Strong earnings helped the market overcome Monday’s downdraft. The S&P 500 (SPX) closed at 1,337 or up 1.33%, the NASDAQ 100 (NDX) closed at 2,377.30 or up 2.30%, the Russell 2000 closed at 845.84 or up 1.30%, and the Dow Jones 30 Industrials closed at 12,505.99 or up 1.33%. Implied volatility for the indexes – SPX (VIX). RUT (RVX) and NDX (VXN) – closed near recent lows and were down for the week. The downward move in the volatility indexes was less than it had been in the past few weeks. It appears many traders are positioning themselves for a market low in exchange traded volatility indexes.
The economic and earnings reports will provide the market with direction and impetus. The corporate conference calls will give us a sense of what each company sees for future earnings periods. Of particular interest to me is the current and long-term effects the Japanese earthquake and tsunami have upon the supply chain for the technology and manufacturing segments of the economy. I have yet to read a cogent explanation of the possible impact. Keep an eye on the Middle East. Syria is the latest hot zone. Many observers think the market has already factored in the impact of any Mideast turmoil into market pricing. Their geopolitical expertise is summed up in their sentiment that we may see $6.00 a gallon for gasoline this summer. Hardly a deep thought.
Any new positions I put on will be centered in the middle of a range. I cannot initiate trades base on the expectation of a market top or market bottom in price or implied volatility. My success rate is much higher when I avoid opinions on market direction. This does not mean I am not prepared for moves in either (or both) prices or implied volatility. I know, in advance, what my trading responses will be to either eventuality. Price and implied volatility are the variables for trading in any market. The constant in approaching the market is trading discipline. Discipline, in conjunction with a Prepared Mind, will allow you to optimize your success in trading dynamic markets.
Have a good trading week. Be focused. Know where you are and where you might be going. Remember: “Chance favors the Prepared Mind.” – Louis Pasteur
Monday April 25:
Economic: New Home Sales – 10:00
Earnings: BMO – Before Market Open: Radio Shack (RSH); AMC – After Market Close: Express Scripts (ESRX), NetFlix (NFLX), Kimberly Clark (KMP).
Tuesday April 26:
Economic: ICSC Goldman Stores Sales – 7:45, Redbook – 8:55, S&P Case-Schiller Home Price Index – 9:00.
Earnings: BMO: Lockheed Martin (LMT), #M(MMM), Coca Cola (KO), Acme Packet(APKT), Illinois Toolworks (ITW), Ford (F), Under Armour (UA); AMC: Amazon (AMZN).
Other: FOMC Meeting begins.
Wednesday April 27:
Economic: MBA Purchase Applications – 7:00, Durable Goods Orders – 8:30.
Earnings: BMO: Corning (GLW), Boeing (BA), General Dynamics (GD) Apache (APA); AMC: Microsoft (MSFT), Starbucks (SBUX).
Other: FOMC Meeting Announcement – 12:30. This has been moved from its usual time to make way for the Chairman’s press conference following the announcement.
Thursday April 28:
Economic: GDP – 8:30, Initial Jobless Claims – 8:30, Pending Home Sales – 10:00.
Earnings: BMO: Exxon Mobil (XOM), Dow Chemical (DOW)Occidental Petroleum (OXY), Colgate Palmolive (CL), Pepsi (PEP) Bristol Myers Squibb (BMY); AMC: First Solar (FSLR), Coinstar (CSTR), Motorola (MMI)
Friday April 29:
Economic: Personal Income and Outlays – 8:30, Chicago PMI – 9:45, Consumer Sentiment – 9:55
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