Listen Live
M-F 6AM-8AM

Blog

Frank Fahey: Market News for the Prepared Mind: 5.1-5.8.2017

May 1, 2017


“Chance favors the Prepared Mind.” – Louis Pasteur

“Diplomacy is the art of saying ‘Nice doggie’ until you can find a rock.” – Will Rogers

“I accept chaos, I’m not sure whether it accepts me.” – Bob Dylan

“Inflation is the one form of taxation that can be imposed without legislation.” –  Milton Friedman

“Corporations do not pay taxes, they collect them, passing the burden to consumers as a cost of production. And corporate taxation is a feast of rent-seeking – a cornucopia of credits, exemptions and other subsidies conferred by the political class on favored, and grateful, corporations.” George Will

A combination of earnings, elections and taxes led to market performance which was the best of 2017.  The week started wih a major relief rally as investors celebrated the outcome of the French election and the decrease in the likelihood of “Frexit.”   U.S. President Donald Trump’s Wednesday release of his tax proposal spurred further gains in the market,  The administration’s inability to provide details about their one page, 12 bullet point plan led to investor wariness.  Reported Q1 GD disappointed and slowed in the first quarter in France, the UK and U.S  The wariness about the tax plan and disappointing GDPs were tempered by positive earnings announcements by bellwether stocks Alphabet and Amazon.

The best week in months has led to renewed discussion by financial talking heads about a market “bubble.”  The NASDAQ Composite crossed 6000 last week. Part of the impetus behind the bubble talk is the performance of NASDAQ  100 and the NASDAQ Composite versus the S&P 500.  The NASDAQ Index YTD performances, 14.80% and 12% respectively, are double the performance of the S$P 500,  Calmer heads are pointing to  the weighting of the tech heavy NASDAQ indexes as being the cause of the performance differential.

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

Index 28-Apr Change % Weekly 2017 YTD Volatility of Index
Dow Jones Industrials (DJIA) 20,940.51 392.75 1.91% 5.96% 10.49% (VXD)
S&P 500 (SPX) 2,384.20 35.51 1.51% 6.52% 10.82% (VIX)
NASDAQ 100 (NDX) 5,583.53 141.48 2.60% 14.80% 11.53% (VXN)
Russell 2000 (RUT) 1,400.42 20.57 1.49% 3.19% 15.34% (RVX)
S&P 100 (OEX) 1054.86 17.79 1.72% 6.40% 9.25% (VXO)
Crude Oil (CLM7) 49.19 (0.44) -0.89% -8.72% 28.55% (OVX)
Dow Jones Transportation (TRAN) 4401.54 (31.08) -0.70% 8.64% NA
CBOE Volatility Index (VIX) 10.82 (3.81) -26.04% NA

Data Source: OptionVue8 

 

The outcome of last weekend’s French election led to the VIX being crushed.  The VIX was down 26%, with the front month future down 14.31%.   The VXST, the CBOE Short-term Volatility Index, led the tumble with a decrease of nearly 45%. In fact every, all 28 CBOE volatility indexes were down for the week.  The volatility crushed led to interesting marking commentary.

In the latest edition of “Barron’s”, Steven Sears writes about the VIX in his column, “The Striking Price.”  It is a diatribe against “nauseating amount of meaningless commentary” about the VIX and portfolio hedging. Talk about biting the hand that feeds you.  I find it interesting when a market commentator rails against market commentary.  It should be taken as a cautionary tale about people trading products they do not understand.  A blanket condemnation of the VIX serves no positive purpose.  A knowledge of what you are trading is one of the basic rules of basic rules of market participation.

Sears warns us that a “healthy skepticism toward much of the VIX commentary is needed. It will save you money and lessen your anxiety.”  The statement is myopic.  Rather, a healthy skepticism towards all financial commentary is needed.  The core of any trading discipline is developing one’s own risk reward comfort zone.  Education and knowledge, combined with ab understanding of dollar risk of any strategy, are the core of trading discipline.

