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Frank Fahey: Market News for the Prepared Mind: 8.14-8.21.2017

August 14, 2017


“Chance favors the prepared mind.” -Louis Pasteur

“There is only one side of the market and it is not the bull side or the bear side, but the right side.” -Jesse Livermore

“I love to talk about nothing. It’s the only thing I know anything about.” -Oscar Wilde

“Computers have enabled people to make more mistakes faster than almost any invention in history, with the possible exception of tequila and handguns.” -Mitch Ratcliffe

“Better to have a simple model backed by excellent people than the other way around.” -Paul Carrett

 

NBSorry for the delay in posting. It always helps to hit “post.” Next week’s blog will contain on Index and VIX information. I will be in pursuit of the total eclipse.

The S&P 500 sold off 35.51 points to 2441. Last week’s 1.43% drop was the largest since November 2016. The bulk of the damage was done on Thursday when the SPX lost 1.45%. The sell-off was preceded by a market which was setting new records for lack of movement. Thursday’s skid was preceded by 58 consecutive trading sessions without a move, in either direction, exceeding 1%. This near absence of movement culminated in a record 16 straight sessions without a 0.3% move up or down. Both streaks ended with Thursday’s sell- off.

Financial talking head various blamed the ratcheting up of US-North Korea tensions and the long-legs of the current bull market. The nation’s debt ceiling limit, a statutory limit of outstanding debt obligations, needs to be raised, per the Trump administration, by September 29. Other sources are predicting a need for an increase earlier in September.

The congressional debt ceiling showdown created a crisis in 2011. It resulted in the most volatile week for financial markets since the 2008 recession. The S&P 500 was down as much as 10.6% the week of August 5. 2011. Congress will not be back inside the Beltway until September 5. Will Congress be able to reach a another bipartisan agreement in 2017? Ignore the debt ceiling negotiations at your own risk.

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

Index 11-Aug Change % Weekly 2017 YTD Volatility of Index
Dow Jones Industrials (DJIA) 21858.32 (234.49) -1.06% 10.60% 13.89% (VXD)
S&P 500 (SPX) 2441.32 (35.51) -1.43% 9.07% 15.51% (VIX)
NASDAQ 100 (NDX) 5831.53 (68.38) -1.16% 19.90% 17.77% (VXN)
Russell 2000 (RUT) 1374.23 (38.09) -2.70% 1.26% 19.59% (RVX)
S&P 100 (OEX) 1081.80 (13.62) -1.24% 9.12% 12.87% (VXO)
Dow Jones Transportation (TRAN) 4461.15 (50.81) -1.13% 10.11% NA
Crude Oil (CLU7) 48.77 (0.74) -1.49% -9.50% 28.41%(OVX)
Gold (GCZ7) 1295.70 30.90 2.44% 12.47% 13.45 (GVZ)
CBOE Volatility Index (VIX) 15.51 5.48 54.64% NA

Data Source: OptionVue8

The VIX shook off the dog days of August by closing the week at 16.04 – the highest close since November 8, 2016. The gain for the week was over 54%. The VXST – the CBOE Short-term Volatility Index – was up 81% for the week. The term structure of the front three monthly futures narrowed while gaining from 15% to nearly 37%. The number of short positions in VIX futures hit a record high the previous week. The explosion in volatility was partially fueled by traders covering short positions.

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

Indexes Ticker 11-Aug 4-Aug Change % Change
S&P 500 SPX 2441.32 2476.83 (35.51) -1.43%
CBOE Volatility Index VIX 15.51 10.03 5.48 54.64%
VIX August Future (8/18/2017) VXQ7 15.425 11.275 4.15 36.81%
VIX September Future (9/20/2017) VXU7 15.275 12.775 2.50 19.57%
VIX October Future (10/18/2017) VXV7 15.525 13.525 2.00 14.79%
CBOE Short-term Volatility Index VXST 15.53 8.58 6.95 81.00%
CBOE 3 Month Volatility Index VXV 16.39 12.75 3.64 28.55%
CBOE Mid-term Volatility Index (6 month) VXMT 16.86 14.25 2.61 18.32%
VIX of VIX VVIX 127.43 87.39 40.04 45.82%
CBOE SKEW Index SKEW 136.48 138.32 (1.84) -1.33%
Long VIX ETP’s
ProShares Ultra VIX Short Term Futures ETF UVXY 43.09 29.79 13.30 44.65%
iPath S&P 500 VIX Short Term Futures ETN VXX 13.66 11.19 2.47 22.07%
ProShares VIX Short Term Futures ETF VIXY 45.50 37.31 8.19 21.95%
iPath S&P 500 VIX Mid-Term Futures ETN VXZ 23.20 21.19 2.01 9.49%
Inverse VIX ETP’s
ProShares Short VIX Short Term Future ETF SVXY 71.88 90.77 (18.89) -20.81%
Daily Inverse VIX Short Term ETN XIV 74.58 94.29 (19.71) -20.90%

Data Source: OptionVue8

The wild cards for the week are North Korea, the debt ceiling, and The POTUS’ twitter account. The week of August 14 brings reports on consumer spending, retail sales, housing starts, manufacturing and industrial production, as well as the minutes of the last Fed meeting.

This earnings season winds down over the next two weeks. The highlights include: Sysco, Urban Outfitters, Coach, Jack Henry, Staples, TJX, Advance Auto Parts, American Eagle Outfitters, Dick’s Sporting Goods, Home Depot, Target, L Brands, Cisco Systems, Ross Stores, Wal-Mart, Gap, Applied Materials, Estee Lauder, Footlocker, and Deere and Co. 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:

“A man without ethics is a wild beast loosed upon this world.” -Albert Camus

“The average man doesn’t wish to be told that it is a bull or a bear market. What he desires is to be told specifically which particular stock to buy or sell. He wants to get something for nothing.” -Jesse Livermore

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

“What we learn from history is that people don’t learn from history.” -Warren Buffet

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

 

Monday, August 14: 

Economic: No major announcements.

