"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:| Index | 12-May | Change | % Weekly | 2017 YTD | Volatility of Index |
| Dow Jones Industrials (DJIA) | 20,896.61 | (110.33) | -0.53% | 5.74% | 10.63% (VXD) |
| S&P 500 (SPX) | 2,390.00 | (9.00) | -0.38% | 6.78% | 10.40% (VIX) |
| NASDAQ 100 (NDX) | 5,686.81 | 40.72 | 0.72% | 16.93% | 12.30% (VXN) |
| Russell 2000 (RUT) | 1,382.77 | (14.23) | -1.02% | 1.89% | 15.78% (RVX) |
| S&P 100 (OEX) | 1056.81 | (4.45) | -0.42% | 6.59% | 9.56% (VXO) |
| Crude Oil (CLM7) | 47.82 | 1.34 | 2.89% | -11.26% | 33.72%(OVX) |
| Dow Jones Transportation (TRAN) | 4393.28 | (61.32) | -1.38% | 8.44% | NA |
| CBOE Volatility Index (VIX) | 10.4 | (0.17) | -1.61% | NA |
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 bullish VIX 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:
| Indexes | Ticker | 12-May | 5-May | Change | % Change |
| CBOE Volatility Index | VIX | 10.40 | 10.57 | (0.17) | -1.61% |
| VIX May Future (5/17/2017) | VXK7 | 11.225 | 11.775 | (0.55) | -4.67% |
| VIX June Future (6/21/2017) | VXM7 | 12.425 | 12.675 | (0.25) | -1.97% |
| VIX July Future (6/18/2017) | VXN7 | 13.625 | 13.675 | (0.05) | -0.37% |
| CBOE Short-term Volatility Index | VXST | 9.40 | 11.44 | (2.04) | -17.83% |
| CBOE 3 Month Volatility Index | VXV | 12.97 | 12.85 | 0.12 | 0.93% |
| CBOE Mid-term Volatility Index (6 month) | VXMT | 15.10 | 14.65 | 0.45 | 3.07% |
| VIX of VIX | VVIX | 82.50 | 80.65 | 1.85 | 2.29% |
| CBOE SKEW Index | SKEW | 128.21 | 131.36 | (3.15) | -2.40% |
| Long VIX ETP's | |||||
| ProShares Ultra VIX Short Term Futures ETF | UVXY | 12.41 | 13.15 | (0.74) | -5.63% |
| iPath S&P 500 VIX Short Term Futures ETN | VXX | 14.04 | 14.45 | (0.41) | -2.84% |
| ProShares VIX Short Term Futures ETF | VIXY | 11.72 | 12.05 | (0.33) | -2.74% |
| iPath S&P 500 VIX Mid-Term Futures ETN | VXZ | 24.91 | 24.48 | 0.43 | 1.76% |
| Inverse VIX ETP's | |||||
| ProShares Short VIX Short Term Future ETF | SVXY | 154.45 | 150.07 | 4.38 | 2.92% |
| Daily Inverse VIX Short Term ETN | XIV | 79.85 | 77.63 | 2.22 | 2.86% |
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:
| SYMBOL | B/A | 5/12 Close | AVGVOL | MEAN | SMA 10 | 50% FIB | DATE |
| NOAH | AMC | $25.83 | 195,098 | 6.17% | $25.51 | $25.95 | 15-May |
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:
| SYMBOL | B/A | 5/12 Close | AVGVOL | MEAN | SMA 10 | 50% FIB |
| DKS | BMO | $48.06 | 2,777,080 | 7.76% | $50.87 | $50.19 |
| HD | BMO | $156.92 | 4,009,560 | 1.75% | $155.97 | $151.96 |
| MMYT | BMO | $38.00 | 404,490 | 1.06% | $38.02 | $37.42 |
| SSYS | BMO | $29.96 | 790,366 | 6.82% | $26.83 | $24.91 |
| TJX | BMO | $77.31 | 3,715,510 | 1.86% | $78.97 | $78.36 |
| VOD | BMO | $27.58 | 4,035,610 | 2.59% | $26.72 | $26.41 |