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

Indexes Ticker 28-Apr 21-Apr Change % Change
CBOE Volatility Index VIX 10.82 14.63 (3.81) -26.04%
VIX May Future (5/17/2017) VXK7 12.275 14.325 (2.05) -14.31%
VIX June Future (6/21/2017) VXM7 13.125 14.225 (1.10) -7.73%
VIX July Future (6/18/2017) VXN7 14.000 15.275 (1.28) -8.35%
CBOE Short-term Volatility Index VXST 9.42 17.09 (7.67) -44.88%
CBOE 3 Month Volatility Index VXV 12.93 14.75 (1.83) -12.37%
CBOE Mid-term Volatility Index (6 month) VXMT 14.74 15.93 (1.19) -7.47%
VIX of VIX VVIX 77.09 95.41 (18.32) -19.20%
CBOE SKEW Index SKEW 146.98 148.42 (1.44) -0.97%
Long VIX ETP’s
ProShares Ultra VIX Short Term Futures ETF UVXY 14.18 18.49 (4.31) -23.31%
iPath S&P 500 VIX Short Term Futures ETN VXX 15.01 17.20 (2.19) -12.73%
ProShares VIX Short Term Futures ETF VIXY 12.51 14.35 (1.84) -12.82%
iPath S&P 500 VIX Mid-Term Futures ETN VXZ 24.74 25.86 (1.12) -4.33%
Inverse VIX ETP’s
ProShares Short VIX Short Term Future ETF SVXY 145.05 127.88 17.17 13.43%
Daily Inverse VIX Short Term ETN XIV 75.09 66.26 8.83 13.33%

Data Source: OptionVue8 

 

The first week of May provides a plethora of employment reports, concluding with the US. Employment Situation report on Friday. on Wednesday’s FOMC statement where no change, given the softness of economic growth, is the universal expectation. Instead it will be Friday’s employment report that will be the week’s focus with the Econoday consensus calling for significant improvement, Monday with personal income and spending that will offer a March breakdown of the first-quarter’s disappointing GDP data. Tuesday’s vehicle sales will not only offer definitive indications on the economic strength of April but also offer the first clues on second-quarter GDP.

Strong profit reports , along with conference calls with positive forecasts, have been a driving force behind stocks moving upward.  First quarter earnings announcement will continue the next three weeks. Earnings announcements are predictable volatility events providing trading opportunity.  It is important to reduce the number of surprises which may occur in any trading campaign.    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.   The earnings highlights this week, for widely held and actively traded stocks, are:

Advice to stimulate your imagination:

“It’s a cruel and random world, but the chaos is all so beautiful.” – Hiromu Arakawa

“If you do not actively attack the risks, they will actively attack you.”  – Tom Gib

“The income tax has made more liars out of the American people than golf has.” – Will Rogers

“The easy way out usually leads back in.” – Peter Senge

“The world is still a weird place, despite my efforts to make clear and perfect sense of it.”

– Hunter S. Thompson

 

 Monday, May 1:

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

International Economic:  Bank of Japan –  Minutes 8:50.

Earnings:

SYMBOL B/A 4/28 Close AVGVOL MEAN SMA 10 50% FIB
clip_image002_thumbCAH BMO $72.59 2,268,510 4.10% $74.43 $77.05
CMS BMO $45.40 1,872,040 0.92% $45.34 $45.10
CC AMC 4 2,508,670 6.82% $37.62 $36.53
ARE AMC $112.51 1,077,590 1.20% $114.51 $112.81
EIX AMC $79.97 1,788,850 1.01% $80.56 $80.09
FLS AMC $50.87 1,544,110 3.76% $49.04 $48.25
NBL AMC $32.33 4,391,240 1.55% $34.16 $34.03
SBAC AMC $126.49 1,107,310 3.46% $124.35 $120.80

 

Tuesday, May 2:

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

International Economic:  France PMI Manufacturing Index – 2:50AM, Germany Manufacturing Index – 3:55AM, Germany Unemployment Rate – 3:55, Eurozone Manufacturing Index – 4:00AM, Eurozone Unemployment Rate – 5:00AM

Other:  FOMC meeting begins.

