"Chance favors the Prepared Mind." - Louis Pasteur
"Experience traders control risk, inexperienced traders chase gains." - Alan Farley
“I had nothing to offer anybody except my own confusion.” – Jack Kerouac
“You should never make predictions, especially about the future.” - Samuel Goldwyn
Sorry for the delay in posting. A full weekend with family has resulted in a truncated version of this blog. The numbers for last week paint a picture – with or without commentary. The divergence between the major indexes was of a magnitude I have rarely seen during my years as a trader. A FANG sell-off (Facebook, Apple, Amazon, Netflix, and Google) had minimal impact upon other equity indexes. The sell-off was a classic stock rotation with money going from FANG and other tech stocks to the financial sector. The rotation of sectors and increasing intraday movement are characteristic of late stage bull markets.
| Index | 9-Jun | Change | % Weekly | 2017 YTD | Volatility of Index |
| Dow Jones Industrials (DJIA) | 21271.97 | 65.68 | 0.31% | 7.64% | 10.59% (VXD) |
| S&P 500 (SPX) | 2431.77 | (7.30) | -0.30% | 8.64% | 10.70% (VIX) |
| NASDAQ 100 (NDX) | 5741.94 | (139.52) | -2.37% | 18.06% | 18.13% (VXN) |
| Russell 2000 (RUT) | 1420.71 | 17.32 | 1.23% | 4.68% | 15.83% (RVX) |
| S&P 100 (OEX) | 1071.90 | (2.46) | -0.23% | 8.12% | 10.39% (VXO) |
| Crude Oil (CLN7) | 46.06 | (1.68) | -3.52% | -14.53% | 32.59%(OVX) |
| Dow Jones Transportation (TRAN) | 4616.29 | 17.91 | 0.39% | 13.94% | NA |
| CBOE Volatility Index (VIX) | 10.70 | 0.95 | 9.74% | NA |
The VIX gained nearly 10% last week. The monthly VIX futures basically held constant. The Short-Term Volatility Index (VXST) show a gain of Just over 22%. The tenor of the VIX options market was modestly bullish. Russell Rhoads’, CBOE VIX guru, trade of the week took place on Friday. Per Russell, “A trader purchased 3000 VIX Jun 21st 14 Calls at 0.36 and then sold 4500 of the VIX Jun 21st 17 Calls for 0.18.” This ratio spread was done for even money.
| Indexes | Ticker | 9-Jun | 2-Jun | Change | % Change |
| CBOE Volatility Index | VIX | 10.70 | 9.75 | 0.95 | 9.74% |
| VIX June Future (6/21/2017) | VXM7 | 11.725 | 11.625 | 0.10 | 0.86% |
| VIX July Future (7/18/2017) | VXN7 | 12.575 | 12.525 | 0.05 | 0.40% |
| VIX August Future (8/18/2017) | VXQ7 | 13.425 | 13.325 | 0.10 | 0.75% |
| CBOE Short-term Volatility Index | VXST | 10.37 | 8.47 | 1.90 | 22.43% |
| CBOE 3 Month Volatility Index | VXV | 12.96 | 12.46 | 0.50 | 4.01% |
| CBOE Mid-term Volatility Index (6 month) | VXMT | 15.17 | 14.88 | 0.29 | 1.95% |
| VIX of VIX | VVIX | 87.41 | 83.62 | 3.79 | 4.53% |
| CBOE SKEW Index | SKEW | 131.26 | 124.23 | 7.03 | 5.66% |
| Long VIX ETP's | |||||
| ProShares Ultra VIX Short Term Futures ETF | UVXY | 10.64 | 10.51 | 0.13 | 1.24% |
| iPath S&P 500 VIX Short Term Futures ETN | VXX | 13.31 | 13.21 | 0.10 | 0.76% |
| ProShares VIX Short Term Futures ETF | VIXY | 11.08 | 10.99 | 0.09 | 0.82% |
| iPath S&P 500 VIX Mid-Term Futures ETN | VXZ | 23.93 | 24.17 | (0.24) | -0.99% |
| Inverse VIX ETP's | |||||
| ProShares Short VIX Short Term Future ETF | SVXY | 155.31 | 156.65 | (1.34) | -0.86% |
| Daily Inverse VIX Short Term ETN | XIV | 80.36 | 81.05 | (0.69) | -0.85% |
The economic calendar heats with reports on industrial production, retail sales, consumer prices and housing starts. The highlight of the week will be the Fed’s rate decision on Wednesday and its comments in the subsequent press conference. will be the highlight of the week. The wild card, as always, will be potential political fireworks from inside the Beltway. International economic news will be highlighted by announcements by the Bank of Japan and the Bank of England. Both are expected to maintain current policy and interest rates.
