Watching the Tape

News and Views from FinTrust Investment Advisors

Watching The Tape: August 15-19, 2016

TapeThe Dog Days are Done

2016.08.12 pic1

Sirius rises late in the dark, liquid sky

On summer nights, star of stars,

Orion’s Dog they call it, brightest

Of all, but an evil portent, bringing heat

And fevers to suffering humanity

                             Homer, The Illiad

The Dog Days are finally over.  According to The Old Farmer’s Almanac, the “Dog Days of Summer” officially last 40 days, from July 3 to August 11.   The Dog Days get their name from the summertime ascension of the star Sirius, also known as the Dog Star.

2016.08.12 pic2

Thursday was the final Dog Day of 2016.  Applying Homer’s criteria of “heat and fevers”, this summer’s dog days seemed a little doggier than usual.  For example:

Heat:   July was a killer.  NASA reports that July was the hottest month in Earth’s recorded weather history.

2016.08.12 pic3(Courtesy of The Weather Channel)

Fevers:   Did you watch the political conventions?  We rest our case.

2016.08.12 pic4

The stock market:   Homer didn’t mention the stock market (might have been all Greek to him?), but stocks heated-up during the Dog Days.  Shaking off Brexit and a host of disappointing earnings reports, the market rose 5% during those 40 days.

Then on August 11 – the final Dog Day of the year – the Dow Industrials, S&P 500 and NASDAQ all closed at record highs on the same day for the first time since 1999.

2016.08.12 pic5The Dow Jones Industrial Average during the Dog Days – Source: Yahoo Finance

 

2016.08.12 pic6

Speaking of the ascension of Sirius…  The namesake stock of the Dog Star, Sirius XM (NASDAQ: SIRI), carries one of the highest short-positions of any stock traded in the market.  A high short position means speculators are very negative about the company.

Sirius XM defied the shorts and rose 12% in July, to $4.44 per share.

Comment:   Traders often refer to cheap stocks as “dogs”.   Speaking of which…

 

UPDATE: The Dogs of the Dow

2016.08.12 pic7(Photo: Market Intelligence Center)

The Dogs of the Dow Strategy is a time-honored January stock-picking methodology.  According to the strategy, investors buy the “dogs” of the Dow Jones Industrial Average:  the ten stocks paying the highest dividend yields, on January 2.  Then – according to the strategy – every January investors rebalance the portfolio into the New Year’s ten highest yielding stocks.

So how has that strategy worked so far this year?  Not too shaggy, er, shabby.

Through August 11, the Dogs of the Dow are up 18.04%.

Below are this year’s ten Dogs of the Dow companies and their returns year-to-date:

Procter and Gamble  +11.59%

Pfizer  +10.40%

Chevron  +13.42%

Exxon Mobil  +11.87%

Cisco Systems  +18.04%

Verizon Communications  +18.71%

International Business Machines  +20.69%

Wal-Mart Stores   +21.92%

Merck and Company  +23.10%

Caterpillar  +25.17%

******************

The Week Ahead

Economics

Highlights: Tuesday’s CPI and Wednesday’s Fed Minutes

Monday, August 15: Empire State Mfg Survey, Housing Market Index

Tuesday, August 16: Consumer Price Index, Housing Starts, Industrial Production

Wednesday, August 17: EIA Petroleum Status Report, FOMC Minutes

Thursday, August 18: Jobless Claims, Leading Indicators

 

Earnings

 Retail Big Box Week

 

Tuesday, August 16:  Advance Auto Parts, Dicks Sporting Goods, Home Depot

Wednesday, August 17: Analog Devices, Cisco Systems, Lowes Cos, Staples, Target

Thursday, August 18:  Gap, Perry Ellis, Ross Stores, Wal-mart

Friday, August 19: Deere, Foot Locker, Hibbet Sports, Stein Mary

 

Watching the Tape is a compilation of news, observations and views written and edited by Bill Kibler, Senior VP, FinTrust Investment Advisors. Information is provided by sources believed to be reliable, but FinTrust  is not responsible for accuracy.  The information herein is not a recommendation to buy or sell any security.  Past results are no indication of future performance.

 

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