"Chance favors the prepared mind."-- Louis Pasteur

It was a very interesting week.   The major indexes, with the possible exception of the Dow Jones Industrials, moved sideways. The Dow Jones Industrial Average closed down 151.89 points or – 1.15%  The Russell 2000 (RUT) closed at 830.03 up 1.12 points or plus 0.14%.   The S&P 500 (SPX) was down 7.06 points or -0.50% to 1,397.11. The NASDAQ 100 (NDX) up for the sixth week in a row at 2,728.55 – up 15.77 points or 0.58%.  The VIX confirmed the sideways sentiment by closing at 14.82 –  down 2.42%.

The market mavens parsed the behavior of the market a number of different ways.  A sampling of headlines provides a sense of the divergence of opinions -   “Market Tremors Signal That Something Wicked This Way Comes,” “Goldman Calls Bright Outlook for Equity Market,” “Foreign Jitters Translate to Dow and S&P Losses.”  I could provide further examples of schizophrenic headlines.    These headlines often serve no purpose other than to support one’s own market call.  Is it Sach’s “The Long Good Buy” or is “Something Wicked” on the horizon?  I can trade my own position, understand the implications of a market move up or down, and be prepared with a rational response to any market eventuality.

Here is a capsule view of last week’s market behavior:

A large number of stocks go ex-dividend this week.  Check your covered call positions for the risk of early assignment for the dividend.  Friday is the last day of the first quarter.   The end of the quarter can give rise to “window dressing.”   This end of quarter behavior can lead to  temporary increases in price as institutional investors and hedge funds rebalance their holdings. There is a dearth of earnings announcements.

Economic announcements focus on housing, manufacturing and consumer confidence.   Market technicians are focusing on 50 day moving averages as support in the indexes.    Be aware of these numbers,   It appears that, once again, we can expect a week with no scheduled announcements which can be market movers.  Be careful, be disciplined, and to not allow yourself to be caught unaware.

Remember:

“Chance favors the Prepared Mind.” – Louis Pasteur

This week’s economic news (All times are Eastern Time.  Dates and times are subject to change):

Monday March 26:

Economic:  Chicago Fed National Activity Index – 8:30, Pending Home Sales Index 0 10:00, Dallas Fed Manufacturing Survey – 10:00,

Earnings: BMO:  Cal-Maine Food (CALM), China Housing & Land(CHLN), Ivanhoe Mines (IVN);  AMC:  Apollo Group (APOL).

Other:  Ben Bernanke, Fed Chairman,  speaks at the National Association for Business Economics in Arlington, Va. – 8:00,  New York Fed President William Dudley speaks before the House Committee on Financial Services on Federal Reserve aid to the euro zone, Doug Elmendorf, Congressional Budget Office director, follows Bernanke at 8:45.

Tuesday March 27:

Economic:  ICSC-Goldman Sachs Weekly Retail Store Sales – 7:45, Redbook – 8:55, S&P Case-Shiller Home Price Index – 9:00, Consumer Confidence – 10:00, Richmond Fed Manufacturing Index – 10:00, State Street Investor Confidence Index – 10:00..

Earnings: BMO:  Lennar Corp (LEN), McCormick & CO(MKC), Neogen (NEOG), Walgreen (WAG); AMC: Oxford Industries (OXM), Phillips-Van Heusen (PVH), Robbins &Myers (RBN), SYNNEX (SNX).

Other: Boston Federal Reserve Bank Pres. Eric Rosengren speaks to the National Institute for Economic and Social Research in London,  Federal Reserve Chairman Ben Bernanke delivers third of four lectures at the George Washington School of Business – 12:45.

Wednesday March 28:,

Economic:   MBA Purchase Applications – 7:00, Durable Goods Orders – 8:30 , EIA Petroleum Status Report – 10:30.

Earnings: BMO: Family Dollar (FDO), Jos. A Bank Clothiers (JOSB), Lindsay Corp (LNN), Progress Software (PRGS), Teavana (TEA);  AMC:  HB Fuller (FUL), Mosaic (MOS), Paychex (PAYX), Red Hat (RHT), Texas Industries (TXI).

Other: James Bullard, St. Louis Federal Reserve Bank President, speaks to a monetary policy conference at Tsinghua University in Beijing – 9:00 PM.