International Economic: Eurozone Industrial Production – 5:00AM.

Earnings:

SYMBOL B/A 8/11 Close AVGVOL AVG MOVE SMA 10 50% FIB
JD BMO $45.90 11,189,500 6.19% $46.25 $43.85
SYY BMO $51.58 2,975,760 1.64% $52.12 $50.94

 

Tuesday, August 15: 

Economic: Retail Sales – 8:30, Empire State Manufacturing Survey – 8:30, Import and Export Prices – 8:30, Redbook – 8:55, Business Inventories – 10:00, Housing Market Index – 10:00.

International: Germany GDP Flash – 2:00AM, Great Britain CPI and PPI – 4:30AM.

Earnings:

SYMBOL B/A 8/11 Close AVGVOL AVG MOVE SMA 10 50% FIB
AAP BMO $107.34 1,854,100 4.90% $110.48 $107.27
COH BMO $47.55 2,646,440 3.02% $47.41 $47.31
HD BMO $154.88 4,747,060 1.00% $151.55 $150.11
TJX BMO $71.07 4,819,050 2.53% $70.39 $69.38
A AMC $59.33 1,908,560 2.98% $59.99 $60.03
JKHY AMC $105.74 570,145 1.56% $106.50 $106.03

 

Wednesday, August 16: 

Economic: MBA Mortgage Applications – 7:00, Housing Starts – 8:30, Atlanta Fed Business Inflation Expectations 10:00, EIA Petroleum Status Report – 10:30.

International Economic: Great Britain Labour Report – 4:30AM. Eurozone GDP Flash – 5:00AM, Japan Merchandise Trade – 7:50PM.
Other: FOMC Minutes – 3:00PM.

Earnings:

SYMBOL B/A 8/11 Close AVGVOL AVG MOVE SMA 10 50% FIB
CACI AMC $128.55 120,466 2.97% $128.29 $128.32
CSCO AMC $31.47 21,578,700 3.59% $31.56 $31.46
CTRP AMC $53.85 3,379,010 3.46% $58.07 $56.73
LB AMC $40.88 3,697,260 3.90% $43.70 $48.60
NTAP AMC $41.49 3,229,650 5.21% $42.85 $41.72
OSIS AMC $80.98 123,352 9.55% $79.70 $78.23
PRXL AMC $87.62 1,144,680 6.89% $87.55 $87.38
SNPS AMC $76.27 1,028,220 5.33% $76.50 $74.75
TGT AMC $55.65 7,721,120 6.42% $57.06 $54.62

 

Thursday, August 17: 

Economic: Weekly Jobless Claims – 8:30, Philadelphia Fed Business Outlook Survey – 8:30, Industrial Production – 9:15, Bloomberg Consumer Comfort Index – 9:45, E-Commerce Retail Sales – 10:00, Leading Indicators – 10:00, EIA Natural Gas Report – 10:30, Money Supply – 4:30.

International Economic: Great Britain Retail Sales – 4:30Am, Eurozone Merchandise Trade – 5:00AM.

Other: European Central Bank Minutes – 7:30AM.

Earnings:

SYMBOL B/A 8/11 Close AVGVOL AVG MOVE SMA 10 50% FIB
BABA BMO $151.70 17,896,800 2.83% $155.06 $150.35
HTHT BMO $99.36 254,998 4.41% $100.92 $91.84
LANC BMO $123.11 119,364 4.25% $123.07 $124.48
MSG BMO $215.66 128,323 1.25% $217.21 $205.82
WMT BMO $80.40 9,052,650 3.03% $80.71 $77.56
AMAT AMC $43.08 10,802,700 0.62% $43.56 $44.58
ATGE AMC $33.25 743,034 None $33.12 $35.25
CIB AMC $43.48 365,562 2.00% $43.70 $43.98
GLOB AMC $42.96 323,077 4.18% $44.08 $43.66
ROST AMC $55.56 3,673,540 3.02% $55.43 $54.95

 

Friday, August 18: 

Economic: Consumer Sentiment – 10:00, Baker Hughes Rig Count – 1:00.

International Economic: Germany PPI – 2:00AM.

Other: Dallas Federal Reserve Bank President Robert Kaplan to participate in a moderated Q&A session at the Dallas County Community College District Conference Day 2017 in Dallas, with audience Q&A.

Earnings:

SYMBOL B/A 8/11 Close AVGVOL AVG MOVE SMA 10 50% FIB
DE BMO $126.70 2,475,940 9.17% $129.68 $127.88
EL BMO $99.65 1,674,480 3.95% $99.94 $98.97
FL BMO $49.30 3,888,560 10.20% $48.31 $48.09

 

Monday, August 21: 

Economic: Chicago Fed National Activity Index – 8:30.

International Economic: No major announcements.

Earnings:

SYMBOL B/A 8/11 Close AVGVOL AVG MOVE SMA 10 50% FIB
BBL AMC $35.03 1,632,510 0.45% $35.92 $33.98
BHP AMC $40.35 2,557,050 0.68% $41.19 $39.15
FN AMC $41.00 567,423 4.91% $43.23 $43.94
NDSN AMC $127.68 359,855 6.35% $127.51 $124.03
PINC AMC $33.35 380,602 3.85% $34.37 $34.82
ZAYO AMC $33.82 2,066,120 2.34% $32.95 $32.13

 

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