Blog Archives
Frank Fahey: Market News for the Prepared Mind: 6.5-6.12.2017
June 5, 2017
“Chance favors the Prepared Mind.” – Louis Pasteur
“Experience traders control risk, inexperienced traders chase gains.” – Alan Farley
“All you need is the plan – the road map – and the courage to press on to your destination.” – Earl Nightingale
“To achieve anything in this game,
you must be prepared to dabble on the boundary of disaster.” – Stirling Moss
The Dow Jones Industrial Average, the Stand and Poor’s 500, and the NASDAQ Composite all closed at record highs last week. The Dow Jones Transportation Index is flirting with new highs. This stellar performance came despite pronouncements by analysts that the “Trump Trade” is dead, weaker than expected job growth and lackluster consumer spending.
Trading has an underpinning of discipline combined with the trader’s personal risk/reward comfort zone and their understanding of what is a “normal” market. Traders often discuss the concept of “normal.” Our success depends on being able to reduce market movement and trends to a lowest common denominator. This basic view of the market is what is “normal.”
My recent conversations with other professional options traders have shown a growing consensus that we are seeing a new ”normal.” A new “normal” requires the options trader to reassess current strategies within the context of current market intraday movement, implied volatility for options, and the liquidity/investor participation individual option markets. This is another example of the need “The Prepared Mind” in successful implementation and management of option strategies.
Here is an overview of the US market behavior last week and for 2017:
Data Source: OptionVue8
The VIX has closed has closed below 10 more time this year than any other year since 1990. The average VIX closing price is lower than any other yearly averages during the same period. The VIX and associated derivatives held strong this week despite record high in the major equity indexes. Spread strategies being implemented in VIX options tend to be bullish. The spreads being quoted appear to be reflecting the belief the VIX is trading around a support level. This level appears to be rooted in psychological feelings rather than technical facts.
Data Source: OptionVue8
This week will be a much quieter last week. The focus will be on the service sector. manufacturing, the consumer, and inventories. The highlights of the week is fired FBI Director James Comey is scheduled to testify before the Senate Intelligence Committee in an open session on Thursday morning at 10 AM. This testimony will be aired live on ABC, CBS, CNN and other networks.
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 Thor, Casey’s General Sore, Fred’s, GIII Apparel, Oxford Industries, Brown-Forman, Analogic, Verifone, and J.M. Smucker.
Advice to stimulate your imagination:
“Sometimes paranoia is just having all the facts.” – William S. Burroughs
“You’ll always miss 100% of the shots you don’t take.” – Wayne Gretzky
“All media exist to invest our lives with artificial perceptions and arbitrary values.” – Marshall McLuhan
“If you spend more than 13 minutes analyzing economic and market forecasts,
you’ve wasted 10 minutes” Peter Lynch
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:
Tuesday, June 6:
Economic: Gallup US ECI – 8:30, Redbook – 8:55, JOLTS – 10:00.
International Economic: Eurozone Retail Sales – 5:00AM.
Earnings:
Wednesday, June 7:
Economic: MBA Mortgage Applications – 7:00, Gallup US Job Creation Index – 8:30, EIA Petroleum Status Report – 10:30.
International Economic: Germany Manufacturers’ Orders – 2:00AM, Japan GDP = 7:50PM. China Merchandise Trade Balance – 10:00PM.
Earnings:
Thursday, June 8:
Economic: Weekly Jobless Claims – 8:30, Bloomberg Consumer Confidence – 9:45, Quarterly Services Survey – 10:00, EIA Natural Gas Report – 10:30, Money Supply – 4:30.
International Economic: Germany Industrial Production- 2:00, France Merchandise Trade – 2:45AM, Eurozone GDP – 5:00AM, China PPI and CPI – 9:30PM
Other: European Central Bank Announcement – 7:45AM, Fired FBI Director James Comey is scheduled to testify before the Senate Intelligence Committee in an open session on Thursday morning at 10 AM.
Earnings:
Friday, June 9:
Economic: Wholesale Trade – 10:00, Baker Hughes Rig Count – 1:00.
International Economic: Japan Tertiary Index – 12:30AM, German Merchandise Trade – 2:00, Great Britain Industrial Production and Merchandise Trade – 4:30Am.
Earnings:
Monday, June 12:
Economic: No major announcements
International Economic: No major announcements.
