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Frank Fahey: Market News for the Prepared Mind: 5.29-6.5.2017
May 30, 2017
“Chance favors the Prepared Mind.” – Louis Pasteur
“Experience traders control risk, inexperienced traders chase gains.” – Alan Farley
“We are pioneers and the history of pioneers is not that good.” – Jeff Bezos
“I have a right to be blind sometimes.” – Lord Nelson
The blog will continue to focus on numbers and “facts.” The major indices rebounded from two weeks of negative numbers to set new all-time highs. The market’s ability to ignore “bad news” was a topic of conversation this week among the financial news talking heads.
Economic data has been tepid of late. The economic news continued this trend last week with despite disappointing GDP numbers for the first quarter, new-home sales, and durable goods orders. Many analysts attributed the strength of the US domestic equity indexes on better than expected results from overseas.
Other analysts have scrapped their crystal balls. The most puzzling explanation was, “The markets just want to go higher.” This analysis should be called the Cyndi Lauper Theory in honor of her song “Girls Just Want to Have Fun.” Please give me that man’s seat at the table.
Here is an overview of the US market behavior last week and for 2017:
| Index | 26-May | Change | % Weekly | 2017 YTD | Volatility of Index |
| Dow Jones Industrials (DJIA) | 21,080.28 | 275.44 | 1.32% | 6.67% | 9.60% (VXD) |
| S&P 500 (SPX) | 2,415.82 | 34.10 | 1.43% | 7.93% | 9.81% (VIX) |
| NASDAQ 100 (NDX) | 5,788.36 | 136.80 | 2.42% | 19.01% | 12.26% (VXN) |
| Russell 2000 (RUT) | 1,382.24 | 14.91 | 1.09% | 1.85% | 14.79% (RVX) |
| S&P 100 (OEX) | 1065.35 | 14.56 | 1.39% | 7.46% | 9.16% (VXO) |
| Crude Oil (CLN7) | 49.87 | (1.09) | -2.14% | -7.46% | 30.04%(OVX) |
| Dow Jones Transportation (TRAN) | 4527.94 | 199.52 | 4.61% | 11.76% | NA |
| CBOE Volatility Index (VIX) | 9.81 | (2.23) | -18.52% | NA |
Data Source: OptionVue8
The VIX closed just above the post financial crisis lows from earlier this month. The CBOE Short-term Volatility Index (VXST) closed at an all-time low on Friday. Russell Rhoads, CBOE VIX guru, points out the low VIX levels are not accompanied by SKEW in the 150’s. Usually, SKEW is inversely related to low VIX levels. The current SKEW a lack of concern for tail risk despite the low VIX. There appears to be a lack of near term fear about economic and political turmoil.
| Indexes | Ticker | 26-May | 19-May | Change | % Change |
| CBOE Volatility Index | VIX | 9.81 | 12.04 | (2.23) | -18.52% |
| VIX June Future (6/21/2017) | VXM7 | 11.925 | 12.725 | (0.80) | -6.29% |
| VIX July Future (7/18/2017) | VXN7 | 12.925 | 13.475 | (0.55) | -4.08% |
| VIX August Future (8/18/2017) | VXQ7 | 13.775 | 14.425 | (0.65) | -4.51% |
| CBOE Short-term Volatility Index | VXST | 7.60 | 10.98 | (3.38) | -30.78% |
| CBOE 3 Month Volatility Index | VXV | 12.44 | 13.49 | (1.05) | -7.78% |
| CBOE Mid-term Volatility Index (6 month) | VXMT | 14.84 | 15.57 | (0.73) | -4.69% |
| VIX of VIX | VVIX | 81.81 | 87.21 | (5.40) | -6.19% |
| CBOE SKEW Index | SKEW | 125.41 | 131.39 | (5.98) | -4.55% |
| Long VIX ETP’s | |||||
| ProShares Ultra VIX Short Term Futures ETF | UVXY | 10.95 | 12.95 | (2.00) | -15.45% |
| iPath S&P 500 VIX Short Term Futures ETN | VXX | 13.46 | 14.64 | (1.18) | -8.06% |
| ProShares VIX Short Term Futures ETF | VIXY | 11.22 | 12.16 | (0.94) | -7.73% |
| iPath S&P 500 VIX Mid-Term Futures ETN | VXZ | 24.60 | 25.08 | (0.48) | -1.91% |
| Inverse VIX ETP’s | |||||
| ProShares Short VIX Short Term Future ETF | SVXY | 153.49 | 142.40 | 11.09 | 7.79% |
| Daily Inverse VIX Short Term ETN | XIV | 79.54 | 73.67 | 5.87 | 7.97% |
Data Source: OptionVue8
It will be a very heavy week for economic news. The week starts with markets closed for Memorial Day in the U.S., and ends with the U.S. Employment Situation report. In between, we get a wide range of employment reports and indexes plus Consumer Spending, the S&P CoreLogic Case-Shiller Home Price Index, and International Trade.
This earnings season is winding down. It has been a strong earnings season. 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. Earnings highlights include g-III Apparel, Michael Kors Holdings, Vera Bradley, Analog Devices, Dollar General, Ciena, and Broadcom,
Advice to stimulate your imagination:
“Sometimes paranoia is just having all the facts.” – William S. Burroughs
“The secret of life is to have no fear; it’s the only way to function.” – Stokely Carmichael
“All media exist to invest our lives with artificial perceptions and arbitrary values.” – Marshall McLuhan
“The key to risk management is never putting yourself in a position where you cannot live to fight another day.” – Dick Fuld
Monday, May 29:
US Holiday – Memorial Day – Markets Closed
International Economic: Japan Household Spending and Unemployment Rate – 7:30PM.