Thursday March 29:

Economic:   GDP – 8:30, Jobless Claims – 8:30, Corporate Profits – 8:30, Bloomberg Consumer Confidence Index – 9:45.  EIA Natural Gas Status Report – 10:30, Farm Prices – 3:00.

Earnings:  BMO: Best Buy (BBY), Movado Group (MOV), Shaw Group (SHAW), Worthington Industries (WOR); AMC:  Research in Motion (RIMM), Tibco Software (TIBX).

Other: Philadelphia Federal Reserve Bank Pres. Charles Plosser speaks to the Rotary Club of Wilmington – 1:00,  Atlanta Federal Reserve Bank Pres. Jeffrey Lacker speaks to the UNC School of Law’s Banking Institute – 6:45.

Friday March 30:

Economic:  Personal Income and Outlays – 8:30, Chicago PMI – 9:45, Reuter’s/University of Michigan’s Consumer Sentiment Index

Earnings: BMO: Finish Line (FINL); AMC:  Northwest Pie (NWPX).

Other:  Last trading day of the first quarter. Euro-zone finance ministers discuss the parameters of a permanent rescue fund.

Monday April 2:

Economic:  Dow Jones Economic Sentiment Indicator – 9:45, ISM Manufacturing Index – 10:00, Construction Spending – 10:00.

Earnings:  No optionable stocks with earnings.

Other:

"Chance favors the prepared mind."-- Louis Pasteur

The bull is back. It is questionable whether it was ever really gone.  There was a global rally of 1% to 2% in every national stock market with the exception of mainland China.  The rally was led by the banks – banks announced a dividend increases combined with stock buybacks, bank stress tests were very positive, and the Fed sounded no alarm bells.  In fact , the Fed sounded bullish assessments of the economy.   The Dow Jones Industrial Average closed at its highest level since December 2007.  The DJIA was up 310 points or 2.40%.  The Russell 2000 (RUT) closed at 828.91 up 11.70 points or plus 1.43%.   The S&P 500 (SPX) was up 69.93 points or 2.43% to 1,404.17. The NASDAQ 100 (NDX) closed the week at 2,712.78 – up 65.93 points or 2.49%.  The VIX confirmed the bullish sentiment by closing at 14.47 or down 15.43%.

The level of concern and fear in this market is hard to discern and the bears are starting to capitulate.  I hear only the smallest of grumblings from the last of that vanishing breed.  Hard landing in China….mumble, mumble…..eurozone sovereign debt …..yet more mumbling

Here is a capsule view of last week’s market behavior:

On the surface it appears the coming week could be very quiet,  There is a dearth of earnings and economic reports.  This is the type of market where I find myself lost  in a private reverie which ends up with me getting thwacked in the back of the head by a two by four.  In these types of environments I need to redouble my efforts to stay focused.  It is easy to ignore discipline and go with the flow,  Be careful, be disciplined, and to not allow yourself to be caught unaware.

Remember:

“Chance favors the Prepared Mind.” – Louis Pasteur

This week’s economic news (All times are Eastern Time.  Dates and times are subject to change):

Monday March 19:

Economic:  Housing Market Index – 10;00,

Earnings: BMO:  Interoil (IOC):  AMC:  Adobe Systems (ADBE), Focus Media (FMCN),.

Other:

Tuesday March 20:

Economic:  ICSC-Goldman Sachs Weekly Retail Store Sales – 7:45, Housing Starts – 8:30, Redbook – 8:55.

Earnings: BMO: (DSW), Jefferies Group (JEF), U.S. Silica (SLCA), Tiffany & Co. (TIF);  AMC: AAR (AIR), Cintas (CTAS), Harry Winston Diamond (HWD), Jabil Circuit (JBL), Oracle (ORCL).

Other:  Japanese Markets are closed.

Wednesday March 21:

Economic:   MBA Purchase Applications – 7:00, Existing Home Sales – 10:00, EIA Petroleum Status Report – 10:30.

Earnings: BMO: Actuant (ATU), Fred’s (FRED), General Mills (GIS), Clarcor (CLC), Discover Financial Services (DFS), HB Fuller (FUL), Herman Miller (MLHR).

Other:  .

Thursday March 22:

Economic:   Jobless Claims – 8:30, FHFA House Price Index – 10:00, Leading Indicators – 10:00, EIA Natural Gas Status Report – 10:30.

