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Frank Fahey: Market News for the Prepared Mind: 9.4-9.11.2017

September 4, 2017


“Chance favors the Prepared Mind.” – Louis Pasteur

“Dreams come true; without that possibility, nature would not incite us to have them.” – John Updike

“Hurricane season brings a humbling reminder that, despite our technologies, most of nature remains unpredictable.” – Diane Ackerman

“The obvious rarely happens, the unexpected constantly occurs.” – Jesse Livermore

“There is a profound difference between information and meaning.” – Warren Bennis 

 

The end of the month was on Thursday last week. Pundits across financial media were focused on telling investors about the impact of the first losing month in four months. Time and energy were spent on what a losing month for the indexes would portend for the rest of the year. It turns out we were able to witness a monumental waste of time, energy and breath. The only major index with negative monthly performance was the small cap laden Russell 2000.

Here are the August results:

Index 31-Aug 31-Jul Aug Change August % 2017 YTD
Dow Jones Industrials (DJIA) 21948.10 21891.00 57.10 0.26% 11.06%
S&P 500 (SPX) 2471.65 2470.30 1.35 0.05% 10.43%
NASDAQ 100 (NDX) 5988.60 5880.30 108.30 1.84% 23.13%
Russell 2000 (RUT) 1405.28 1425.14 (19.86) -1.39% 3.55%
S&P 100 (OEX) 1093.78 1088.12 5.66 0.52% 10.32%
Dow Jones Transportation (TRAN) 4481.93 4490.36 (8.43) -0.19% 10.63%
Crude Oil (CLV7) 47.10 50.17 (3.07) -6.12% -12.60%
Gold (GCZ7) 1326.70 1275.30 51.40 4.03% 15.16%
CBOE Volatility Index (VIX) 10.59 10.26 0.33 3.22% NA

Data Source: OptionVue8 

The end-of-month and end-of-week market rallies were the result of a consensus that Hurricane Harvey as an impetus to force come to an agreement on the debt ceiling increase. This view put concerns about North Korea and a government shut down in the rear-view mirror. However, North Korea’s detonation of an H-Bomb may have removed some of the investor comfort zone.

Here is an overview of the US market behavior last week and for 2017 YTD:

Index 1-Sep Change % Weekly 2017 YTD Volatility of Index
Dow Jones Industrials (DJIA) 21987.56 173.89 0.80% 11.26% 10.62% (VXD)
S&P 500 (SPX) 2476.55 34.30 1.40% 10.64% 10.13% (VIX)
NASDAQ 100 (NDX) 5897.90 75.37 1.29% 21.27% 15.52% (VXN)
Russell 2000 (RUT) 1413.52 36.07 2.62% 4.15% 15.68% (RVX)
S&P 100 (OEX) 1095.25 15.23 1.41% 10.47% 12.91% (VXO)
Dow Jones Transportation (TRAN) 4491.13 90.92 2.07% 10.85% NA
Crude Oil (CLV7) 47.35 (0.51) -1.07% -12.14% 28.97%(OVX)
Gold (GCZ7) 1329.90 33.40 2.58% 15.44% 12.73 (GVZ)
CBOE Volatility Index (VIX) 10.13 (1.15) -10.20% NA
Data Source: OptionVue8 
I am still in a summer state of mind.  There was nothing particularly noteworthy about the behavior of the VIX and related products.  The S&P 500  went up while the VIX went down.
Here is an overview of last week for the VIX and related products:
Indexes Ticker 1-Sep 25-Aug Change % Change
CBOE Volatility Index VIX 10.13 11.28 (1.15) -10.20%
VIX September Future (9/20/2017) VXU7 12.625 13.075 (0.45) -3.44%
VIX October Future (10/18/2017) VXV7 13.775 14.025 (0.25) -1.78%
VIX November Future (11/15/2017) VXX7 14.250 14.425 (0.18) -1.21%
CBOE Short-term Volatility Index VXST 7.94 8.97 (1.03) -11.48%
CBOE 3 Month Volatility Index VXV 13.59 13.99 (0.40) -2.86%
CBOE Mid-term Volatility Index (6 month) VXMT 15.33 15.42 (0.09) -0.58%
VIX of VIX VVIX 93.60 93.53 0.07 0.07%
CBOE SKEW Index SKEW 130.53 130.16 0.37 0.28%
Long VIX ETP’s
ProShares Ultra VIX Short Term Futures ETF UVXY 28.94 30.88 (1.94) -6.28%
iPath S&P 500 VIX Short Term Futures ETN VXX 46.17 47.68 (1.51) -3.17%
ProShares VIX Short Term Futures ETF VIXY 38.35 39.63 (1.28) -3.23%
iPath S&P 500 VIX Mid-Term Futures ETN VXZ 21.65 21.86 (0.21) -0.96%
Inverse VIX ETP’s
ProShares Short VIX Short Term Future ETF SVXY 80.31 77.96 2.35 3.01%
Daily Inverse VIX Short Term ETN XIV 83.72 73.89 9.83 13.30%

Data Source: OptionVue8

U.S. markets are closed in observance of Labor Day. The shortened trading week is quiet on economic reports. Factory orders, mortgage applications, and wholesale trade highlight the balance of the week. In Europe, the European Central Bank is expected to leave their policy unchanged. Merchandise trade and industrial production dominate the economic reports to be released.

The wild card remains North Korea. North Korea carried out its most powerful nuclear test this weekend. Off-hours trading on Sunday and Monday showed a muted response. S&P 500 futures were down 6.25 or 0.35%. September VIX futures were up 6.13% or 0.775.