Earnings:
| SYMBOL | B/A | 5/26 Close | AVGVOL | AVG MOVE | SMA 10 | 50% FIB |
| RYAAY | BMO | $106.22 | 255,745 | 3.11% | $101.90 | $97.03 |
| TTM | BMO | $37.07 | 1,405,530 | 7.33% | $35.18 | $35.09 |
Tuesday, May 30:
Economic: Personal Income and Outlays – 8:30, S&P Corelogic Case-Shiller HPI -9:00, State Street Investor Confidence Index – 10:00, Dallas Fed Manufacturing Survey – 10:30.
International Economic: France GDP – 2:45AM, Eurozone Economic Sentiment – 5:00AM, Germany CPI – 8:00AM, Japan Industrial Production – 7:50PM, China CFLP Manufacturing PMI = 9:00PM.
Earnings:
| SYMBOL | B/A | 5/26 Close | AVGVOL | AVG MOVE | SMA 10 | 50% FIB |
| ADI | BMO | $82.81 | 3,287,900 | 2.71% | $81.27 | $78.80 |
| KORS | BMO | $36.76 | 2,043,180 | 5.29% | $36.41 | $37.17 |
| OLLI | AMC | $41.70 | 597,864 | 3.24% | $40.30 | $39.59 |
| PANW | AMC | $118.08 | 2,227,790 | 12.80% | $117.19 | $114.72 |
| SMTC | AMC | $37.10 | 488,458 | 2.13% | $36.22 | $35.27 |
| VAL | BMO | $112.99 | 867,747 | 0.16% | $112.22 | $112.32 |
Wednesday, May 31:
Economic: MBA Mortgage Applications – 7:00, Redbook – 8:55, Chicago PMI – 9:45, Pending Home Sales Index – 10:00, Beige Book – 2:00, Farm Prices – 3:00.
International Economic: Germany Retail Sales – 2:00AM, France PPI, Germany Unemployment Rate – 3:55AM, Eurozone Unemployment Rate – 5:00AM, Japan PMI Manufacturing Index – 8:30PM.
Other: Dallas Federal Reserve Bank President Robert Kaplan to participate in a moderated Q&A session with audience and media at the C. Peter McColough Series on International Economics in New York City – 800AM, San Francisco Federal Reserve Bank President John Williams to speak at The Bank of Korea International Conference 2017: Global Economic and Financial Challenges: The Decade Ahead in Seoul, with media and audience Q&A – 7:30PM.
Earnings:
| SYMBOL | B/A | 5/26 Close | AVGVOL | AVG MOVE | SMA 10 | 50% FIB |
| AVGO | AMC | $241.21 | 2,361,800 | 3.57% | $237.92 | $228.88 |
| COO | AMC | $217.46 | 380,447 | 1.44% | $214.06 | $208.60 |
| DCI | BMO | $46.68 | 508,991 | 7.10% | $46.72 | $46.31 |
| DG | BMO | $72.32 | 2,877,090 | 4.78% | $71.46 | $71.91 |
| FIVE | AMC | $52.63 | 1,163,250 | 5.97% | $52.12 | $50.37 |
| GWRE | AMC | $67.73 | 385,908 | 2.62% | $63.50 | $63.76 |
| JOY | BMO | $28.30 | 1,114,410 | 0.12% | $28.25 | $28.21 |
| LULU | AMC | $48.23 | 3,858,690 | 12.79% | $49.32 | $51.84 |
| MBLY | BMO | $61.80 | 5,931,020 | 2.59% | $61.78 | $61.70 |
| RH | AMC | $57.81 | 1,773,290 | 16.53% | $57.58 | $53.65 |
| TECD | BMO | $94.66 | 427,206 | 5.06% | $93.70 | $94.95 |
| VMW | AMC | $96.81 | 1,205,560 | 6.26% | $94.61 | $93.96 |
| WDAY | AMC | $99.99 | 1,536,100 | 7.58% | $97.71 | $93.12 |
Thursday, June 1:
Economic: Motor Vehicle Sales, Chain Store Sales, Challenger Job-Cut Report – 7:30, ADP Employment Report – 8:15, Weekly Jobless Claims – 8:30, Productivity and Costs – 8:30, Gallup Good Jobs Rate – 8:30, PMI Manufacturing Index – 9:45, Bloomberg Consumer Confidence – 9:45, ISM Manufacturing Index – 10:00, Construction Spending – 10:00, EIA Natural Gas Report – 10:30, EIA Petroleum Status Report – 11:00, Money Supply – 4:30.
International Economic: Germany PMI Manufacturing Index – 3:55AM, Eurozone PMI Manufacturing Index – 4:00SM
Earnings: None meeting criteria.
Friday, June 2:
Economic: Employment Situation – 8:30, International Trade – 8:30, Baker Hughes Rig Count – 1:00.
International Economic: Eurozone PPI – 5:00AM.
Earnings: None meeting criteria.
Monday, June 5:
Economic: Gallup US Consumer Spending Measure – 8:30, PMI Services – 9:56. Factory Orders – 10:00, ISM Non-Manufacturing Index – 10:00, Labor Market Conditions Index = 10:00, TD Ameritrade IMX – 12:30
International Economic: No major announcements.
Earnings:
| SYMBOL | B/A | 5/26 Close | AVGVOL | AVG MOVE | SMA 10 | 50% FIB |
| CASY | AMC | $115.78 | 505,433 | 3.57% | $114.47 | $113.30 |
| THO | AMC | $91.40 | 835,078 | 7.83% | $93.33 | $94.37 |
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