LyondellBasell Industries NV $85.58 27.81 BMO 22-Apr
STI SunTrust Banks, Inc. $36.08 25.17 BMO 22-Apr
STT State Street Corp $58.52 26.34 BMO 22-Apr
AAPL Apple Inc. $108.99 27.29 AMC 25-Apr
AKAM Akamai Technologies, Inc. $55.57 41.30 AMC 25-Apr
AXE Anixter International Inc. $52.11 32.36 BMO 25-Apr
BWLD Buffalo Wild Wings $148.12 33.03 AMC 25-Apr
CMG Chipotle Mexican Grill, Inc. $470.97 45.71 AMC 25-Apr
CNC Centene Corp $61.57 35.92 BMO 25-Apr
COF Capital One Financial Corp. $69.31 26.41 AMC 25-Apr
COH Coach Inc $40.09 37.63 BMO 25-Apr
ESRX Express Scripts Holding Co $68.69 28.71 AMC 25-Apr
EW Edwards Lifesciences Corp $88.21 44.34 AMC 25-Apr
HAL Halliburton Company $35.72 33.97 BMO 25-Apr
JLL Jones Lang LaSalle Inc $117.32 30.25 AMC 25-Apr
PXD Pioneer Natural Resources $140.74 42.28 AMC 25-Apr
UTHR United Therapeutics Corporation $111.43 44.61 BMO 25-Apr
TEN Tenneco Inc $51.51 33.72 BMO 26-Apr
ANTM Anthem Inc $138.99 26.92 BMO 27-Apr
BA Boeing Co $126.94 26.07 BMO 27-Apr
BHI Baker Hughes Incorporated $43.83 67.66 BMO 27-Apr
CAVM Cavium Inc $61.16 38.20 AMC 27-Apr
CFR Cullen/Frost Bankers, Inc. $55.11 35.36 BMO 27-Apr
DXCM DexCom, Inc. $67.91 43.03 AMC 27-Apr
GRA W. R. Grace & Co $71.18 37.72 BMO 27-Apr
GRMN Garmin Ltd. $39.96 25.96 BMO 27-Apr
HES Hess Corp. $52.65 44.83 BMO 27-Apr
IAC IAC/InterActiveCorp $47.08 33.12 BMO 27-Apr
IP International Paper Co $41.04 26.70 BMO 27-Apr
MAR Marriott International Inc $71.18 27.11 BMO 27-Apr
RGLD Royal Gold, Inc USA) $51.29 46.19 BMO 27-Apr
SAVE Spirit Airlines Incorporated $47.98 39.61 BMO 27-Apr
TOT Total SA (ADR) $45.42 26.55 BMO 27-Apr
VRTX Vertex Pharmaceuticals Incorporated $79.49 56.96 AMC 27-Apr
WOOF VCA Inc $57.69 28.85 DMT 27-Apr
AEM Agnico Eagle Mines Ltd (USA) $36.16 40.72 AMC 28-Apr
AET Aetna Inc $112.35 26.75 BMO 28-Apr
AGN Allergan plc $268.03 42.47 BMO 28-Apr
ALGN Align Technology, Inc. $72.69 33.14 AMC 28-Apr
ARW Arrow Electronics, Inc. $64.41 25.02 BMO 28-Apr
BERY Berry Plastics Group Inc $36.15 31.82 AMC 28-Apr
BG Bunge Ltd $56.67 27.73 BMO 28-Apr
BIDU Baidu Inc (ADR) $190.88 43.36 AMC 28-Apr
BMRN BioMarin Pharmaceutical Inc. $82.48 53.62 AMC 28-Apr
CBM Cambrex Corporation $44.00 45.36 AMC 28-Apr
CELG Celgene Corporation $100.09 31.58 BMO 28-Apr
CHTR Charter Communications, Inc. $202.43 30.37 BMO 28-Apr
COP ConocoPhillips $40.27 41.82 BMO 28-Apr
ELLI Ellie Mae Inc $90.64 41.09 AMC 28-Apr
EXPE Expedia Inc $107.82 47.45 AMC 28-Apr
FLR Fluor Corporation (NEW) $53.70 28.87 AMC 28-Apr
FSLR First Solar, Inc. $68.47 62.48 AMC 28-Apr
GILD Gilead Sciences, Inc. $91.86 27.49 AMC 28-Apr
HAR Harman International Industries Inc. $89.04 36.40 AMC 28-Apr
HP Helmerich & Payne, Inc. $58.72 43.34 BMO 28-Apr
IDCC InterDigital, Inc. $55.65 25.84 AMC 28-Apr
INCY Incyte Corporation $72.47 58.13 BMO 28-Apr
LNKD LinkedIn Corp $114.35 66.96 AMC 28-Apr
MJN Mead Johnson Nutrition CO $84.97 32.62 BMO 28-Apr
NBIX Neurocrine Biosciences, Inc. $39.55 52.36 AMC 28-Apr
ROK Rockwell Automation $113.75 26.34 BMO 28-Apr
SGEN Seattle Genetics, Inc. $35.09 60.34 AMC 28-Apr
SPR Spirit AeroSystems Holdings, Inc. $45.36 31.76 BMO 28-Apr
SWKS Skyworks Solutions Inc $77.90 46.07 AMC 28-Apr
TLLP Tesoro Logistics LP $45.66 47.12 AMC 28-Apr
TMUS T-Mobile Us Inc $38.30 32.45 BMO 28-Apr
TSO Tesoro Corporation $86.01 41.54 AMC 28-Apr
TSRO TESARO Inc $44.03 74.34 BMO 28-Apr
TWC Time Warner Cable Inc $204.62 25.97 BMO 28-Apr
UFS Domtar Corp (USA) $40.50 31.04 BMO 28-Apr
VA Virgin America Inc $38.56 56.50 BMO 28-Apr
VIAB Viacom, Inc. $41.28 41.13 AMC 28-Apr
WDC Western Digital Corp $47.24 51.21 AMC 28-Apr
WHR Whirlpool Corporation $180.34 31.82 BMO 28-Apr
WYNN Wynn Resorts, Limited $93.43 52.30 AMC 28-Apr
EPC Edgewell Personal Care Co $80.53 25.83 BMO 29-Apr
NWL Newell Rubbermaid Inc. $44.29 27.92 BMO 29-Apr
PSX Phillips 66 $86.59 28.79 BMO 29-Apr
PSXP Phillips 66 Partners LP $62.59 53.50 BMO 29-Apr
SHPG Shire PLC (ADR) $171.90 40.44 BMO 29-Apr

