“Genius is patience” - Isaac Newton
“Have patience with all
things, But, first of all with yourself.”
- Saint Francis de Sales
- Saint Francis de Sales
The second longest bull market in history
continued with the Dow Jones Industrials (DJIA), the NASDAQ100 (NDX) and the
S&P 500 (SPX) drifted up to a low-volume all-time closing highs on Monday. The bull market, which stated in 2009, has
been surpassed in length by only the 1987-2000 bull run of 4,494 days. This week’s theme in the financial media is
how the bull market looks “tired.”
Rock and Roll Hall of Fame inductee Lou Reed
succinctly described the market’s August lethargy:
You know there's nothin' happening at all
Every time she put on the radio
There was nothin' goin' down at all
Not at all
One of the few constants in equity markets is the
summer doldrums – “nothin’ goin’ down at all.”
The low volume and the lack of market movement and interest are typical
August market behavior. The next two
weeks are among the most popular vacation periods in the US and Europe. Volume and price action should be quiet through
the Labor Day.
Do not become complacent. A slow market environment can be interrupted
by moments of violent price action. The
trading desks will be manned by back-ups. The relative lack of experience on
vacation period trading desks has a tendency to exacerbate price action in
either direction. Trading is an exercise
in balancing patience and panic. One of the hallmarks of inexperience is a
tendency to overreact to risk.
Here
is an overview of the US market behavior last week:
Index
|
19-Aug
|
Weekly Change
|
% Weekly
|
2016 YTD
|
Volatility of Index
|
Dow Jones
Industrials (DJIA)
|
18,552.57
|
(23.90)
|
-0.13%
|
6.47%
|
11.09% (VXD)
|
S&P 500
(SPX)
|
2,183.87
|
(0.18)
|
-0.01%
|
6.85%
|
11.34% (VIX)
|
NASDAQ 100
(NDX)
|
4,806.14
|
23.80
|
0.50%
|
4.55%
|
13.42% (VXN)
|
Russell 2000
(RUT)
|
1,233.40
|
4.97
|
0.40%
|
8.78%
|
15.53% (RVX)
|
S&P 100
(OEX)
|
964.80
|
(1.71)
|
-0.18%
|
5.86%
|
10.32% (VXO)
|
Crude Oil (CL
U6)
|
48.57
|
3.88
|
8.68%
|
31.02%
|
34.88%(OVX)
|
CBOE Volatility
Index (VIX)
|
11.64
|
0.09
|
0.78%
|
NA
|
“Nothin’ goin’ down at all.” The VIX reacted with nothing in response to the equity market’s nothing. The August VIX futures contract expired on Wednesday. The September contract (VXU6 – 9/21/2016) is the front month. The November 2016 through April 2017 futures showed normal gains despite the spot VIX being down almost 2%. The CBOE Mid-term Volatility Index (6 month) was up 1%, reflecting the relative strength of the of the longer term VIX futures. The spot VIX – as evidenced in the following price chart – closed at the lower end of its two year price range.
Trader and analyst sentiment seem to be pointed in the direction of a higher VIX (and lower S&P 500) over the next few months. When I look at charts, I am reminded by the succinct advice of the oldest trading member on the CBOE floor some thirty years ago: “Frankie, every boat that ever sank had charts.” You are responsible for your own navigation.