Earnings:
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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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Frank Fahey: Market News for the Prepared Mind: 5.22-5.30.2017
May 22, 2017
“Chance favors the Prepared Mind.” – Louis Pasteur
Everything is contingent, and there is also chaos. Spalding Gray
“Chaos is a friend of mine.” – Bob Dylan
“Does not everything depend on our interpretation of the silence around us?” – Lawrence Durrell
The blog will focus on numbers and “facts.” This is a very frustrating market. My trading discipline is the result of thirty years of daily immersion in equities and their derivative markets. The major variables have always been price movement, volatility, volume, market trends and news This is year has a new variable has been added. Every decision I make is tempered by the unknown variable – a wild card. This unpredictability arises from the, often contradictory, statements of Donald Trump. This will be, yet, another week when where I have to try and define the impact of the unknown variable. Be wary, be nimble.
Here is an overview of the US market behavior last week and for 2017:
Data Source: OptionVue8
VIX futures show little change at the end of the week despite the S&P 500 have its largest downward swoon of the year. The unknown variable on Pennsylvania Avenue is forcing traders to be very nimble.
Here is an overview of last week for the VIX and related products:
Data Source: OptionVue8
The last full week of May brings reports on existing home sales, new home sales, and durable goods. In addition, the Fed will release the minutes of its last meeting. However, the focus will be in the chaos and disorganization inside the Beltway.
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 Nordson, Agilent, Toll Brothers, Autozone, intuit, Eaton Vance, Advance Auto Parts, Tiffany, HP, Guess?, Williams Sonoma, Lowe’s, Dollar Tree, Hormel Foods, Gamestop, Medtronic , Ulta Beauty, Toro, Costco, Best Buy and Big Lots.
Advice to stimulate your imagination:
“I like an element of chaos in music. That feeling is the best thing ever, as long as you don’t have too much of it.” – Jeff Beck
“The aim of education is the knowledge, not of facts, but of values.” – William S. Burroughs
“All media exist to invest our lives with artificial perceptions and arbitrary values.” – Marshall McLuhan
Monday, May 22:
Economic: Chicago Fed National Activity Index – 8:30.
International Economic: Japan All Industry Index – 1:30AM.
Other: Minneapolis Federal Reserve Bank President Neel Kashkari will deliver welcoming remarks at the Opportunity and Inclusive Growth Institute Conference in Minneapolis – 10:00AM, Philadelphia Federal Reserve Bank President Patrick Harker to discuss “the Link Between Physical and Economic Wellbeing” at the Jefferson College of Health Professions and Jefferson College of Pharmacy Commencement Ceremony in Philadelphia – 10:00AM, Minneapolis Federal Reserve Bank President Neel Kashkari to participate in a media Q&A at the Opportunity and Inclusive Growth Institute Conference in Minneapolis – 6:45PM, Federal Reserve Governor Lael Brainard will deliver the dinner keynote speech at the Opportunity & Inclusive Growth Institute Conference in Minneapolis – 7:00PM, Federal Reserve Governor Lael Brainard will speak about “The Roles of Opportunity and Inclusion in Strengthening the U.S. Economy” at the Federal Reserve Bank of Minneapolis conference on Opportunity and Inclusive Growth in Minneapolis, with audience Q&A – 7:30PM, Chicago Federal Reserve Bank President Charles Evans will speak at the Symposium on OTC Derivatives – 58th Shanghai Clearing House Forum on Policy and Practice-Default Management, a private event closed to the media, but remarks are to be posted at the ChicagoFed.org website, in Shanghai China – 9:10PM.
Earnings:
Tuesday, May 23:
Economic: Redbook – 8:55, New Home sales – 10:00, Richmond Fed Manufacturing Index – 10:00.
International Economic: Japan All Industry Index – 12:30AM, Germany GDP – 2:00AM, Germany PMI Composite Flash – 3:30AM, Eurozone PMI Composite Flash – 4:00AM.
Other: Minneapolis Federal Reserve Bank President Neel Kashkari to participate in in a conversation about “Homeownership in Indian Country” at the CICD Roundtable – A Conversation about Building Economic Well-Being for Native Communities through Homeownership, in Minneapolis – 3:15PM, Philadelphia Federal Reserve Bank President Patrick Harker to give a presentation, with audience and Q&A in New York – 5:00PM.
Earnings:
Wednesday, May 24:
Economic: MBA Mortgage Applications – 7:00, FHFA House Price Index – 9:00, PMI Composite Flash 0 9:45, Existing Home Sales – 10:00, EIA Petroleum Status Report – 10:30, FOMC Minutes – 2:00.
International Economic: No major announcements.