Earnings:  BMO:  ConAgra Foods (CAG), Dollar General (DG), FedEx (FDX), G-III Apparel (GIII), GameStop (GME), IHS (IHS), Lululemon Athletica (LULU), Perry Ellis (PERY), Signet Group (SIG), Talbots (TLB); AMC:  Accenture (ACN), Cost Plus (CPWM), Nike (NKE), Northwest Pipe (NWPX), Steelcase (SCS).

Other:

Friday March 23:

Economic:  New Home Sales – 10:00.

Earnings: BMO: Darden Restaurants (DRI), KB Home (KBH).

Other

Monday March 26:

Economic:  Chicago Fed National Activity Index – 10:30, Pending Homes Sales Index – 10:00, Dallas Fed manufacturing Survey – 10:30.

Earnings:  BMO:  Cal-Maine Food (CALM), Ivanhoe Mines (IVN);  AMC:  Apollo Group (APOL).

Frank Fahey is a mentor with DiscoverOptions, the educational arm of OptionVue Systems.  Inquiries should call 847-816-6610 or email info@DiscoverOptions.com.

"Chance favors the prepared mind." -- Louis Pasteur

Despite last week’s sideways movement, the sentiment in the stock markets remains overwhelmingly bullish.  The indexes remain just below multi-year highs.  The Russell 2000 was the biggest winner.  The RUT closed at 817.21 u[ 15.59 points or plus 1.94%.   The S&P 500 (SPX) was up 1.21 points or 0.09% to 1,1370.87. The NASDAQ 100 (NDX) closed the week at 2,646.85 – up 5.27 points or 0.20%.  The Dow Jones Industrial Average was the loser among the major indices.  The DJIA closed down 55.55 points or 0.43%.  The markets were remarkably resilient given the concerns which dominated the prior weekend.

The primary concern for last week was the gift which keeps on giving – Greek debt.  The private bondholders of Greek debt accepted the largest restructuring of sovereign debt in history.  The debt swap will create of a loss of over 74% for current bondholders and set the stage for a second bailout of over $170 billion.  The agreement to accept the loss of 75% has been characterized as a “credit event” rather than a “default.”  While the semantic differences were important to the stock markets,  I am sure it felt like a default to the bondholders.  The U.S. job numbers aided the market with the third straight monthly gain.  January was revised higher and the unemployment rate remained at 8.3%.

Other news provided some economic clouds on the horizon.  China has lowered it 2012 growth target to 7.5%.  This is an 8 year low.  China also released economic data portending an Chinese economic slowdown.  Tensions in the Mideast are causing growing concern.  Despite  agreements by many to wait and see if sanctions in Iran will work, gasoline prices continued an ongoing  upward trend.  This trend in gasoline prices was further fueled by calls for a more bellicose stance against Iran and military intervention in Syria’s internal strife.

Here is a capsule view of last week’s market behavior:

The earnings cycle is over.    The primary focus is not on Europe alone.  Investors, analysts and traders are paying closer attention to the Chinese economic juggernaut.  Any signs of further faltering in growth have the potential to adversely affect the U.S. markets.  The concern about economic growth has moved to Europe.  The European Central Bank (ECB) has forecasted economic contraction for 2012,  They did not share the projected amount of contraction.

The big news for the week is on Thursday.  The Fed will start making public the results of the initial stress test on the largest U.S. banks.  Any surprise will have a dramatic effect upon financial sector stocks and the market in general.  Consumer confidence and inflation numbers round out the rest of the economic news.

The coming week is highlighted by options and futures expirations.  Friday is a “quadruple witching hour.”  Remember that the last day of trading for the SPX, NDX and the RUT will be Thursday March 15.

Remember:

“Chance favors the Prepared Mind.” – Louis Pasteur

This week’s economic news (All times are Eastern Time.  Dates and times are subject to change):

Monday March 12:

Economic:  February Federal Treasury Budget – 2:00.

Earnings: BMO:  American Sates Water (AWR), Sasol Ltd. (SSL); AMC:   CallWave (CALL), Churchill Downs (CHDN),  Sun Hydraulics (SHNY),Urban Outfitters (URBN)

Other:  Euro-zone finance ministers decide on 130 billion bailout for Greece .  IMF announces participation in Greek bailout,

Tuesday March 13:

Economic:  NFIB Small Business Optimism Index – 7:30, ICSC-Goldman Sachs Weekly Retail Store Sales – 7:45, February Retail Store Sales – 8:30, Redbook – 8:55, January Business Inventories – 10:00, FIMC Meeting announcement – 2:15.