Here is an overview of last week for the VIX and
related products:
Indexes
|
Ticker
|
19-Aug
|
12-Aug
|
Change
|
% Change
|
CBOE Volatility
Index
|
VIX
|
11.34
|
11.55
|
(0.21)
|
-1.82%
|
VIX September
Future (9/21/2016)
|
VXU6
|
14.750
|
14.975
|
(0.23)
|
-1.50%
|
VIX October
Future (10/19/2016)
|
VXV6
|
16.675
|
16.725
|
(0.05)
|
-0.30%
|
VIX November
Future (10/19/2016)
|
VXX6
|
17.725
|
17.625
|
(0.10)
|
0.57%
|
CBOE Short-term
Volatility Index
|
VXST
|
9.40
|
9.54
|
(0.14)
|
-1.47%
|
CBOE 3 Month
Volatility Index
|
VXV
|
15.13
|
15.26
|
(0.13)
|
-0.85%
|
CBOE Mid-term
Volatility Index (6 month)
|
VXMT
|
17.71
|
17.52
|
0.19
|
1.08%
|
VIX of VIX
|
VVIX
|
82.44
|
94.49
|
(12.05)
|
-12.75%
|
CBOE SKEW Index
|
SKEW
|
136.58
|
132.13
|
4.45
|
3.37%
|
Long VIX ETP's
|
|||||
ProShares Ultra
VIX Short Term Futures ETF
|
UVXY
|
19.75
|
20.70
|
(0.95)
|
-4.59%
|
iPath S&P
500 VIX Short Term Futures ETN
|
VXX
|
36.13
|
36.95
|
(0.82)
|
-2.22%
|
ProShares VIX
Short Term Futures ETF
|
VIXY
|
30.01
|
30.66
|
(0.65)
|
-2.12%
|
iPath S&P
500 VIX Mid-Tem Futures ETN
|
VXZ
|
38.90
|
38.47
|
0.43
|
1.12%
|
Inverse VIX ETP's
|
|||||
ProShares Short
VIX Short Term Future ETF
|
SVXY
|
73.44
|
72.11
|
1.33
|
1.84%
|
Daily Inverse
VIX Short Term ETN
|
XIV
|
37.55
|
36.85
|
0.70
|
1.90%
|
The week of August 22 includes reports on new home sales,
existing home sales, and durable goods orders.
The major economic announcement will be the release of the second
estimate of the second quarter GDP. The
second quarter earnings reporting season is nearly over. The lack of earnings reports will
significantly reduce the amount of individual corporate news. The dearth of
economic reports and the lack of corporate news moves attention to monetary
policy.
On Thursday and Friday,
the Kansas City Federal Reserve Bank hosts an annual monetary policy symposium,
discussing "Designing Resilient Monetary Policy Frameworks for the Future,"
in Jackson Hole, Wyoming. This event is closely watched by market players. In
the past, the Jackson Hole stage has been used by Fed chairs to speak on
prospects for US and global economies, in addition to discussing the direction and
timing of future interest rates.
Do not take an early
lunch on Friday with standing opening orders.
Fed Chair Janet Yellen Janet Yellen will be speaking at 11AM EDT. Traders will be waiting to react to her
comments.
The earnings highlights this week for widely held and
actively traded stocks include: Nordson, Toll Brothers, J.M. Smucker, Dollar
General, Dycom Industries, La-Z-Boy, Intuit, Best Buy, HP, Guess?,
Williams-Sonoma, Sanderson Farms, Signet Jewelers, Dollar Tree, GameStop,
Tiffany &Co, Medtronic, Autodesk, Tech Data, Movado, Ulta Salon, and Big
Lots.
I have an expanded initial scan for earnings play
candidates over the next month. You
should further filter any of the stocks with your own risk/reward criteria. This scan is available as a PDF. Contact me a fjfahey@gmail.com if you would like it sent to you or if you would like
to be removed from the distribution list for additional scans.
