The Week Ahead: Jobs, trade, manufacturing and the FOMC minutes

Monday is New Year’s Day, and markets will be closed in New York, London, Tokyo and Sydney.

The monthly employment situation report will be published on Friday at 8:30 a.m. New York time, starting off the first week of 2018 with a high-impact report. Simultaneously, another major report, international trade, will also be released.

The employment reporting gets a sneak preview on Thursday at 8:15 a.m. with the private-sector ADP employment report.

One other top report will be out during the week: The Institute of Supply Management manufacturing survey on Monday at 10 a.m.

Also, the Federal Open Market Committee minutes of its Dec. 13 meeting will be released on Wednesday at 2 p.m. At that meeting the FOMC raised the target for the federal funds rate from 1.25% to 1.5%, continuing its gradual tightening as the economy recovers. Two members, Chicago Fed Pres. Charles Evans and Minneapolis Fed Pres. Neel Kashkari, dissented, preferring to keep the target unchanged.

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Shares: NKE

NKE publishes earnings on Thursday after the closing bell. I have also placed an options trade on NKE.

NKE’s earnings beat analysts’ expectations, but the price fell after the announcement. I held the position through the Christmas holiday in the hope that there would be a reversal and I could mitigate my loss, and indeed that is what happened when I exited on Dec. 27.

sym entry exit result ($) result (%) entry date exit date
NKE 64.72  63.38  -1.34  -2.1% 12/21 12/22
zacks rank zacks esp DI spread ADX earns est. earns actual
3 1.21 15.72 43.63 0.4372  0.46

By Tim Bovee, Portland, Oreogn, Dec. 21, 2017

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NKE Analysis


Update 12/22/2017: NKE’s earnings eat the Street estimate by 2.3%, coming in at $0.46 per share against the consensus forecast of $0.4372. Shares fell $4.71 in extended hours trading and then recovered by $2.67, falling into a narrow sideways movement. I exited for a loss.

Shares fell by 2.8% over my holding period of less than a day, or a -1,034% annual rate. The options position produced a -10.8% loss for a -3,931% annual rate.

Going into the trade the Zacks earnings surprise predictor shows a 1.21% score in the context of a neutral rank (3), accurately anticipating the actual report.

The trend metrics, however, were less successful. The average directional indicator (ADX) at 43.63 suggested a strong trend, and the directional indicators, with +DI at 29.27 and -DI at 13.55, showed it as an uptrend, missing the decline that actually ensued.

I shall complete this report with the daily movement vs. the expected movements after the number are available.

NKE publishes earnings on Thursday after the closing bell.

I shall use options that trade for the last time eight days hence, on Dec. 29.

Implied volatility stands at 31%, which is 3.3 times the VIX, a measure of the volatility of the S&P 500 index.

NKE’s IV stands in the 96th percentile of its annual range and at the peak of its most recent broad movement.

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