Sunday, June 29, 2014

* Preparation: Must Know for the Week to Come; Must Know from Last Week

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Last Week: Must Know
Last week was an odd one in that we started to see a divergence between the major market indices. In particular, NASDAQ and the NASDAQ 100 did quite well, while the S&P 500 and DJIA were down on the week.

Also into focus is the optimism of Q2 GDP.  So much so, that the horrific numbers from Q1 were 'much a do.'

[T]he U.S. economy shrank by a 2.9% annual pace in the first quarter instead of 1% as previously reported, marking the biggest decline since early 2009 when the Great Recession was winding down.

Source: MarketWatch via Yahoo! Finance Stocks rise after walking off downward GDP revision

Data provided, Yahoo! Finance, Charles Schwab optionsXpress

Last Week: Phenomena We Must Know
Ten Facts: Has the Last Year Been an Artificially Driven Stock Rally?

Americans are Not Participating in the Economic Recovery. The Bull Market Has Been the Greatest Re-distributor of Wealth Ever 

Last Week: Stats Must Know
Momentum remains very high after it re-entered the market several weeks ago.

* As of Friday: 72.6% of stocks are now trading above their 50-day MA
* As of 1-month Ago: 52.1% of stocks were trading above their 50-day MA
* As of 5-weeks Ago: 40.8% of stocks were trading above their 50-day MA

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Last Week: Must Know Headlines:
Economic risks in Europe may trump soccer drama next week

Are auto loans a subprime crisis in the making?

Stocks rise after walking off downward GDP revision

For most families, wealth has vanished

A good sign for housing: biggest number of homes for sale in almost two years

This Week: Must Know
While there is (as always) some important economic data coming out for the United States (details below), a wonderful article written by Michael Santoli focuses on another region: The Eurozone.

The European Commission Friday reported an unexpected decline in household and business economic sentiment, and inflation in the euro zone has stubbornly remained below 1% since the fall, keeping big-picture fears of deflation nearby.


Monday each major EU country releases its final manufacturing purchasing-managers index, which follow a softer-than-hoped set of preliminary figures. Crucial inflation updates will be closely parsed. There will also be housing numbers from the U.K. – where the Bank of England is openly trying to talk down a frothy property market – and Europe-wide retail sales.

Source: The Daily Ticker via Yahoo! Finance Economic risks in Europe may trump soccer drama next week, written by Michael Santoli.

There's a lot more to the article, I highly recommend reading it.

Back to the US, there's a single name that will absolutely come into play next week, and that's American Apparel (APP).  Keeping it short and sweet, a rather "loud personality" at CEO (Dov Charney) has resulted in his ousting and perhaps mistakenly triggered a debt covenant. Namely, the firm needs $10M by Friday or a cascade of further covenants will be triggered to the tune of about $200 million in debt.

This is a $0.97 stock, which was actually $0.75 stock on Thursday after a weird and semi-ridiculous rally on Friday of 30% aka $0.22.

Whether a white knight, black knight, or just night-night, next week APP is going to be in the headlines.

Below you will find all that we need to prepare for the week to come

All data and images for this report are provided by Charles Schwab optionsXpress

This Week: Economic Calendar
Thursday will be our jobs day since Friday is a market holiday (Happy Birthday America!).  Those numbers will be huge because the basic argument that the horrendous Q1 contraction of ~3.0% is not relevant since Q2 is going to be so good... like 3.6% good.

Why the optimism, well, a few reasons, but mostly, enormous jobs growth of 200,000+ for three consecutive months.  Nonfarm payrolls estimates are at 220K-230K; if that falls below 200K, rationale or not, I think we see a sell-off and the streak of smaller than 1% SPX moves will end.  But... we have little reason to believe that will happen.

Prior to jobs we have Chicago PMI, Auto & truck Sales and the ISM Index. Look for those to be foreshadowing of the Thursday "big deal" data on jobs.

Partial List of Noteworthy Earnings This Week
The 15 most optionable earnings events; a relatively quiet week as we have moved well out of earnings season. Here's a list of tradable (liquid) earnings events.

This is trade analysis, not a recommendation.

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