For what took five days to achieve, we lost in one trading day last Wednesday. It took five days to run the markets up only to be lost in one trading day, frustrating/concerning many of the bulls. Believe it or not, this is actually a normal sign. The markets will always fall faster than it will run up.
We lost a footing in the markets (Wednesday) due to Italy being the next big concern after Greece. Italy is a much larger concern for the global economy due to the size of their economy and as yields (borrowing costs) continue to rise for them. Greece is a very tiny country in the global economy, but Italy is one of the largest, a night and day comparison. If we had market troubles over a small country like Greece, imagine the troubles we face with Italy. While the fall itself was a normal sign, the handcuff to global headlines remains a concerning and unhealthy sign. Again, the markets will always fall faster than they will run up.
Trading is very frustrating these days even on bullish days. Friday was a perfect example of a day that you could find the best looking charts ready for a breakout. Upon breaking out, the enthusiasm/volume was non-existent as the bulls were very reluctant to press being fearful of another Wednesday. Highly speculative stocks will need more money entering them if we are going to move a leg higher in the markets. Risk tolerance is not high though. We started to see the hot money enter speculative stocks the other week, but it was only a short-lived event. With Italy seemingly having a new government in place or soon-to-be in place by Monday, I expect the bulls may be able to breathe a sigh of relief to start the week. A sigh of relief until the next sign the EU situation won’t be fixed shows up. This will happen again and again for a long time it appears. I have yet to see a remedy we can start to embrace as a real solution. All I see is countries who are unable to pass the necessary spending cuts moving towards bankruptcy “hoping” that in time, the problem will just work itself out. Sound familiar
Unlike last week, this week will have a great deal of economic data to focus on creating odds of higher volatility (see calendar below). Also, this week we have options expiration. We have various Fed speakers throughout the week and much anticipated Retail Sales on Tuesday. If those numbers disappoint, we may hear a lot of pundits talking negatively about the economy for a few days.
| Date | ET | Release | For | Actual | Briefing.com Forecast | Briefing.com Consensus | Prior | Revised From |
|---|---|---|---|---|---|---|---|---|
| Nov 15 | 08:30 | PPI | Oct | -0.2% | -0.2% | 0.8% | ||
| Nov 15 | 08:30 | Core PPI | Oct | 0.2% | 0.1% | 0.2% | ||
| Nov 15 | 08:30 | Retail Sales | Oct | 0.6% | 0.4% | 1.1% | ||
| Nov 15 | 08:30 | Retail Sales ex-auto | Oct | 0.3% | 0.2% | 0.6% | ||
| Nov 15 | 08:30 | Empire Manufacturing | Nov | 0.0 | 0.0 | -8.48 | ||
| Nov 15 | 10:00 | Business Inventories | Sep | 0.0% | 0.1% | 0.5% | ||
| Nov 16 | 07:00 | MBA Mortgage Index | 11/12 | NA | NA | 10.3% | ||
| Nov 16 | 08:30 | CPI | Oct | 0.1% | 0.0% | 0.3% | ||
| Nov 16 | 08:30 | Core CPI | Oct | 0.1% | 0.1% | 0.1% | ||
| Nov 16 | 09:00 | Net Long-Term TIC Flows | Sep | NA | NA | $57.9B | ||
| Nov 16 | 09:15 | Industrial Production | Oct | 0.2% | 0.4% | 0.2% | ||
| Nov 16 | 09:15 | Capacity Utilization | Oct | 77.6% | 77.6% | 77.4% | ||
| Nov 16 | 10:00 | NAHB Housing Market Index | Nov | 18 | 18 | 18 | ||
| Nov 16 | 10:30 | Crude Inventories | 11/12 | NA | NA | -1.370M | ||
| Nov 17 | 08:30 | Initial Claims | 11/12 | 400K | 400K | 390K | ||
| Nov 17 | 08:30 | Continuing Claims | 11/05 | 3650K | 3648K | 3615K | ||
| Nov 17 | 08:30 | Housing Starts | Oct | 575K | 603K | 658K | ||
| Nov 17 | 08:30 | Building Permits | Oct | 600K | 603K | 594K | ||
| Nov 17 | 10:00 | Philadelphia Fed | Nov | 5.0 | 7.5 | 8.7 | ||
| Nov 18 | 10:00 | Leading Indicators | Oct | 0.3% | 0.6% | 0.2% |
Here is this week’s stock radar. Most of these stocks have already reported earnings and are seeing volume enter them. I’ll holding only profits in VIVO and have not seen enough volume to determine if I should add back to my position. I’m looking to trade aggressively in AMCC and NR if the markets hold up this week.
Bebe Stores, Inc. (BEBE) (Trade Carefully With Retail Sales Data On Tuesday)
Rex Energy Corporation (REXX)
Spectrum Pharmaceuticals, Inc. (SPPI)
Multimedia Games Inc. (MGAM)
Opko Health, Inc. (OPK)
Procera Networks, Inc. (PKT)
Spreadtrum Communications Inc. (SPRD)
Kulicke & Soffa Industries Inc. (KLIC)
ORBCOMM, Inc. (ORBC)
Orbitz Worldwide, Inc. (OWW)
Quepasa Corp. (QPSA)
THQ Inc. (THQI)
Dejour Energy (DEJ) (Reports Earnings On 14th)
Newpark Resources (NR) (Article: Newpark Resources Did It Again)
Gastar Exploration (GST)
Meridian Bioscience (VIVO)
Flotek Industries Inc. (FTK)
Applied Micro Circuits Corp. (AMCC) (Basic Chart On Forums)
You can follow my trades alongside the 36,000 plus market players who follow me on SeekingAlpha (Shameless promotion). As always, do your own homework to see if you agree. Good luck out there.
Mike
At the time of publication, Kudrna was long VIVO, GST, DEJ, NR and AMCC but positions may change at any time
