The Madison Letter Weekly Summary

Since inception, our overall timing return is 81.29% versus 48.41% on the S&P 500 for excess return of 32.88%. 

madison market1

Madison scores on the major indexes are in a range of -8 to +6. Stocks and indexes have moved higher, albeit a small move, since our last update.

The range between the buy and sell points is now average. As an example, the S&P 500 range was 54 points at the low and is now at 104 points which is rising but lower from a week ago at 110. As volatility rises, this expands. Witness at the October low the range was 169 points. Currently, volatility has begun to expand again.

Also, in tracking the range between the 2 year and 10 year moves from 157 basis points to 152. Short term rates are on the rise while long term have fallen in the last week. This needs to be watched. There are implications.

We began to offer a buy and sell strategy via our Madison Market Timing Indicator at the beginning of April of 2007. There are now 24 open and closed winning trades to 8 closed losing trades with our market timing results.

Options Activity

We highlight unusual options activity where volume is heavy as well. The third column from the left will highlight such outliers. Airgas (ARG) saw excess call action for a third day in a row. I smell a deal and might have to look into a trade. JC Penney (JCP) saw excess put action as it struggles in front of back to school season.  

                                                      [Image 1]

                     The rows in the options matrix are as follows:

  • Curr Vlm = Current Option Volume for today
  • OpVol20 = 20 day Option Volume average
  • % Delta (sorted descending) = Curr Vlm/ OpVol20 * 100
  • Sym = Symbol
  • 20 HV 100HV 252HV = 20 day, 100 Day and 252 Day Historical Volatility
  • Slope = The slope of the historic vol
  • Delta = Change in slope
  • cOptInt = Call Open Interest
  • pOptInt =Put Open Interest
  • cVolum = Call Volume
  • pVolum = Put Volume

Futures Down Slightly

In After Hours Trading

IPOs On Deck today of note Easterly Acquisition (EACQU), Genocea Biosciences, Global Partner Acquisition (GPACU), Poseidon Containers Holdings (PCON), vTv Therapeutics (VTVT). Secondaries on deck ADPT CARA NLSN ZGNX.

In After Hours Trading: SCTY+1.35, BAX+.70, SKX+.54, DEPO+.29, SU+.28, HOS+.28, MCK+.23, OTEX+.19, VNDA+.17, THG+.15, ASH+.15, ESV+.13, NE+.11, CXO+.09, ACGL+.09, TER+.08, WES+.08, TWI+.08, MET+.07, NOW+.07, NXPI+.06, ATW+.06, WGP+.06, KRC+.06, ALGT+.05, WDC+.05, AFFX+.05, BKFS+.05, ELY+.05, PPC+.05, TEX+.04, TILE+.04, CSGP+.04, HOLX+.04, MDAS+.04, VRTX+.04, ORLY+.03, FB+.03, QRVO+.03, LRCX+.03, SSNC+.03, MAA+.03, ESRT+.03, PSA+.03, OI+.02, EPE+.02, FNF+.02, SCI+.02, PTC+.02, SBAC+.02, BXP+.02, DOX+.02, SSS+.02, WLL+.02, DYAX-.02, WFM-.02, XOOM-.03, KEG-.04, CNW-.04, FOE-.05, WPRT-.05, WMGI-.05, PEIX-.06, LNC-.07, MTW-.08, WMB-.08, HLS-.08, CMO-.09, EQIX-.12, CEMP-.15, MEOH-.17, WYNN-.23, FBP-.27, CLD-.47, PVA-.66.

What’s Happening This Morning

U.S. futures: S&P -1.25, Dow Jones , NDX +12 and Russell 2000 +2.60 with fair value lower. Asia higher ex China and Europe higher.

Copper,silver and gold lower. WTI Crude higher and Brent Oil Futures higher. Natural Gas is lower. $ is higher vs Euro, lower vs. Pound and higher vs. Yen. US 10 year Treasury yield +1. Prices as of 7:55 a.m. EDT.