Other: Minneapolis Federal Reserve Bank President Neel Kashkari to speak at the Town Hall Forum in Ashland, Wisconsin, with audience Q&A – 6:00PM, Philadelphia Federal Reserve Bank President Patrick Harker to give a presentation, with audience and Q&A in New York – 5:00PM.
Earnings:
Thursday, May 25:
Economic: International Trade in Goods – 8:30, Weekly Jobless Claims – 8:30, Bloomberg Consumer Confidence – 9:45, EIA Natural Gas Report – 10:30, Kansas City Fed Manufacturing Index – 11:00, Money Supply – 4:30.
International Economic: Great Britain GDP – 4:30AM.
Other: Federal Reserve Governor Lael Brainard to participate in a panel discussion on global economic issues at the Center for Global Development’s Voices of Experience: A conversation with former Treasury Under Secretaries for International Affairs in Washington, with audience Q&A – 10:00AM, Dallas Federal Reserve Bank President Robert Kaplan to participate in a moderated Q&A session at the C.D. Howe Institute Annual Directors’ Dinner, with audience Q&A – 6:00PM, St. Louis Federal Reserve Bank President James Bullard to present on the topic of “U.S. Economy and Monetary Policy” at Keio University in Tokyo, with audience and media Q&A – 10:00PM.
Earnings:
Friday, May 26:
Economic: Durable Goods Orders – 8:30Am, GDP – 8:30, Corporate Profits – 8:30, Consumer Sentiment = 10:00Baker Hughes Rig Count – 1:00.
International Economic: No major Announcements.
Other: San Francisco Federal Reserve Bank President John Williams to deliver the keynote address at the Symposium on Asian Banking and Finance: Risk and Resilience in Global Finance in Singapore, with media and audience Q&A – 8:15PM,
Earnings:
Monday, May 29:
US Holiday – Memorial Day – Markets Closed
International Economic: Japan Household Spending and Unemployment Rate – 7:30PM.
Tuesday, May 30:
Economic: Personal Income and Outlays – 8:30, Consumer Confidence – 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, Chinan CFLP Manufacturing PMI = 9:00PM.
Earnings:
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Frank Fahey: Market News for the Prepared Mind: 5.15-5.22.2017
May 15, 2017
“Chance favors the Prepared Mind.” – Louis Pasteur
“There are nights when the wolves are silent and only the moon howls” – George Carlin
“Silence is so freaking loud” – Sarah Dessen
“Does not everything depend on our interpretation of the silence around us?” – Lawrence Durrell
It is quiet. This is a short entry befitting the activity of the past week. I need to channel my inner Alfred E. Neuman. His signature phrase, “What, me worry?” is easily applied to the current US equity markets. The market continues to shrug off every piece of piece of negative news.
Ever sell-off is a buying opportunity. The markets have become a never-ending big yawn. President Trump fires FBI Director James Comey – yawn. North Korea test intercontinental ballistic missiles and atomic bombs – yawn. Syria uses chemical weapons on their own citizens – yawn. It seems there is nothing of sufficient gravity to roil the stock markets.
In 2017, the Dow Jones Industrial Average has on had four moves of 1% or more in either direction. This is the lowest number of 1% moves to start a year since 1965. Volatility continues to trend lower. The markets are quiet, perhaps too quiet. In movies, silence can speak louder than any use of sound. Ignore the silence at your own risk. The lack of noise can distance a trader from the market. Listen! Remain engaged and nimble.
Here is an overview of the US market behavior last week and for 2017:
Volatility is still flirting with historic lows. Russell Rhoda of the CBOE trade of the week as a as a MOAVCS (Mother of all VIX Call Spreads). On Tuesday, 195,000 VIX bullish June 30/35 call spreads were purchased for a net cost of 0.06.
Here is an overview of last week for the VIX and related products:
Data Source: OptionVue8
The third week of May will be quiet – Housing Starts and Industrial Production. The wild card remains the political situation in Washington, D.C. However, chaos in D.C. does not appear to have any correlation with chaos in the markets.
The earnings season is starting to wind down. The earnings highlight will be Wal-Mart Stores’ release of first quarter earnings. 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. Other earnings highlights include Staples, TJX, Home Depot, Urban Outfitters, Dick’s Sporting Goods, Synopsys, Cisco, Flowers Foods, Ross Stores, Ralph Lauren, Foot Locker, and Deere & Co.
Advice to stimulate your imagination:
“Patience, Grasshopper” – Master Po
“If you do not actively attack the risks, they will actively attack you.” – Tom Gib
“Lying is done with words, and, also, with silence.” – Adrienne Rich
“The easy way out usually leads back in.” – Peter Senge
“Silence about a thing just magnifies it.” – Tennessee Williams
Monday, May 15:
Economic: Empire State Manufacturing Survey – 8:30, Housing Market Index – 10:00.