Data Source: OptionVue7

 

Advice to stimulate your imagination:

 

“Chance favors the Prepared Mind.” – Louis Pasteur

“Well, you know, I was a human being before I became a businessman.” – George Soros

Monday April 4:

Economic:  Gallup US Consumer Spending Measure – 8:30, Labor Market Conditions Index – 10:00, Factory Orders.

International Economic:  EMU Unemployment Rate – 5:00.

 Other: Boston Federal Reserve Bank Eric Rosengren presentation on cybersecurity and financial stability to Boston Fed conference on cybersecurity, in Boston – 10:15AM, Minneapolis Federal Reserve Bank President Neel Kashkari briefing with reporters following conference on too-big-to-fail, in Minneapolis – 5:15PM, Minneapolis Federal Reserve Bank President Neel Kashkari holds town hall on too-big-to-fail, in Minneapolis – 7PM.

 Earnings: No announcements meeting criteria.

 Tuesday April 5:

Economic: International Trade – 8:30AM, Gallup US ECI – 8:30, Redbook – 8:55, PMI Services Index – 9:45, JOLTS – 10:00, ISM Non-Manufacturing Index – 10:00.

International Economic:  Germany Manufacturer’s Orders – 3:55AM, EMU Retail Sales – 5:00AM

 Other: Chicago Federal Reserve Bank President Charles Evans speech, in Hong Kong – 1:00AM.

Earnings:

Symbol Company Name April 1 Close IV30 B/A
ALR Alere Inc $50.61 25.85 BMO
GBX Greenbrier Companies Inc $27.64 64.36 BMO
WBA Walgreens Boots Alliance Inc $84.24 24.58 BMO
DRI Darden Restaurants, Inc. $66.30 28.36 AMC

 

Wednesday April 6:

Economic:  MBA Mortgage Applications – 7:00, Gallup US Job creation Index – 8:30AM, EIA Petroleum Status Report – 10:30.

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

Other:  FOMC Minutes – 2:00PM.  Cleveland Federal Reserve Bank President Loretta Mester speech to the Cleveland Association of Business Economics – 12:20PM, Dallas Federal Reserve Bank President Rob Kaplan participates in moderated Q&A, in Dallas, Texas – 8:00PM.

 

Earnings:

Symbol Company Name April 1 Close IV30 B/A
AYI Acuity Brands, Inc. $218.14 41.84 BMO
MON Monsanto Company $87.74 29.32 BMO
STZ Constellation Brands, Inc. $151.09 26.79 BMO
BBBY Bed Bath & Beyond Inc. $49.64 33.05 AMC
BBSI Barrett Business Services, Inc. $28.75 87.85 AMC
GPN Global Payments Inc $65.30 40.53 AMC

 

 

Thursday April 7:

 

Economic: US Chain Store Sales, Weekly Jobless Claims – 8:30, Bloomberg Consumer Comfort Index – 9:45, EIA Natural Gas Report – 10:30.

                                                                                                                                                                     

International Economic:  EMU European Central Bank (ECB) – 7:30AM.

 

Other:   Federal Reserve Chair Janet Yellen conversation with former Fed chairs Ben Bernanke, Alan Greenspan and Paul Volcker – 5:30PM.

 

Earnings:

Symbol Company Name April 1 Close IV30 B/A
CAG ConAgra Foods Inc $44.62 32.86 BMO
KMX CarMax, Inc $51.10 49.94 BMO

 

Friday April 8:

 

Economic:  US Wholesale Trade  – 10:00, Baker Hughes Rig Count – 1:00.

 

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

 

Earnings: No announcements meeting criteria.

Monday April 11:

Economic:  No major Announcements.

International Economic:  No major announcements. 

 Earnings: No announcements meeting criteria.

 

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