Earnings:

SYMBOL B/A 4/28 Close AVGVOL MEAN SMA 10 50% FIB
BP BMO $34.32 6,678,490 4.34% $34.51 $34.63
MA BMO $116.32 2,998,080 2.37% $114.27 $113.82
MO BMO $71.78 6,329,420 0.79% $71.90 $73.58
ADM BMO $45.75 2,975,140 3.30% $45.07 $45.28
AET BMO $135.07 2,726,010 0.89% $131.32 $130.14
AME BMO $57.20 1,718,680 2.98% $55.26 $54.99
BDX BMO $186.97 1,119,940 2.24% $182.39 $181.03
CMI BMO $150.94 1,229,220 2.44% $147.70 $148.74
COH BMO $39.39 3,572,320 3.09% $39.53 $39.81
COP BMO $47.91 7,963,190 1.75% $48.28 $46.94
CVS BMO $82.44 6,732,900 4.87% $79.85 $79.73
EMR BMO $60.28 3,885,340 2.75% $59.42 $59.54
ETN BMO $75.64 2,345,700 1.70% $74.90 $74.42
FIS BMO $84.19 1,628,940 4.10% $82.14 $81.73
GEO BMO $33.32 1,607,710 1.91% $26.46 $26.00
HCA BMO $84.21 2,387,280 1.12% $84.67 $86.19
HCP BMO $31.35 4,211,000 4.24% $32.16 $31.41
HLT BMO $58.97 2,175,510 2.34% $58.06 $58.47
MRK BMO $62.33 9,033,040 1.75% $62.45 $63.01
NNN BMO $42.22 1,082,370 1.21% $44.62 $44.27
PCG BMO $67.05 2,121,580 0.46% $67.39 $67.05
PFE BMO $33.92 23,052,700 2.13% $33.79 $34.02
WEC BMO $60.52 1,982,930 1.56% $60.59 $60.57
WNR BMO $34.49 1,069,780 5.50% $34.13 $34.39
XYL BMO $51.41 1,538,570 1.71% $50.40 $49.98
CHTR BMO $345.16 1,170,770 2.99% $337.53 $334.65
EXPD BMO $56.09 1,082,230 3.25% $56.38 $56.43
SHOP BMO $75.95 1,395,820 7.09% $73.87 $71.47
APC AMC $57.02 4,313,630 1.95% $59.67 $59.86
DVA AMC $69.01 1,154,240 2.96% $68.18 $67.32
DVN AMC $39.49 4,582,330 4.55% $40.12 $40.77
FMC AMC $73.23 1,741,050 7.07% $73.39 $67.59
NFX AMC $34.62 2,989,030 5.20% $35.31 $35.30
OKE AMC $52.61 3,018,180 4.08% $54.12 $54.56
OKS AMC $51.46 1,308,160 2.95% $52.97 $53.20
TEX AMC $34.98 1,524,500 1.15% $33.16 $32.55
AAPL AMC $143.65 25,228,300 5.26% $142.51 $142.04
AKAM AMC $60.94 2,136,580 10.60% $60.19 $61.14
EVHC AMC $56.03 1,611,590 2.78% $56.64 $59.76
FANG AMC $99.84 1,577,980 1.66% $102.48 $102.81
GILD AMC $68.55 9,701,500 7.05% $66.81 $67.23
MDLZ AMC $45.03 7,890,740 2.74% $44.85 $44.30
RSPP AMC $38.05 1,697,400 2.93% $38.27 $39.45
TWLO AMC $33.05 3,404,250 2.35% $31.40 $30.02

 

Wednesday, May 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-Manufacturing Index – 10:00, EIA Petroleum Status Report – 10:30.

International Economic:  Eurozone PPI – 5:00AM, China General Services PMI – 9:00PM.

Other:  FOMC Meeting Announcement – 2:00.