This week earnings announcements slow down to a trickle this week. The highlights include: Dave&Buster’s, Hewlett Packard, Casey’s General Stores, Fred’s, G-III Apparel, Korn Ferry, Barnes&Noble, Brady, John Wiley&Sons, VeriFone, and Kroger. Confirm the date and time of any company’s earnings announcement before trading any earnings announcement strategy. The most accurate source of this information is the company’s investor relations website.

Advice to stimulate your imagination:

“Ideas come and go, stories stay.” – Nassim Nicholas Taleb

“A paranoid is someone who knows a little of what’s going on. A psychotic is a guy who’s just found out what’s going on.” – William S. Burroughs

“A point of view can be a dangerous luxury when submitted for insight and understanding.” – Marshall McLuhan

“Don’t give me timing, give me time.” – Jesse Livermore

“Freedom is what you do with what’s been done to you.” – Jean-Paul Sartre

 

Monday, September 4: 

U.S. Holiday: Labor Day – Markets Closed.

International: Eurozone PPI – 5:00AM.

 

Tuesday, September 5: 

Economic: Factory Orders – 10:00, Gallup US ECI – 2:00.

International: Germany PMI Composite – 3:55 AM, Eurozone PMI Composite – 4:00 AM, Eurozone GDP – 5:00 AM, Eurozone Retail Sales – 5:00 AM.

Other: Minneapolis Federal Reserve Bank President Neel Kashkari to speak at a moderated Q&A at the 1st Tuesday Speaker Series at Carlson School of Management in Minneapolis, with audience Q&A – 2:00PM, Dallas Federal Reserve Bank President Robert Kaplan to participate in a moderated Q&A session in Dallas, with audience and media Q&A – 7:00PM.

Earnings: None meeting scan criteria.

 

Wednesday, September 6: 

Economic: MBA Mortgage Applications – 7:00, International Trade – 8:30, Redbook – 8:66, PMI Services Index – 9:45, ISM Non-Manufacturing Index – 10:00, Beige Book – 2:00.

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

Other: Federal Reserve Governor Jerome Powell will deliver a speech entitled “The Role of Boards at Large Financial Firms,” as the breakfast presentation during the Large-Bank Directors Conference hosted by the Federal Reserve Bank of Chicago, with audience and media Q&A, in Chicago – 9:15AM.

Earnings:

SYMBOL B/A 9/1 CLOSE AVGVOL AVG MOVE SMA 10 50% FIB
FRAN BMO $7.66 1,169,780 12.20% $7.50 $8.23
FRED BMO $6.07 1,582,650 8.04% $6.07 $6.45
HDS BMO $33.02 4,249,940 9.08% $31.73 $31.66
JKS BMO $28.52 1,099,190 6.52% $25.34 $26.44
DDC AMC $14.15 1,392,480 1.78% $14.11 $14.07
RH AMC $48.51 2,385,240 15.46% $46.53 $58.71

 

Thursday, September 7: 

Economic: Weekly Jobless Claims – 8:30, Productivity and Costs – 8:30, Bloomberg Consumer Comfort Index – 9:45, Quarterly Services Survey – 10:00, EIA Natural Gas Report – 10:30, EIA Petroleum Status Report – 11:00 Money Supply – 4:30.

International: Germany Industrial Production – 2:00 AM, Japan GDP – 7:50 PM, China Merchandise Trade Balance – 10:00PM.

Other: European Central Bank Announcement – 7:45 – AM. President Federal Reserve Bank of New York William Dudley will speak about the U.S. economic outlook and implications for monetary policy at a Money Marketeers of New York University event, with audience and media Q&A, in New York – 7:00 PM, Atlanta Federal Reserve Bank President Raphael Bostic to participate in a moderated discussion on his views on the economy at An Evening with Raphael Bostic in Atlanta – 7:00 PM, Kansas City Federal Reserve Bank President Esther George to discuss the U.S. economic outlook at the Omaha Economic Forum in Omaha – 8:15 PM.

Earnings:

SYMBOL B/A 9/1 CLOSE AVGVOL AVG MOVE SMA 10 50% FIB
BKS BMO $7.50 1,342,960 7.69% $7.55 $7.60
DVMT BMO $74.76 1,235,420 1.39% $71.63 $68.90
FCEL BMO $1.60 1,051,880 1.06% $1.49 $1.49
HOV BMO $1.88 1,450,190 7.11% $1.90 $2.06
MBLY BMO $62.67 2,519,760 2.79% $63.01 $62.99
AOBC AMC $16.52 1,107,980 7.16% $17.46 $18.73
FNSR AMC $23.19 2,779,340 11.48% $24.26 $25.50
PAY AMC $19.58 1,674,920 8.65% $19.37 $19.26
RDFN AMC $23.60 1,863,690 None $24.69 $26.39
SGYP AMC $3.01 4,299,530 3.34% $3.01 $3.48
TLRD AMC $12.15 1,564,820 22.72% $11.54 $11.62

 

Friday, September 8: 

Economic: Motor Vehicle Sales, Employment Situation – 8:30, PMI Manufacturing Index – 9:45, ISM Manufacturing Index – 110:00, Construction Spending – 10:00, Consumer Sentiment – 10:00 , Baker Hughes Rig Count – 1:00.

International: Germany Merchandise Trade – 2:00 A, France Industrial Production 2:45AM, Great Britain Merchandise Trade – 4:30 AM, China CPI & PPI – 9:30 PM.

Other: Philadelphia Federal Reserve Bank President Patrick Harker to speak on Consumer Finance Issues at New Perspectives on Consumer Behavior in Credit and Payments Markets Conference in Philadelphia – 8:45 AM.

Earnings: None meeting scan criteria.

 

Monday, September 11: 

Economic: No major announcements.

International: Japan Tertiary Index – 1:30AM.

Earnings: None meeting scan criteria.

 

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