All Sectors higher lead by Healthcare, Conglomerates and Technology.

Earnings Expected

Earnings due after the close (by avg. trade volume): BRCM, AUY, FEYE, HK, WU, EGO, SPF, AMGN, EA, SPN, ISBC, BAS, HBI, FE, LNKD, EIX, ROVI, QTM, EVHC, ES, EXPE, BVN, FLS, DLR, FLR, KLAC, LSCC, AIV, NR, AMCC, QLGC, OLN, MOH, SGEN, VVUS, CMLS, RMD, MWA, SYNA, LEG, IM, RGC, HME, CXP, DCT, FR, DECK, PKI, PODD, UHS, SZYM, PTCT, TPX, TCO, MTSN, NSR, ANH, EEP, ZLTQ, RNG, WWWW, CPT, SKYW, ATEN, MXWL, BSAC, MTD, COLM, INT, FEIC, ESS.

Due Friday morning (by avg. trade volume descending): XOM, MT, CVX, STX, WY, PSX, WETF, PEG, TYC, RCL, IMGN, SWC, NWL, AXL, BERY, AEE, AON, IMS, LM, TRP, RLGY, ENB, ITT, TNP, PNM, KCG, HMC, CBOE, DSX, TDS, WMC, BPL, GIL, PSXP.

Rags & Mags: Inside Wall Street

USA Today: Whole Foods (WFM) plunges in after hours dropping 11%. Federal Reserve remains quiet on rate hikes. GDP Report expected to rebound from early year freeze.

Reported Earnings This Morning

Reported Earnings This Morning (Best to Worst absolute beats/misses [+.02 or greater/-.02 or worse]): SNE+29.62, CRR+.27, VLO+.25, CI+.22, TMUS+.20, ERJ+.19, ACIW+.16, GTLS+.16, CPN+.14, ACOR+.14, HP+.13, PWE+.13, YNDX+.12, CVE+.10, HOT+.10, INGR+.09, FIG+.08, ALXN+.08, SEE+.07, APD+.07, SHOP+.06, PG+.05, SC+.05, DBD+.05, PES+.05, STAY+.05, RDS.A+.05, XRAY+.05, SWK+.04, NOK+.04, ENTG+.04, CCE+.03, IDXX+.03, LKQ+.03, COP+.03, AVP+.03, VICL+.03, CME+.03, NICE+.03, IT+.02, MD+.02, MOBL+.02, ODFL+.02, IRDM+.02, WST+.02, NAVB-.02, ALU-.02, POT-.02, PCRX-.03, ADP-.04, AWI-.04, NMM-.04, BLL-.05, ESI-.07, PBF-.08, NSM-.09, FMS-.12, OSK-.12, CROX-.14, MPC-.24, IRM-.26, TWC-.26, LLL-.29, BG-.86, LINE-1.11. Current Morning missing: AAWW, ACI, AZN, BC, BNCL, BTE, BUD, BWA, CBB, CCJ, COT, CVI, FCAU, GG, GNC, GOV, IDA, ITC, IVZ, KMT, MDLZ, MWW, NNN, NTCT, OA, OMG, PNK, PNW, RFP, RYL, SCG, SUI, UPL, VA, VG, VLY, ZBH

A Cruel Joke For Investors In TLT?

We are going to continue making Thursday our chart section in only Superstock Investor. That said, we are changing the format. Each Thursday in Wall Street Rebel we have moved to doing a Chart of The Week.

If you want to follow the S&P 500, then you will need to sign up for www.superstockinvestor.com at the website when subscriptions become available. Each week in Superstock we track the S&P 500, NASDAQ Composite, Russell 2000, Emerging Markets (EEM), 20 Year Treasury (TLT), U.S. Dollar (UUP), High Yield Bonds (HYG) and Corporate Bonds (LQD). 