This earnings season is over. There are only a smattering of earnings announcement this week. 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 H&R Block, John Wiley & Sons, Kroger, and Bob Evans Farms.
Advice to stimulate your imagination:
“The purpose of technology is not to confuse the brain but to serve the body.” - – William S. Burroughs
“In the business world, the rearview mirror is always clearer than the windshield.” - Warren Buffett
“A point of view can be a dangerous luxury when substituted for insight and understanding.” - Marshall McLuhan
"If you spend more than 13 minutes analyzing economic and market forecasts,
you've wasted 10 minutes" Peter Lynch
Monday June 12:
Economic: No major announcements
International Economic: No major announcements.
Earnings: None meeting criteria.
Tuesday June 13:
Economic: NFIB Small Business Optimism Index - 8:30, PPI – FD – 8:30, Redbook – 8:55.
International Economic: Great Britain CPI & PPI – 4:30AM, China Fixed Asset Investment, Industrial Production, and Retail Sales – 10:00PM.
Other: FOMC Meeting Begins. New York Federal Reserve President William Dudley speaks about the Impact of Regulation on a Bank's Internal Capital Allocation at the Prudential Bank Regulation Conference, in Washington D.C. – 1:45PM.
Earnings:
| SYMBOL | B/A | 2-Jun | AVGVOL | AVG MOVE | SMA 10 | 50% FIB |
| HRB | AMC | $26.19 | 3,029,110 | 10.04% | $26.51 | $26.02 |
Wednesday June 14:
Economic: MBA Mortgage Applications – 7:00, Consumer Price Index – 8:30, Retail Sales – 8:30, Business Inventories – 10:00, EIA Petroleum Status Report – 10:30.
International Economic: Germany CPI – 2:00Am, Great Britain Labour Market Report – 4:00AM, Eurozone Industrial Production – 5:00AM.
Other: FOMC Meeting Announcement 2:00PM, FOMC Forecasts – 2:00PM, Fed Chair Press Conference – 2:20.
Earnings:
| SYMBOL | B/A | 2-Jun | AVGVOL | AVG MOVE | SMA 10 | 50% FIB |
| JBL | AMC | $31.04 | 1,954,480 | 6.04% | $30.63 | $29.77 |
Thursday June 15:
Economic: Weekly Jobless Claims – 8:30, Philadelphia Fed Business Outlook Survey – 8:30, Empire State Manufacturing Survey – 8:30 – 8:30, Import and Export Prices – 8:30, Industrial Production – 9:15, Bloomberg Consumer Confidence – 9:45, Housing Market Index – 10:00, EIA Natural Gas Report – 10:30, Money Supply – 4:30.
International Economic: Great Britain Retail Sales- 4:30AM, Eurozone Merchandise Trade - 5:00AM
Other: Bank of England Announcement – 7:00AM.Bank of Japan Announcement.
Earnings:
| SYMBOL | B/A | 2-Jun | AVGVOL | AVG MOVE | SMA 10 | 50% FIB |
| KR | BMO | $30.78 | 8,614,880 | 2.22% | $29.00 | $29.73 |
| BOBE | BMO | $71.35 | 297,711 | 6.02% | $71.29 | $70.39 |
| FNSR | AMC | $25.04 | 4,173,020 | 11.04% | $25.56 | $24.97 |
Friday June 16:
Quadruple Witching
Economic: Housing Starts – 8:30, Atlanta Fed Business Inflation Expectations – 10:00, Consumer Sentiment – 10:00, Baker Hughes Rig Count – 1:00.
International Economic: Eurozone HICP – 4:00AM.
Other: Dallas Federal Reserve Bank President Robert Kaplan to speak at a moderated Q&A held by Park Cities Rotary Club in Dallas, with audience and media Q&A – 12:45PM.
Earnings: None meeting criteria.
Monday June 19:
Economic: No major announcements
International Economic: No major announcements.
Other: New York Federal Reserve Bank President William Dudley will speak at the Business Roundtable Meeting held by the North Country Chamber of Commerce and North Country Regional Economic Development Council, in Plattsburg, NY – 8:00AM, President Federal Reserve Bank of Chicago Charles Evans will speak about current economic conditions or monetary policy at the Money Marketeers of New York University event in New York City, with audience and media Q&A – 7:00PM.
Earnings: None meeting criteria.
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