Earnings: BMO:  Ebix (EBIX), FactSet Research (FDS), Map Pharmaceuticals (MAPP); AMC:   Francescas Holdings (FRAN), Medifast (MED),.

Other:  Super Tuesday – Leaders of Germany and Italy meet.  My birthday.

Wednesday March 14:

Economic:   MBA Purchase Applications – 7:00, Current Account – 8:30, February Import and Export Prices – 8:30 , EIA Petroleum Status Report – 10:30, January Consumer Credit – 3:00..

Earnings: BMO: Braskem (BAK), GeoResources (GEOI), Neutral Tandem (IQNT), Guess? (GES), Redhook Ale Brewery (HOOK), Rue21 (RUE), Vera Bradley (VRA), Youku.com (YOKU.)

Other: Ben Bernanke speaks to the Independent Community Bankers Association conference in Nashville, TN.  .

Thursday March 15:

Economic:   JoblessClaims – 8:30, February Producer Price Index – 8:30, Empire State Manufacturing Survey – 8:30,  Treasury International Capital – 9:00,m Bloomberg Consumer Comfort Index – 9;45, March Philadelphia Fed Survey  – 10:00. EIA Natural Gas Status Report – 10:30.

Earnings:  BMO:  AMC Newtworks (AMCX), Cato Corp (CATO), Ross Store (ROSS), Scholastic Corp (SCHL), Marriott Vacation (VAC);  AMC:  Dole Food (DOLE), Enbridge Energies (EEP), Getty Realty (GTY), Sonosite (SONO).

Other:  Fed release stress test on big banks.   AM settled Indexes cease trading.  Settlement price determined by Friday’s opening.

Friday March 16:

Economic:  Consumer price Index – 8:30, Industrial Production – 9:15, Reutters/University of Michigan Consumer Sentiment – 9:55.

Earnings: BMO XhipMOS Tech (IMOS), Rentech Nitrogen (RNF).

Other:   Quadruple Witching

Monday March 17:

Economic:  Housing Market Index – 10;00,

Earnings: AMC:

Other:  Dallas Federal Reserve Bank Pres.,  Richard W. Fisher, speaks to the Centre for the Study of Financial Innovation in London – 7:30.  New York Federal Reserve Bank Pres. William Dudley visits Long Island, delivering a speech and meeting with local community and business leaders.

Frank Fahey is a mentor with DiscoverOptions, the educational arm of OptionVue Systems.  Inquiries should call 847-816-6610 or email info@DiscoverOptions.com.

"Chance favors the prepared mind." -- Louis Pasteur

There was continued sideways movement in the markets.  The past week was the close of the best February since 1998.   The equity markets stayed in a range near post-2008 highs.   On Tuesday, the Dow Jones Industrial Average (DJIA) closed above 13,000 for the first time since May 2008.  The DJIA closed the week down 5.38 or 0.04%.  This was the first weekly loss in three weeks. The S&P 500 (SPX) was up 3.89 points or 0.28% to 1,369.63. The NASDAQ composite tested 3,000 for the first time since 2000.  The NASDA 100 (NDX) closed the week at 2,641.58 – up 37.37 points or 1.43%.  The strength of the NASSDAQ Composite and NASDAQ 100 reflect the impact and weighting of Apple (AAPL).  AAPL was up over $25 or 5% for the week.

The flirtation with multiyear highs was tempered by drops in small caps and the Dow Jones Transportation Index (DJT).  The Russell 2000 (RUT) closed at 801.62 – down 24 points or 2.91%.  The DJT was down over 4% for the month.  A number of analysts have indicated the behavior of the small caps and transports is a precursor of what we can expect for the market as a whole.  So far, their forecast of a correction has brought us only sideways movement. The volatility indexes continued last week’s behavior by trading in a very narrow range. Oil and Gold continue to be windows on the expectations for the economy, the US Dollar, Mid East tensions, and European sovereign debt.