 Last week we looked at the Las Vegas Sands (LVS) which is in our Morning Matters Portfolio and reported earnings last week. Finally, the chart has begun to improve. Time to start making up for lost time. 

1

This week we look at iShares Barclays 20 Year Treasury (TLT) which is could be playing a cruel joke on investors. Finally, the chart has begun to improve but what if it turns down from here? A distinct possibility. Pay attention carefully here. 

2

 Charts are courtesy of www.erlangerchartroom.com.

 

Options Activity

We highlight unusual options activity where volume is heavy as well. The third column from the left will highlight such outliers. Airgas (ARG) saw excess call action for a second day in a row. Chicago Bridge & Iron (CBI) saw excess put action for a second day as it jumped 3%.  

                                                      [Image 1]

                     The rows in the options matrix are as follows:

  • Curr Vlm = Current Option Volume for today
  • OpVol20 = 20 day Option Volume average
  • % Delta (sorted descending) = Curr Vlm/ OpVol20 * 100
  • Sym = Symbol
  • 20 HV 100HV 252HV = 20 day, 100 Day and 252 Day Historical Volatility
  • Slope = The slope of the historic vol
  • Delta = Change in slope
  • cOptInt = Call Open Interest
  • pOptInt =Put Open Interest
  • cVolum = Call Volume
  • pVolum = Put Volume

Futures Still Higher

July 29, 2015

In After Hours Trading

No IPOs On Deck today of note. Secondaries on deck BLDR CFG EYEG.

In After Hours Trading: APC+.53, SM+.50, AIZ+.47, GILD+.44, CINF+.42, IACI+.26, RUBI+.26, CTXS+.18, OIS+.13, VRSK+.11, VDSI+.09, BMR+.09, EEFT+.08, CHRW+.08, EW+.08, NCR+.07, ULTI+.07, ATR+.07, TRU+.06, DHT+.06, NUVA+.06, TSS+.05, ESRX+.04, WNC+.03, WRI+.03, TWTR+.03, BXMT+.03, HT+.02, SLCA+.02, WSH+.02, PNRA-.02, ATML-.02, AFL-.02, PEI-.03, RRC-.03, GAS-.04, YELP-.04, VR-.04, RNR-.05, BWLD-.16, X-.19, GPRE-.20, NEU-.62 .

What’s Happening This Morning

U.S. futures: S&P +2.25, Dow Jones +35, NDX +7 and Russell 2000 +1.20 with fair value lower. Asia higher ex Japan and Europe higher.

Copper higher with silver and gold lower. WTI Crude higher and Brent Oil Futures lower. Natural Gas is higher. $ is higher vs Euro, lower vs. Pound and higher vs. Yen. US 10 year Treasury yield +2. Prices as of 8:45 a.m. EDT.

All Sectors higher lead by Healthcare, Conglomerates and Technology.

Earnings Expected

Earnings due after the close (by avg. trade volume): APC+.53, SM+.50, AIZ+.47, GILD+.44, CINF+.42, IACI+.26, RUBI+.26, CTXS+.18, OIS+.13, VRSK+.11, VDSI+.09, BMR+.09, EEFT+.08, CHRW+.08, EW+.08, NCR+.07, ULTI+.07, ATR+.07, TRU+.06, DHT+.06, NUVA+.06, TSS+.05, ESRX+.04, WNC+.03, WRI+.03, TWTR+.03, BXMT+.03, HT+.02, SLCA+.02, WSH+.02, PNRA-.02, ATML-.02, AFL-.02, PEI-.03, RRC-.03, GAS-.04, YELP-.04, VR-.04, RNR-.05, BWLD-.16, X-.19, GPRE-.20, NEU-.62.