Earnings:

SYMBOL B/A 4/28 Close AVGVOL MEAN SMA 10 50% FIB
Q BMO $84.28 1,473,170 1.70% $81.69 $80.45
BG BMO $79.03 1,332,560 7.52% $77.73 $78.36
EL BMO $87.14 1,895,100 3.88% $86.20 $85.88
SO BMO $49.80 5,352,240 1.38% $49.90 $50.24
ADP BMO $104.49 1,744,970 3.42% $103.20 $102.88
ALL BMO $81.29 1,846,950 1.98% $80.79 $80.80
BUD BMO $113.24 1,649,830 2.95% $110.84 $111.14
HUM BMO $221.98 1,439,560 1.62% $214.70 $212.72
ICE BMO $60.20 2,928,200 4.43% $60.36 $60.17
NVO BMO $38.68 2,531,690 7.93% $36.64 $35.99
OLN BMO $32.13 2,505,900 3.09% $31.98 $31.98
RAI BMO $64.50 5,817,370 1.68% $64.17 $63.35
TAP BMO $95.89 1,455,970 1.62% $95.62 $96.46
TWX BMO $99.27 3,185,970 1.43% $99.70 $98.58
YUM BMO $65.75 2,695,360 1.62% $64.96 $64.77
BERY BMO $50.00 1,199,230 1.90% $49.45 $49.04
DISH BMO $64.44 3,692,410 1.60% $60.94 $61.45
DLPH BMO $80.40 1,948,930 2.99% $77.05 $77.30
ESPR BMO $35.75 2,200,300 2.97% $37.26 $38.06
GRMN BMO $50.84 1,320,900 5.80% $49.92 $50.15
IONS BMO $48.19 1,641,510 9.25% $44.40 $43.38
SBGI BMO $39.45 1,434,100 3.41% $39.71 $39.70
VOYA BMO $37.38 1,667,850 5.16% $36.93 $37.09
ES AMC $59.40 1,447,980 0.89% $59.85 $59.38
FB AMC $150.25 16,524,600 3.98% $143.77 $142.68
AIG AMC $60.91 7,073,280 5.35% $59.78 $60.80
ALB AMC $108.91 1,028,820 6.52% $106.19 $105.94
CAR AMC $30.50 2,376,610 9.30% $29.86 $29.48
CLR AMC $42.41 2,675,560 4.55% $43.81 $44.62
CXO AMC $126.66 1,345,720 4.13% $128.91 $128.25
CXW AMC $34.45 1,201,230 4.79% $33.94 $32.70
ETP AMC $35.93 2,958,190 3.04% $35.51 $35.51
FLT AMC $141.14 1,424,320 7.12% $146.70 $150.44
FNF AMC $40.95 1,056,230 2.11% $39.80 $39.88
KHC AMC $90.39 3,172,620 2.62% $91.77 $91.53
LNC AMC $65.93 1,900,600 3.68% $65.13 $64.72
LNT AMC $39.32 1,259,280 0.64% $39.84 $39.80
MET AMC $51.81 6,161,030 4.72% $51.68 $51.84
NUS AMC $55.23 1,012,260 9.05% $55.34 $54.72
OHI AMC $33.00 1,798,340 3.82% $34.47 $33.17
PRU AMC $107.03 1,950,980 2.83% $105.65 $105.67
PXD AMC $172.99 1,978,130 5.37% $177.32 $181.76
SUN AMC $30.39 1,103,570 3.98% $30.33 $27.35
WMB AMC $30.63 7,311,980 4.56% $30.35 $29.56
WPZ AMC $40.93 1,146,680 4.00% $41.04 $40.40
XPO AMC $49.39 1,200,380 7.29% $47.00 $47.81
BIVV AMC $58.81 2,684,760 NA $57.20 $53.73
CLVS AMC $57.89 1,843,390 4.83% $56.52 $62.53
CONE AMC $54.64 1,491,010 1.03% $53.65 $52.20
CRUS AMC $64.35 1,513,930 13.12% $64.04 $61.95
DATA AMC $53.68 1,184,480 10.93% $53.03 $51.33
LVLT AMC $60.76 2,260,270 2.78% $60.20 $58.39
NXPI AMC $105.75 2,678,780 2.31% $104.36 $104.10
QRVO AMC $68.03 1,539,430 6.73% $70.26 $68.61
TSLA AMC $314.07 5,577,790 3.58% $305.99 $282.50
WMGI AMC $30.39 1,080,400 5.24% $23.68 $23.45