Here is a capsule view of last week’s market behavior:

The earnings cycle is officially over.  There are not any announcements which can affect the markets as a whole.  The primary focus will be on Europe.  Thursday, March 8, is the deadline for private bondholders to “voluntarily” exchange current Greek government bonds for new ones.  The new bonds are worth approximately 25% of the old bonds.  Even if 75% of the bondholders do not accept the deal, the bondholders will be forced to accept the deal involuntarily.  If the exchange is “voluntary”, then per the International Swaps and Derivatives Association, there is no default.  All the sovereign debt negotiations are taking place in a parallel financial universe I do not understand.  The opinions on the ramifications of the swap range from a minimal lack of concern to predictions of panic and market collapse. On Friday, European leaders are scheduled to make their decision on a second Greek bailout.  Traders need to be aware of these deadlines.

On Friday, the US will release the monthly job reports.  These are being awaited with great anticipation.  The concerns raised focus on whether these numbers will allow investors to maintain optimism about the current economic recover. Dividend activity is high this week.  Covered call traders should be aware of the possibility of their stocks being called away through assignment of the short calls.  Rolling up (higher strike price) or out (further out expiration month) will minimize assignment risk.

Remember:

“Chance favors the Prepared Mind.” – Louis Pasteur

This week’s economic news (All times are Eastern Time.  Dates and times are subject to change):

Monday March 5:

Economic:  January Factory Orders – 10:00, February ISM Non-Manufacturing Index -10:00, February Conference Board Help-Wanted OnLine Data – 10:00.

Earnings: BMO: First Majestic Silver (AG); AMC:  ABM Industries (ABM), Casey’s General Stores (CASY), Bancolombia (CIB), Quanex (NX), Verifone (PAY).

Other:   President Obama meets with Israel’s Benjamin Netanyahu

Tuesday March 6:

Economic:  ICSC-Goldman Sachs Retail Store Sales – 8:45, Redbook – 8:55.

Earnings: BMO:  Bank of Nova Scotia (BNS), Dick’s Sporting Goods (DKS), Kronos Worldwide (KRO), Medidata (MDSO), Vail Resorts (MTN), Standard Motor Products (SMP), United Natural Foods (UNFI); AMC:  Analogic (ALOG), ASM International (ASMI), Pandora Media (P), Post Holings (POST).

Other:  Super Tuesday – Presidential primaries in 11 states.

Wednesday March 7:

Economic:   MBA Purchase Applications – 7:00, February Challenger Job Cut Report – 7:00, February ADP Employment Report – 8:15, Q4 2011 Productivity and Cost – 8:30, , EIA Petroleum Status Report – 10:30, January Consumer Credit – 3:00..

Earnings: BMO:  Brown-Forman (BF>B), Ciena (CIEN), Express (EXPR), Maidenform Brands (MFB), Navistar (NAV), The Fresh Market (TFM); AMC:  H&R Block (HRB), Men’s Warehouse (MW), Pall Corp. (PLL), Semtech (SMTC).

Thursday March 8:

Economic:   February Jobless Claims – 8:30, Q4 2011 Quarterly Services Survey – 10:00, EIA Natural Gas Status Report – 10:30.

Earnings: BMO:  Buckle (BKE), Anheuser-Busch (BUD), Canadian Natural Resources (CNQ), John Wiley (JW.A), Smithfield Foods (SFD)Williams-Sonoma (WSM);  AMC:  Altera (ALTR), Body
Central (BODY), The Cooper Companies (COO), Smith&Wesson (SWHC), Ult Salon Cosmetics & Fragrance (ULTA).

Other:

Friday March 9:

Economic:  February Employment Situation – 8:30, January International Trade – 8:30, February ECRI Future Inflation Gauge – 9:40, January Wholesale Trade – 10:00, ECRI Weekly Leading Index – 10:30.

Earnings: BMO:  Ann Taylor (ANN), Hibbett Sports (HIBB), Piedmont Natural Gas (PNY).

Other:   Euro-zone Ministers vote on second bailout of Greece.

Monday March 12:

Economic:  Federal/Treasury Budget – 2:00.

Earnings: BMO: American States Water (ASW); AMC:  Alcan (AL), Churchill Downs (CHDN), Dole Foods (DOLE), Urban Outfitters (URBN).

Frank Fahey is a mentor with DiscoverOptions, the educational arm of OptionVue Systems.  Inquiries should call 847-816-6610 or email info@DiscoverOptions.com.