International Economic: China PPI and Import Price Index – 3:15AM.
Earnings:
Tuesday, May 16:
Economic: Housing Starts – 8:30, Redbook – 8:55, Industrial production – 9:15, E-Commerce Retail Sales – 10:00.
International Economic: Japan Tertiary Index – 12:30AM, Great Britain CPI and PPI – 4:30AM, Eurozone GDP Flash and Merchandise Trade – 5:00AM.
Earnings:
Wednesday, May 17:
Economic: MBA Mortgage Applications – 7:00, EIA Petroleum Status Report – 10:30.
International Economic: Great Britain Labour Market Report – 4:30AM, Eurozone HICP – 5:00AM, Japan GDP – 7:50, China Home Price Index – 8:30PM.
Earnings:
Thursday, May 18:
Economic: Weekly Jobless Claims – 8:30, Philadelphia Fed Business Survey – 8:30, Bloomberg Consumer Confidence – 9:45, Leading Indicators – 10:00, EIA Natural Gas Report – 10:30, Money Supply – 4:30.
International Economic: Great Britain Retail Sales – 4:30AM, Eurozone Consumer Confidence Flash – 10:00.
Other: Cleveland Federal Reserve Bank President Loretta Mester to speak at the Economic Club of Minnesota in Minneapolis – 1:15PM.
Earnings:
Friday, May 19:
Economic: Baker Hughes Rig Count – 1:00.
International Economic: Germany PPI – 2:00AM,
Other: St. Louis Federal Reserve Bank President James Bullard to present on “U.S. Economy and Monetary Policy” at the Association for Corporate Growth St. Louis Chapter Washington University in St. Louis, held in St. Louis, with audience and media Q&A. – 9:15AM.
Earnings:
Monday, May 22:
Economic: Chicago Fed National Activity Index – 8:30.
International Economic: Japan All Industry Index – 1:30AM.
Earnings:
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Frank Fahey: Market News for the Prepared Mind: 5.8-5.15.2017
May 8, 2017
“Chance favors the Prepared Mind.” – Louis Pasteur
“Democrats never agree on anything, that’s why they’re Democrats. If they agreed with each other, they’d be Republicans.”.” – Will Rogers
“A man who procrastinates in his choosing will inevitably have his choice made for him by circumstance.” – Hunter S. Thompson
“The Euro ceases to exist the moment that France leaves.” – Marie Le Pen
“France is back.” – Emmanuel Macron
Last week ended with two of the three major indexes hitting new highs. The S&P 500 rose 14.80 to close at 2399.92 – a new all-time high, The NASDAQ Composite gained nearly 1%, closing at an all-time high of, advancing 6100.76. The Dow Jones Industrial Average was the laggard. The DJIA advanced 0.3% to close just above 21,000. The small cap dominated Russell 2000 continued to underperform when compared to larger cap indices.
Financial talking heads are using the VIX to fan the fires of concern about an impending market sell off. It seems every market pundit has a “fact” about the VIX or S&P 500 volatility which portends the risk of the end of the bull market. As of the close this past Thursday, the S&P 500 had gone 7 days without a move of 0.2% in either direction. According to Bespoke Investment, this was only the fifth time the SPX had ever gone as many days with so little movement. This concern was followed by a 0,4% gain on Friday. The VIX hit a post Financial Crisis low of 9.90 on Monday, while again dipping below 10 on Friday.
The weakness in the VIX and the lack of movement in the major indices are not predictors of market direction. The greatest challenge for me as a trader is avoiding complacency. Trading requires patience and a sense of urgency. Trading has been described by long periods of boredom interrupted by moments of panic. The lethargy of a quiet market can rob a trader of the sense of urgency required to prepare for the reaction required for moments of panic. Hunter S. Thompson summed it up with““A man who procrastinates in his choosing will inevitably have his choice made for him by circumstance.”
Here is an overview of the US market behavior last week and for 2017:
Low implied volatility is a basic fact of current markets. Low statistical volatility (movement of the underlying) and low implied volatility (reflected in premium levels of options) are forcing options traders to reevaluate the strategies being used. The viability of any option strategy must be evaluated against change in time, movement in the price of the underlying and changes in implied volatility of the options. Low levels in volatility forces the option trader to find strategies fitting their risk/reward comfort zone.