 

Thursday, May 4:

Economic:  Chain Store Sales, Challenger Job Cut Report – 7:30, International Trade – 8:30, Productivity and Costs – 8:30, Gallup Good Jobs Rate – 8:30, Weekly Jobless Claims – 8:30, Bloomberg Consumer Confidence – 9:45, Factory Orders – 10:00, EIA Natural Gas Report – 10:30, Money Supply – 4:30.

International Economic:  France PMI Composite – 2:50AM, Germany PMI Composite – 3:55AM, Eurozone PMI Composite – 3:55AM, Eurozone Retail Sales – 6:00Am

Earnings:

SYMBOL B/A 4/28 Close AVGVOL MEAN SMA 10 50% FIB
D BMO $77.43 2,654,760 2.52% $77.66 $77.81
K BMO $71.00 2,173,710 2.07% $72.27 $72.20
ABC BMO $82.05 1,855,840 6.30% $82.71 $84.64
AEE BMO $54.69 1,546,160 1.00% $55.10 $55.30
APA BMO $48.64 3,971,890 5.29% $49.99 $51.44
BLL BMO $76.89 1,397,050 5.11% $73.79 $74.33
CCE BMO $38.62 1,319,560 3.11% $37.91 $37.55
CHD BMO $49.53 1,827,530 3.89% $50.23 $50.16
CNQ BMO $31.87 3,186,570 5.56% $32.88 $32.88
GPN BMO $81.76 1,162,420 4.90% $80.27 $79.42
HPP BMO $34.36 1,218,260 0.51% $35.08 $34.62
LNG BMO $45.35 1,789,270 2.75% $46.17 $46.20
MJN BMO $88.72 4,108,920 3.80% $88.78 $88.72
OGE BMO $34.78 1,183,200 1.08% $34.90 $35.16
OXY BMO $61.54 5,218,730 3.03% $62.51 $63.38
PPL BMO $38.11 3,250,130 0.86% $37.93 $37.61
PWR BMO $35.44 1,580,420 2.98% $35.36 $35.81
SNI BMO $74.72 1,137,640 4.60% $75.31 $76.73
TPX BMO $46.95 2,057,240 7.15% $43.98 $43.83
ZTS BMO $56.11 3,389,410 3.90% $54.46 $54.45
COMM BMO $42.04 1,665,450 7.97% $41.19 $41.01
DNKN BMO $55.86 1,377,040 2.20% $54.88 $54.96
HSBC BMO $41.17 2,210,850 3.97% $40.53 $40.56
INCY BMO $124.28 2,609,290 2.53% $125.90 $133.32
LITE BMO $42.75 1,866,320 5.02% $44.86 $49.16
MBLY BMO $61.92 6,421,760 3.38% $61.82 $61.17
RLGY BMO $30.55 1,051,550 7.18% $29.57 $29.55
TRGP BMO $55.13 1,892,690 2.83% $56.75 $57.72
VIAB BMO $42.56 3,863,650 2.53% $43.59 $44.36
Z AMC $39.00 1,302,060 7.36% $36.70 $36.42
ED AMC $79.28 1,634,480 1.10% $79.02 $78.61
AGO AMC $38.13 1,041,310 3.55% $38.33 $37.65
CBS AMC $66.56 3,015,900 2.05% $67.17 $67.75
EGN AMC $51.99 1,334,950 2.02% $52.70 $53.45
FLR AMC $51.32 1,190,130 5.60% $51.17 $51.59
HLF AMC $63.26 1,066,610 5.13% $60.66 $59.52
LYV AMC $32.16 1,064,050 3.46% $31.39 $30.47
MOH AMC $49.79 1,292,980 13.93% $48.17 $46.36
MSI AMC $85.97 1,425,420 2.97% $84.08 $84.40
AAOI AMC $49.39 1,937,540 14.78% $46.14 $50.23
ACAD AMC $34.33 1,816,350 5.71% $33.23 $34.15
AIRM AMC $42.95 1,237,240 5.19% $42.98 $43.17
ATVI AMC $52.25 7,854,170 7.96% $50.11 $50.04
BMRN AMC $95.84 1,111,400 0.82% $92.05 $92.20
LOGM AMC $113.00 1,150,680 7.15% $107.55 $103.28
MNST AMC $45.38 2,451,700 7.89% $45.27 $45.84
NBIX AMC $53.40 1,309,710 2.21% $52.66 $47.02
PTLA AMC $39.99 1,090,130 6.63% $38.56 $37.92