| VRTU | BMO | $31.35 | 465,180 | 2.41% | $31.28 | $29.75 |
| WB | BMO | $62.44 | 1,559,420 | 9.23% | $57.89 | $56.05 |
| ACXM | AMC | $28.04 | 321,598 | 9.17% | $28.78 | $28.01 |
| HLI | AMC | $34.48 | 287,677 | 2.77% | $34.09 | $34.37 |
| JACK | AMC | $100.30 | 722,261 | 9.60% | $103.48 | $101.83 |
| RRGB | AMC | $57.65 | 319,523 | 8.93% | $59.15 | $57.67 |
| SINA | AMC | $83.50 | 852,610 | 10.60% | $79.19 | $76.22 |
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:
| SYMBOL | B/A | 5/12 Close | AVGVOL | MEAN | SMA 10 | 50% FIB |
| TGT | BMO | $55.80 | 7,452,840 | 8.15% | $56.96 | $55.69 |
| CSCO | AMC | $33.45 | 19,040,800 | 2.78% | $34.07 | $33.51 |
| LB | AMC | $49.55 | 4,806,020 | 7.10% | $52.03 | $48.35 |
| SNPS | AMC | $74.42 | 1,469,630 | 4.52% | $74.04 | $72.62 |
| SQM | AMC | $34.34 | 734,003 | 3.48% | $34.45 | $35.27 |
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:
| SYMBOL | B/A | 5/12 Close | AVGVOL | MEAN | SMA 10 | 50% FIB |
| BABA | BMO | $120.34 | 9,097,630 | 3.67% | $117.57 | $113.63 |
| EXP | BMO | $98.54 | 579,985 | 2.27% | $98.83 | $97.31 |
| MNRO | BMO | $50.40 | 336,656 | 4.50% | $51.71 | $51.92 |
| NGG | BMO | $66.98 | 548,097 | 2.16% | $65.86 | $65.18 |
| PLCE | BMO | $122.00 | 527,108 | 9.14% | $117.62 | $114.42 |
| RL | BMO | $76.40 | 1,254,960 | 6.90% | $81.16 | $81.17 |
| WMT | BMO | $75.71 | 8,314,610 | 4.38% | $76.02 | $74.22 |
| ADSK | AMC | $95.39 | 2,110,560 | 4.05% | $93.47 | $89.50 |
| AMAT | AMC | $43.44 | 8,653,490 | 5.44% | $41.90 | $40.44 |
| CRM | AMC | $89.04 | 4,141,870 | 3.74% | $86.89 | $85.47 |
| GLOB | AMC | $36.99 | 193,969 | 6.14% | $37.33 | $35.88 |
| GPS | AMC | $25.07 | 5,158,270 | 6.94% | $26.17 | $24.88 |
| MCK | AMC | $144.58 | 1,620,140 | 9.34% | $141.01 | $140.30 |
| RAVN | AMC | $31.00 | 176,069 | 5.70% | $31.11 | $29.90 |
| ROST | AMC | $63.49 | 2,441,200 | 3.81% | $64.93 | $64.50 |
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:
| SYMBOL | B/A | 5/12 Close | AVGVOL | MEAN | SMA 10 | 50% FIB |
| CPB | BMO | $57.22 | 1,634,260 | 5.68% | $57.29 | $57.14 |
| DE | BMO | $113.11 | 2,336,050 | 7.75% | $112.37 | $110.61 |
| FL | BMO | $74.88 | 1,868,780 | 6.86% | $76.66 | $74.51 |
Monday May 22:
Economic: Chicago Fed National Activity Index – 8:30.
International Economic: Japan All Industry Index – 1:30AM.
Earnings:
| SYMBOL | B/A | 5/12 Close | AVGVOL | MEAN | SMA 10 | 50% FIB |
| BAH | BMO | $35.99 | 1,064,660 | 4.09% | $35.74 | $35.48 |
| KLXI | BMO | $47.11 | 453,615 | 6.02% | $47.60 | $46.23 |
| A | AMC | $56.16 | 1,844,680 | 2.77% | $56.20 | $54.61 |
| LXFT | AMC | $64.20 | 171,639 | 6.05% | $62.72 | $62.35 |
| NDSN | AMC | $129.31 | 272,098 | 7.79% | $127.69 | $124.69 |
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