Symbol
|
Company Name
|
Aug 19 Close
|
IV30
|
B/A
|
DATE
|
OPT VOL
|
HAIN
|
Hain Celestial
Group Inc
|
$38.31
|
50.43
|
AMC
|
29-Aug
|
5575
|
PANW
|
Palo Alto
Networks Inc
|
$137.09
|
49.73
|
AMC
|
30-Aug
|
8123
|
VEEV
|
Veeva Systems
Inc
|
$39.72
|
44.80
|
AMC
|
30-Aug
|
1169
|
CRM
|
salesforce.com,
inc.
|
$76.91
|
38.13
|
AMC
|
31-Aug
|
16291
|
FIVE
|
Five Below Inc
|
$46.91
|
48.02
|
AMC
|
31-Aug
|
1445
|
AMBA
|
Ambarella Inc
|
$63.64
|
52.24
|
AMC
|
1-Sep
|
5728
|
AVGO
|
Broadcom Ltd
|
$173.93
|
36.67
|
AMC
|
1-Sep
|
9405
|
LULU
|
Lululemon
Athletica inc.
|
$80.09
|
40.25
|
AMC
|
1-Sep
|
11033
|
Advice to stimulate your imagination:
"Don't try to buy at the bottom
and sell at the top.
It can't be done except by
Liars." Bernard Baruch
“In the middle of difficulty lies opportunity” Albert
Einstein
"If
you spend more than 13 minutes analyzing economic and market forecasts,
you've
wasted 10 minutes" - Peter Lynch
"The
market can remain irrational longer than you can remain solvent." - John
Keynes
|
Economic: Chicago Fed National Activity Index – 8:30.
International Economic: No major announcements.
Earnings: No earnings announcements meeting scan criteria.
Tuesday August 23:
Economic: Redbook – 8:55, Richmond Red Manufacturing Index – 9:00.
International Economic:
Germany PMI Manufacturing Flash -3:30AM, EMU PMI Manufacturing Flash –
4:00AM, Great Britain CBI Industrial Trends Survey – 6:00AM, EMU EC Consumer
Confidence – 10:00.
Earnings:
Wednesday August 24:
Economic: MBA Mortgage Applications – 7:00, FHFA House Price Index – 9:00, PMI Manufacturing Index Flash – 9:45, Existing Home Sales – 10:00, EIA Petroleum Status Report - 10:30.
Thursday August 25:
Economic: Weekly Jobless Claims – 8:30, Durable Goods Orders – 6:30, Bloomberg Consumer Comfort Index – 9:45, EIA Natural Gas Report – 10:30< Kansas City Fed Manufacturing Index – 11:00.
Other: Kansas City Federal Reserve Bank hosts annual monetary
policy symposium, discussing "Designing Resilient Monetary Policy
Frameworks for the Future," in Jackson Hole, Wyoming. Symposium participants include prominent central bankers,
finance ministers, academics, and financial market participants from around the
world.
Earnings:
Friday August 26:
Economic: GDP – 8:30, International Trade in Goods – 8:30, Corporate Profits – 8:30, PMI Services Flash – 9:45. Consumer Sentiment – 10:00, Baker Hughes Rig Count – 1:00.
International Economic: France GDP – 2:45AM.
Other: Kansas City Federal Reserve Bank hosts annual monetary policy symposium, discussing "Designing Resilient Monetary Policy Frameworks for the Future," in Jackson Hole, Wyoming. Janet Yellen speaks at 11:00AM, Symposium participants include prominent central bankers, finance ministers, academics, and financial market participants from around the world.
Earnings:
Monday August 29:
Economic: Personal Income and Outlays – 8:30, Dallas Fed Manufacturing Survey – 10:30.
International Economic: Japan Unemployment Rate and Household Spending – 7:30PM.
Earnings:
Earnings:
Symbol
|
Company Name
|
August 19 Close
|
IV30
|
B/A
|
AVGOPTVOL
|
ALR
|
Alere Inc
|
$40.21
|
48.60
|
BMO
|
2002
|
BBY
|
Best Buy Co Inc
|
$33.20
|
39.42
|
BMO
|
9060
|
TOL
|
Toll Brothers
Inc
|
$28.62
|
30.28
|
BMO
|
1659
|
INTU
|
Intuit Inc.
|
$112.54
|
25.13
|
AMC
|
1273
|
TV
|
Grupo Televisa
SAB
|
$27.23
|
23.67
|
1382
|
Wednesday August 24:
Economic: MBA Mortgage Applications – 7:00, FHFA House Price Index – 9:00, PMI Manufacturing Index Flash – 9:45, Existing Home Sales – 10:00, EIA Petroleum Status Report - 10:30.