Here is an overview of last week for the VIX and related products:
Will inflation return in May? April price readings will be released this week; import and export prices will be released on Wednesday, while the Producer Price Index will be released on Thursday and the Consumer Price Index will be released on Friday. Economists and investors will be looking for stability in prices and a number near the Fed’s 2% target.
Strong profit reports, along with conference calls with positive forecasts, continue to be a driving force behind stocks moving upward. First quarter earnings announcement will continue the next two weeks. 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: Newell Brands, Tyson Foods, Marriott, Trip Advisor, Walt Disney, AON, Priceline, Allergan, NVIDIA, Mylan, Whole Foods, Vulcan Materials, Perrigo, Nordstrom, Kohl’s Macy’s and JC Penney.
Advice to stimulate your imagination:
“Patience, Grasshopper” – Master Po
“If you do not actively attack the risks, they will actively attack you.” – Tom Gib
“The key to risk management is never putting yourself in a position where you cannot live to fight another day.” – Dick Fuld
“The easy way out usually leads back in.” – Peter Senge
“In a closed society where everybody’s guilty, the only crime is getting caught. In a world of thieves, the only final sin is stupidity.”- Hunter S. Thompson
Monday, May 8:
Economic: Labor Conditions Index – 10:00, TD Ameritrade IMX – 12:30PM.
International Economic: Germany Manufacturers’ Orders – 2:00AM.
Other: St. Louis Federal Reserve Bank President James Bullard to speak at a policy session held the Federal Reserve Bank of Atlanta’s 22nd Annual Financial Markets Conference on “Shifting Sands of Low Interest Rates” in Fernandina Beach, Florida, with audience Q&A – 8:35AM, 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, 8:45AM.
Tuesday, May 9:
Economic: NFIB Small Business Optimism Index – 6:00, Redbook – 8:55, JOLTS – 10:00. Wholesale Trade – 10:00.
International Economic: Germany Industrial Production and Merchandise Trade – 2:00AM, China CPI and PPI – 9:30PM.
Other: Boston Federal Reserve Bank President Eric Rosengren will be the Keynote Speaker at the Risk Management for Commercial Real Estate Conference being held at the NYU Stern School of Business in New York, New York – 1:00PM, Dallas Federal Reserve Bank President Robert Kaplan to speak at the Dallas Regional Chamber Lower Middle Market Investment Summit in Dallas, with audience and media Q&A – 4:15PM.
Earnings:
Wednesday, May 10:
Economic: MBA Mortgage Applications – 7:00, Import and Export Prices – 8:30, Atlanta Fed Business Inflation Expectations – 10:00, EIA Petroleum Status Report – 10:30.
International Economic: France Merchandise Trade – 2:45AM.
Other: Boston Federal Reserve Bank President Eric Rosengren will be the Keynote Speaker at a joint meeting of the Lake Champlain Regional Chamber and Central Vermont Chamber of Commerce in South Burlington, VT – 12:00PM.
Thursday, May 11:
Economic: Weekly Jobless Claims – 8:30, PPI-FD – 8:30, Bloomberg Consumer Confidence – 9:45, EIA Natural Gas Report – 10:30, Money Supply – 4:30.
International Economic: Great Britain Industrial Production and Merchandise Trade – 4:30AM, Bank of England Announcement and Minutes.
Other: New York Federal Reserve Bank President William Dudley speaks on the Benefits and Challenges from Globalization at the Interaction with President Dudley event held by the U.S. India Business Council, the Confederation of Indian Industry and the Bombay Stock Exchange in Mumbai, India, with audience Q&A – 8:30AM.
Friday, May 12:
Economic: CPI – 8:30, Retail Sales = 8:30, Business Inventories – 10:00 Consumer Sentiment – 10:00, Baker Hughes Rig Count – 1:00.
International Economic: Germany CPI and GDP Flash – 2:00AM, Eurozone Industrial Production – 5:00AM.
Other: Chicago Federal Reserve President Charles Evans speaks about current economic conditions and monetary policy in panel discussion, with audience and media Q&A, at the 56th ACI Financial Markets Association World Conference in Dublin, Ireland – 9:00AM, Philadelphia Federal Reserve Bank President Patrick T. Harker to speak about “Economic Outlook” at the Drexel University Urban Economics Policy Conference in Philadelphia, with audience and media Q&A – 12:30PM.
Earnings: None meeting criteria.
Sunday, May 14:
International Economic: China Fixed Asset Investment, Industrial Production, and Retail Sales – 10:00PM.
Monday, May 15:
Economic: Empire State Manufacturing Survey – 8:30, Housing Market Index – 10:00.
International Economic: No major announcements.
Earnings: None meeting criteria.
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