Due Thursday morning (by avg. trade volume descending): RDS.A, NOK, AVP, MDLZ, GG, PG, HST, COP, ALU, ACI, FCAU, VLO, CPN, MPC, TMUS, OXY, POT, TWC, LINE, CI, EPD, XEL, CL, IVZ, AZN, HOT, PWE, UPL, TE, TASR, CAH, DLPH, YNDX, ALXN, TEX, CVE, SC, SEE, CCE, WLT, IRM, HP, CCJ, ADP, SSYS, NSM, BWA, ESI, LKQ, PBF, SNE, PBI, VLY, CME, NTCT, WRK, ITC, BUD, MDXG, VG, ZBH, NNN, PES, GNC, VICL, APD, CBB, PF, MWW, SWK, BLL, ALKS, BC, OSK, XYL, IDXX, SCG, BG, PNW, GOV, IRDM, VA, ERJ, PCRX, SHOP, PNK, RFP, KMT, RYL, BNCL, TKR, ENTG, ODFL, XRAY, FIG, DBD, ACIW, MD, CRR, GLPI, AAWW, COT, GTLS, ACOR, LLL, MOBL, AWI, ALLE, NMM, DFT, MSCI, TWI, OMG, NAVB, IT, INGR, TFX, MPLX, WST, OA, NICE, STAY, TDY, CRL, SUI, CVI, IDA, FMS.

Rags & Mags: Inside Wall Street

USA Today: Federal Reserve could spook market with faster pace of rate hikes. Another article notes Federal Reserve unlikely to give rate hike clues this week. Facebook (FB) has high expectations for earnings. Is Twitter (TWTR) now a bargin. Wall Street supports Hillary Clinton.

Macau To Commence Austerity

When we read that China may begin Austerity measures, we were kind of shocked. Austerity in Europe yes, China no. As such, this makes us think there is a little bit of trouble in Big China.

Macau

Macau is the gaming capital of China and is located some 40 miles to the east of Hong Kong.

Portfolio Update

The S&P 500 is lower than a week ago thanks to the weakness since last Tuesday and we are now under 2100. The Nasdaq Composite has moved back under 5100 and the Dow unfortunately has fallen back below 18000 and is now lower again for the year. The portfolio moved to 58% invested long, 0% short and 42% in cash, net long 58%. We are now at a value of 1035.25% from 1024.39% through Tuesday’s close. We finished the year at a value of 951.10 up 29.86% for the year. Our current value is 1035.25% which puts us up 8.13% for the year without dividends.

Below are the year by year results on a cumulative and absolute basis: 

ssi ytd

It appears for now that 2050 on the S&P 500 has become support from 2100 and now 2100 is resistance. We are now at 2093.25 which is lower than a week ago. A big test for the week is to see if the S&P 500 can stay above 2050.

Our batting average of closed winners and losers is 72%. The portfolio is up to a value of 1035.25% and from inception when it began at 0% in April of 2008. We have never added in dividends so our weekly results are understated since 2008.

The Russell 2000 is now lagging the S&P 500 on a daily basis. As such, we remain with a large cap bias.

Futures Higher

July 28, 2015

In After Hours Trading

8 IPOs On Deck today NantKWest. Secondaries on deck EGLT GWB.

In After Hours Trading: EMN+.18, HIG+.14, PRE+.04, PCL+.04, CDNS+.03, AVB+.02, CNL+.02, KN+.02, TMK-.02, CR-.02, AMKR-.03, BCEI-.03, AGNC-.03, BIDU-.03, SWN-.08, ALSN-.36, RE-.62.

What’s Happening This Morning

U.S. futures: S&P +10, Dow Jones +72, NDX +16.75 and Russell 2000 +6.20 with fair value lower. Asia lower ex Hang Seng and Europe higher.

Copper higher with silver and gold lower. WTI Crude higher and Brent Oil Futures lower. Natural Gas is higher. $ is higher vs Euro, lower vs. Pound and higher vs. Yen. US 10 year Treasury yield +3. Prices as of 7:55 a.m. EDT.

All Sectors higher lead by Healthcare, Conglomerates and Technology.

