Sunday, December 28, 2014

The Week Ahead: ISM manufacturing, January effect

Friday, Jan. 2, is the first trading day of the new year, the session that begins a crucial week that sets the tone for all that will follow in 2015.

Or so the market lore goes. If the fifth trading day of the New Year -- Wednesday, Jan. 8 -- closes above the last trading day of the old year -- Wednesday, Dec. 31, then the market will experience a net rise for the entire year. This is called the January Effect.

Lore, of course, always has its doubters.

The top global money centers, including New York, will be closed on Thursday, New Year's Day.

Friday will kick off the new year with a report with some market-moving potential: The Institute of Supply Management manufacturing index, at 10 a.m. New York time.

Leading indicators (in descending order of importance):

Several reports have been moved from their normal release days because of New Year's Day.

The interest rate spread between 10-year Treasuries and the federal funds rate, reported continually during market hours.

The M2 money supply, at 4:30 p.m. Monday (moved from Thursday).

Vendor performance, also called the deliveries times index, from the Institute of Supply Management manufacturing survey, at 10 a.m. Friday.

The S&P 500 index, reported continually during market hours.

Average weekly initial jobless claims, at 8:30 a.m. Wednesday (moved from Thursday). 

Other items of interest:

Monday: Dallas Federal Reserve Bank manufacturing survey of conditions in Texas at 10:30 a.m.

Tuesday: The S&P Case-Shiller home price index in 20 U.S. metropolitan areas at 9 a.m. and the Conference Board consumer confidence report at 10 a.m.

Wednesday: The Chicago Purchasing Managers index at 9:45 a.m., the pending home sales index at 10 a.m. and  petroleum inventories at 10:30 a.m.

Friday: The Purchasing Managers index minutes before 9 a.m. and construction spending at 10 a.m.

I also keep an eye on the Baltic Dry Index, updated daily.

Treasury Debt


The 3- and 6-month bills have two announcements each.
  • 4-week: Announcement Monday 11 a.m., auction Tuesday 11:30 a.m., settlement Wednesday.
  • 3-month: Auction Monday 11:30 a.m., announcement Wednesday 11 a.m., announcement Friday 11 a.m.
  • 6-month: Auction Monday 11:30 a.m., announcement Wednesday 11 a.m., announcement Friday 11 a.m.
  • 52-week: Announcement Wednesday 11 a.m.

The Federal Reserve glitterati are no doubt spending the week in silent medication of the awesome challenges they shall face in 2015.

Analytical universe

This week I shall be analyzing new bull and bear signals among 1,287 mid-cap and larger stocks and exchange-traded funds.

Trading calendar

By my rules for shorter-term trades, I'm trading February options and later for the short legs of vertical, diagonal and calendar spreads and covered calls, and for all legs of butterfly spreads and iron condors. I'm trading April options and later for single calls and puts as well as straddles. Shares, of course, are good at any time.

Good trading, and Happy New Year!

-- Tim Bovee, Portland, Oregon, Dec. 28, 2014

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