Chance favors the Prepared Mind." - Louis Pasteur
“Imagination decides everything.” - Blaise Pascal
“Fail to plan, plan to fail.” - Winston Churchill
“If you don’t like something, change it. If you can’t change it,
change the way you think about it.” – Mary Engelbreit
It was a quiet ending to 2016. The year opened with one of the worst Januarys in market history. The market tumult continued with two unexpected results to volatility events - the Brexit vote to leave the European Union in the United Kingdom and the election of Donald Trump as U.S. president. The unveiling of the reality Donald Trump’s economic policies will have an impact on global and domestic markets.Here is an overview of the US market behavior last week and for 2016:
|Index||30-Dec||Change||% Weekly||2016 YTD||Volatility of Index|
|Dow Jones Industrials (DJIA)||19,762.60||(231.24)||-1.16%||13.42%||13.88% (VXD)|
|S&P 500 (SPX)||2,238.30||(25.49)||-1.13%||9.51%||14.04% (VIX)|
|NASDAQ 100 (NDX)||4,863.62||(76.40)||-1.55%||5.80%||16.68% (VXN)|
|Russell 2000 (RUT)||1,357.13||(14.37)||-1.05%||19.69%||19.42% (RVX)|
|S&P 100 (OEX)||991.43||(11.09)||-1.11%||8.78%||13.43% (VXO)|
|Crude Oil (CLG7)||53.89||1.89||3.63%||45.37%||30.83%(OVX)|
|CBOE Volatility Index (VIX)||14.04||2.60||22.73%||NA|
A strengthening VIX was a response to last week’s weaker prices in major indexes. The VIX futures term structure shows uncertainty about the markets moving forward through the next quarter.
Here is an overview of last week for the VIX and related products:
|CBOE Volatility Index||VIX||14.04||11.44||2.60||22.73%|
|VIX January Future (1/18/2017)||VXF7||15.125||14.275||0.85||5.95%|
|VIX February Future (2/18/2017)||VXG7||16.575||16.025||0.55||3.43%|
|VIX March Future (3/18/2017)||VXH7||17.500||17.275||0.23||1.30%|
|CBOE Short-term Volatility Index||VXST||12.68||8.98||3.70||41.20%|
|CBOE 3 Month Volatility Index||VXV||16.54||15.25||1.29||8.46%|
|CBOE Mid-term Volatility Index (6 month)||VXMT||18.57||17.63||0.94||5.33%|
|VIX of VIX||VVIX||91.60||87.64||3.96||4.52%|
|CBOE SKEW Index||SKEW||127.26||120.51||6.75||5.60%|
|Long VIX ETP's|
|ProShares Ultra VIX Short Term Futures ETF||UVXY||8.15||7.83||0.32||4.09%|
|iPath S&P 500 VIX Short Term Futures ETN||VXX||25.51||24.15||1.36||5.63%|
|ProShares VIX Short Term Futures ETF||VIXY||21.26||20.14||1.12||5.56%|
|iPath S&P 500 VIX Mid-Tem Futures ETN||VXZ||34.85||34.26||0.59||1.72%|
|Inverse VIX ETP's|
|ProShares Short VIX Short Term Future ETF||SVXY||90.98||96.58||(5.60)||-5.80%|
|Daily Inverse VIX Short Term ETN||XIV||46.75||49.59||(2.84)||-5.73%|
The doldrums of two weeks of the holiday season end with employment week. There will be key readings on economic strength in addition to the once-a-month comprehensive employment reports. These reports include: ISM Manufacturing Index, Vehicle Sales, the ISM non-Manufacturing Index, and trade data. The week is capped with the December Employment Situation Report.
It is time to start preparing for the upcoming earnings season. Confirm the date and time of a company’s earnings announcement before trading any earnings announcement strategy. The most accurate source of this information is the company’s investor relations website. It will be a quiet two weeks for earnings announcements.The earnings highlights this week for widely held and actively traded stocks are: Sonic Corp, UniFirst, Container Store, Constellation Brands, Ruby Tuesday, Walgreen Boots Alliance, Monsanto, and WD-40.
Advice to stimulate your imagination:
“Organizing is what you do before you do something, so that when you do it, it is not all mixed up.” A. A. Milne
“Time is a created thing. To say ‘I don’t have time’ is to say ‘I don’t want to.” - Lao Tzu
Monday January 2:
All US Markets Closed.
International Economic: Germany PMI Manufacturing Index – 3:55AM,
Eurozone PMI Manufacturing Index – 4:00AM, China PMI Manufacturing Index – 8:45PM.
Tuesday January 3:
Economic: PMI Manufacturing Index – 9:45, ISM Manufacturing Index – 10:00, Construction Spending – 10:00.
International Economic: Germany Unemployment Rate – 3:55AM, Germany CPI – 8:00AM, Global Manufacturing PMI – 11:00AM.
Wednesday January 4:
Economic: Motor Vehicle Sales, MBA Mortgage Applications – 7:00, ADP Employment Report – 8:15, Gallup US Job Creation Index – 8:30, Redbook – 8:55, Gallup US Consumer Spending Measure – 2:00.
International Economic: Germany PMI Composite – 3:55AM, Eurozone PMI Composite – 4:00AM, Japan PMI Composite – 7:30PM, China General Service PMI – 8:45PM.
Other: FOMC Minute for December 13/14 Meeting – 2:00.
Thursday January 5:
Economic: Chain Store Sales, Challenger Job-Cut Report – 7:30, Weekly Jobless Claims – 8:30, Gallup Good Jobs Rate – 6:30, Bloomberg Consumer Comfort Index – 9:45, PMI Services Index – 9:45, OSM Non-Manufacturing Index – 10:00, EIA Natural Gas Report – 10:30, EIA Petroleum Status Report – 11:00.
International Economic: Eurozone PPI - 5:00AM, Global Composite PMI – 11:00Am, Global Services PMI – 11:00AM.
Friday January 6:
Economic: December Employment Situation – 8:30, International Trade – 8:30, Factory Orders – 10:00, Baker Hughes Rig Count – 1:00.
International Economic: Germany Manufacturers’ Orders – 2:00AM, Eurozone Economic Sentiment – 5:00AM, Eurozone Retail Sales – 5:00AM.
Monday January 9:
Economic: TD Ameritrade IMX - 12:30, Labor Market Conditions Index – 10:00.
International Economic: Germany Industrial Production – 2:00AM, Eurozone Unemployment Rate – 5:00AM.