Earnings Expected

Earnings due after the close (by avg. trade volume): TWTR, GILD, X, ATML, YELP, ESRX, APC, RRC, NGD, KIM, NCR, AFL, CUZ, SLCA, TRU, SM, CTXS, EQR, VDSI, CHRW, BMR, SPWR, HA, DHT, AKAM, WNC, BLDP, VRSK, EW, OIS, AJG, TSS, BXMT, GPRE, WRI, AXS, WSH, IACI, GAS, AIZ, NUVA, HT, GCA, AEC, CINF, BWLD, PEI, VR, NATI, PNRA, ATR, RNR, ULTI, EEFT, NEU.

Due Wednesday morning (by avg. trade volume descending): HLT, CLF, EXC, MO, SO, GT, MA, GCI, IP, GTI, HUM, HES, PCG, HCBK, STNG, HUN, ETN, AMT, ADT, ANTM, WEC, BEN, LVLT, WBAI, RES, CBG, JAH, GRMN, GD, PX, CDK, BGCP, SPR, SSE, MTOR, HSP, UMC, MDCO, NOC, ICON, VNTV, DATA, SONS, APO, AVY, ROK, BAH, SPIL, Q, CG, STRZA, HTA, TRI, CRI, SPW, CTCM, ACCO, TGI, GEL, WOOF, CFR, HSIC, GRA, ROL, JLL, WEX, PAG, GIB, BOKF, CHH.

Rags & Mags: Inside Wall Street

USA Today: President Obama concludes Africa trip with address to the African Union. China wild card as Fed meets. Ford (F) reported strong earnings on positive car sales, note the revised China car sales to negative growth. China plunge mirrors 2000 NASDAQ drop.

Reported Earnings This Morning

Reported Earnings This Morning (Best to Worst absolute beats/misses [+.02 or greater/-.02 or worse]): UTHR+.24, NTLS+.23, NOV+.13, DHI+.10, LYB+.08, LH+.06, WYN+.06, ICLR+.06, RAI+.05, WAT+.05, MRK+.05, GPN+.04, PFE+.04, MAS+.03, POR+.03, CNC+.02, COMM+.02, NLSN+.02, OFC+.02, BP-.02, WDR-.03, DD-.03, IR-.03, AUO-.08, PCP-.14, CNX-.32.

Current Morning missing: AGCO, AKS, ALLY, AMG, ARG, ARW, BTU, CMI, ECL, F, FCH, FMER, GLW, GRUB, IPGP, IPI, ISSI, JBLU, JEC, LPT, PCAR, SALT, SVU, UPS.

Data Points

Yesterday saw 832 stocks rise and 2275 fall on the NYSE. NASDAQ saw 831 rise and 2009 fall.

The SP 500 is back below its 50 day exponential moving average and above the 200 day exponential moving average, note we got a test yesterday. The Russell 2000 is back below its 50 day moving exponential average and is above its 200 day exponential moving average, note we got a test yesterday.

The 10 day spread moving average of breadth is back to invested. The Madison Market Timing Indicator is still invested.

YTD 3365 (-484) stocks are higher for the year and 3486 (+476) are lower. Updated 7/2/15 Close. Prior Update 6/1/15 close.

Economics

S&P Case Shiller at 9:00 a.m. EDT. PMI Service Flash at 9:45 a.m. June Consumer Confidence is due out at 10:00 a.m. EDT and is expected to drop to 100 from 101.40.

Politico

Wednesday sees FOMC release its latest update. No other news of note.

Conference & Analyst Meetings

Meetings or announcements of note today INTC MU AXP PII WWWW. Keefe Bruyette & Woods Annual Community Bank Investor Conference.

Conference of Note

Campus Technology Annual Educational Technology Conference. Bakken Conference & Expo.

M & A News

Key Upgrades and Downgrades

BP Misses & More Pain Ahead In Energy Patch

Overnight BP Plc (BP) reported its worst quartely earnings in 10 years. Expect to see more of this during the coming week as many energy names report dismal earnings. Now is not the time to be a hero and try to bottom fish energy names.

BP