International Economic: Germany GDP - 2:00AM.
Earnings:
Symbol
|
Company Name
|
August 19 Close
|
IV30
|
B/A
|
AVGOPTVOL
|
CTRP
|
Ctrip.com
International, Ltd. (ADR)
|
$46.29
|
41.06
|
AMC
|
9562
|
PVH
|
PVH Corp
|
$106.50
|
37.22
|
AMC
|
1487
|
WDAY
|
Workday Inc
|
$81.37
|
46.91
|
AMC
|
3460
|
WSM
|
Williams-Sonoma,
Inc.
|
$52.22
|
41.93
|
2471
|
Thursday August 25:
Economic: Weekly Jobless Claims – 8:30, Durable Goods Orders – 6:30, Bloomberg Consumer Comfort Index – 9:45, EIA Natural Gas Report – 10:30< Kansas City Fed Manufacturing Index – 11:00.
International Economic: France Business Climate Indicator – 2:45,
Japan CPI – 7:30PM.
Symbol
|
Company Name
|
August 19 Close
|
IV30
|
B/A
|
AVGOPTVOL
|
SIG
|
Signet Jewelers
Ltd.
|
$92.94
|
50.83
|
DMT
|
5460
|
BURL
|
Burlington
Stores Inc
|
$78.04
|
36.34
|
BMO
|
1340
|
DG
|
Dollar General
Corp.
|
$91.69
|
26.64
|
BMO
|
3653
|
DLTR
|
Dollar Tree,
Inc.
|
$95.86
|
29.76
|
BMO
|
4514
|
GME
|
GameStop Corp.
|
$31.17
|
44.04
|
BMO
|
7993
|
GLNG
|
Golar LNG
Limited (USA)
|
$20.63
|
65.44
|
BMO
|
2049
|
TIF
|
Tiffany &
Co.
|
$68.22
|
34.00
|
BMO
|
5030
|
ADSK
|
Autodesk, Inc.
|
$63.50
|
35.26
|
AMC
|
1269
|
SPLK
|
Splunk Inc
|
$63.83
|
47.10
|
AMC
|
3874
|
ULTA
|
Ulta Salon,
Cosmetics & Frag
|
$271.59
|
37.38
|
AMC
|
3535
|
Friday August 26:
Economic: GDP – 8:30, International Trade in Goods – 8:30, Corporate Profits – 8:30, PMI Services Flash – 9:45. Consumer Sentiment – 10:00, Baker Hughes Rig Count – 1:00.
International Economic: France GDP – 2:45AM.
Other: Kansas City Federal Reserve Bank hosts annual monetary policy symposium, discussing "Designing Resilient Monetary Policy Frameworks for the Future," in Jackson Hole, Wyoming. Janet Yellen speaks at 11:00AM, Symposium participants include prominent central bankers, finance ministers, academics, and financial market participants from around the world.
Earnings:
Symbol
|
Company Name
|
August 19 Close
|
IV30
|
B/A
|
AVGOPTVOL
|
BIG
|
Big Lots, Inc.
|
$54.49
|
45.21
|
BMO
|
1181
|
TTM
|
Tata Motors
Limited (ADR)
|
$38.73
|
33.12
|
1193
|
Monday August 29:
Economic: Personal Income and Outlays – 8:30, Dallas Fed Manufacturing Survey – 10:30.
International Economic: Japan Unemployment Rate and Household Spending – 7:30PM.
Earnings:
Symbol
|
Company Name
|
August 19 Close
|
IV30
|
B/A
|
AVGOPTVOL
|
HAIN
|
Hain Celestial
Group Inc
|
$38.31
|
50.43
|
AMC
|
5575
|
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