 

Friday, May 5:

Economic:  GDP – 8:30, Employment Cost index – 830, Chicago PMI – 9:45, Consumer Sentiment – 10:00, Baker Hughes Rig Count – 1:00.

International Economic: No major announcements.

Other: Federal Reserve Board of Governor Lael Brainard to discuss “Fintech and the Future of Finance” at the Kellogg School of Management at Northwestern University conference in Evanston, Illinois with audience Q&A 1:15PM, Philadelphia Federal Reserve Bank President Patrick Harker gives a speech on “How STEM Can Get You Anywhere” at the X-STEM Symposium in Washington, D.C., with audience Q&A – 2:00PM.

Earnings:

SYMBOL B/A 4/28 Close AVGVOL MEAN SMA 10 50% FIB
CI BMO $156.37 1,317,580 2.26% $154.01 $151.47
EXC BMO $34.63 4,885,140 0.98% $35.35 $35.63
HCN BMO $71.44 1,957,000 1.48% $73.12 $71.17
CTSH BMO $60.23 5,137,760 4.19% $58.56 $58.73
PDCE BMO $55.23 1,057,100 4.80% $59.35 $60.26
XRAY BMO $63.24 1,414,180 2.42% $62.70 $62.69

 

Monday, May 8:

Economic:  Labour Conditions Index – 10:00, TD Ameritrade IMX – 12:30PM.

International Economic:  German Manufacturers’

Other:  Cleveland Federal Reserve President Loretta Mester speaks about the economic outlook and monetary policy at the Chicago Council on Global Affairs Public Breakfast Program — From Main Street to Wall Street: Economic Growth, Monetary Policy, and the Federal Reserve, in Chicago IL, with audience and media Q&A, to be streamed live at https: //www.thechicagocouncil.org/event/main-street-wall-street-economic-growth-monetary-policy-and-federal-reserve?utm_source=Informz&utm_medium=Email&utm_campaign=Council&_zs=wUN2c1&_zl=EoGn3

Earnings:

SYMBOL B/A 4/28 Close AVGVOL MEAN SMA 10 50% FIB
MNK BMO $46.92 1,853,590 7.73% $44.83 $44.26
NWL BMO $47.74 3,837,170 4.58% $47.38 $47.47
SYY BMO $52.87 3,143,420 4.48% $52.58 $52.55
TSN BMO $64.26 2,883,120 4.99% $64.76 $64.06
XEC BMO $116.68 1,115,990 4.16% $118.48 $119.32
AMC AMC $30.30 1,494,230 2.25% $30.73 $31.02
CBI AMC $30.08 1,581,690 7.00% $30.11 $30.05
EOG AMC $92.50 3,268,180 2.85% $94.27 $95.84
MAR AMC $94.42 2,538,960 1.23% $93.24 $92.94
TSO AMC $79.71 2,400,510 2.36% $78.67 $79.30

 

Follow Stocks & Jocks on Twitter — Follow Frank Fahey on Twitter