The Prepared Mind 4.9.2012
"Chance favors the prepared mind."-- Louis Pasteur
Fear casting made a reappearance this weekend. As my wife and I were driving the byways of “Pure Michigan,” a political pundit greeted us with the news the past week was the worst week since 2011. My initial reaction was that I had tuned into Onion Radio. However, this radio personality was serious and sounding an alarm for investors. As I listened, it became apparent this market commentary and accompanying forecast were based on political wish lists and goals rather than actual market performance. It is very important for the Prepared Mind to discern the real from the imagined.
The markets gave us our third consecutive sideways week. The SPX ended the week down 10.39 points or 0.74% at 1,398.08. This was 18 points of the previous Monday’s three year closing high. The Dow Jones Industrial Average closed down 151.9 points or – 1.15%. The Russell 2000 (RUT) closed at 818.18 down 11.80 points or -1.39%. The NASDAQ 100 (NDX) closed up for the eighth week in a row at 2,755.27 – up 7.23 points or + 0.26%. The VIX confirmed the sideways sentiment by closing at 16.70 - up 7.74%.
The preceding numbers are based on the close on Thursday April 5. The equity markets were closed on Friday in observance of Good Friday. The government released a weaker than expected March jobs report. Other markets were open on Friday. The futures on the S&P 500 traded down over 1% on Friday April 6 in response to the jobs report. The prices below are based on a close prior to the release of the jobs report.
Here is a capsule view of last week’s market behavior:
| Index | Close | Weekly Change | % Weekly | % YTD | Volatility of Index |
| Dow Jones Industrials (DJIA) | 13060.14 | -151.90 | -1.15% | 6.90% | 15.27% (VXD) |
| S&P 500 (SPX) | 1398.08 | -10.39 | -0.74% | 11.17% | 16.70% (VIX) |
| NASDAQ 100 (NDX) | 2762.50 | 7.23 | 0.26% | 21.28% | 17.96% (VXN) |
| Russell 2000 (RUT) | 818.18 | -11 | -1.39% | 10.51% | 23.11% (RVX) |
| CBOE Volatility Index (VIX) | 16.70 | 1.20 | 7.74% | NA |
Monday’s opening will be the first opportunity for the equity markets to respond to Friday’s jobs report. The initial response was a 1% sell-off in futures on the S&P 500 and the Russell 2000. Traders and investors will have 3 days to digest the impact and importance of these numbers. Some are conjecturing the weakness will provide impetus for QE3. Stay tuned.
The new earnings season starts at the end of the week with Tuesday’s announcement from Alcoa(AA). JP Morgan Chase (JPM) and Wells Fargo (WFC) will announce earnings on Friday. The following week will provide multiple earnings announcements. Economic announcements will focus on the Consumer and Producer Price Indexes and China’s announcement of first quarter GDP. All eyes are once again on Europe. Sovereign debt concern is the gift which keeps on giving. 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 April 9:
Economic: None announced.
Earnings: BMO: Greenbrier Companies (GBX), Zep (ZEP).
Other: Fed Chairman Ben Bernanke speaks at an Atlanta Fed conference on markets. Australia, Germany, Hong Kong and the U.K. Markets closed. Dyngus Day in
Tuesday April 10:
Economic: NFIB Small Business Optimism Index – 7:30, ICSC-Goldman Sachs Weekly Retail Store Sales – 7:45, Redbook – 8:55, Wholesale Trade – 10:00.
Earnings: BMO: SUPERVALU (SVU), Alcoa (AA),: AMC: ADTRAN (ADTN), Healthcare Services (HCSG), Standard Microsystems (SMSC).
Other: Richard Fisher, president of the Dallas Fed , speaks about the Dallas Fed’s view of too big to fail.
Wednesday April 11:
Economic: MBA Purchase Applications – 7:00, Import and Export Prices- 8:30, EIA Petroleum Status Report – 10:30.
Earnings: BMO: Progressive Corp. (PGR), Titan Machinery (TITN); AMC: Apogee (APOG), Richardson Electronics (RELL), Roundys (RNDY).
Other: Fed Vice Chairman Janet Yellenspeaks about monetary policy to the Money Marketeers of New York University.
Thursday April 12:
Economic: International Trade – 8:30, Jobless Claims – 8:30, Producer Price Index – 8:30, Bloomberg Consumer Confidence Index – 9:45. EIA Natural Gas Status Report – 10:30, Beige Book – 2:00, Treasury Budget -2:00.
Earnings: BMO: Commerce Bancshares (CBSH), Fastenal (FAST), Fairchild Semiconductor (FCS), Layne Christensen (LAYN), Washington Federal (WAFD); AMC: Google (GOOG), Independent Bank (INDB), JB Hunt Transport (JBHT), Bank of the Ozarks (OZRK).
Friday April 13:
Economic: Consumer Price Index – 8:30, University of Michigan Consumer Sentiment – 9:55.
Earnings: BMO: iGate (IGTE), Infosys (INFY), JP Morgan Chase (JPM), Patni Computer (PTI), Shaw Communications (SJR), Wells Fargo (WFC).
Other: China reports first-quarter GDP.
Monday April 16:
Economic: Retail Sales – 8:30, Empire State Mfg Survey – 8:30, Treasury International Capital – 9:00, Business Inventories – 10:)), Housing Market Index -10:00
Earnings: BMO: Citigroup (C) , Gannett (GCI), Knoll (KNL), LG Philips (LPL), Mattel (MAT), McMoRan Exploration (MMR), Charles Schwab (SCHW); AMC: Brown and Brown (BRO), Equity Lifestyles Property (ELS), ICU Medical (ICUI), Lincare Holdings (LNCR), Packaging Corp. Of America (PKG).
Frank Fahey is a mentor with DiscoverOptions, the educational arm of OptionVue Systems. Inquiries should call 847-816-6610 or email info@DiscoverOptions.com.
