SPY caught amid volatility
The SPDR S&P 500 ETF (SPY) fell by 0.37% on Monday, September 14, 2015, ahead of the Fed’s September meeting. The volatility in the US stock market rose on that day with no conclusive clues to the Fed’s rate hike decision, which is due September 16–17, 2015.
The graph below shows the volatility index, referred as a fear gauge for September. It rose 4.53% on September 14. From the graph, we can see the rise in the Volatility S&P 500 Index (VIX) from September 11 through the weekend, as well as SPY’s fall on September 14. Volatility has prevailed throughout September.
Chesapeake Energy: Gainer of the day
Meanwhile, Chesapeake Energy (CHK), the country’s second-largest natural gas producer rose, by 4.62% on September 14. The company’s CEO, Doug Lawler, spoke for Chesapeake at the Barclays Energy Conference. Oil and gas producers like CHK must spend much more on capital expenditure than they make through the sale of commodities, requiring a generous credit limit. Therefore, companies like CHK and Transocean’s (RIG) shares are valued more on the basis of forecasted production growth rather than current profitability.
Now, Chesapeake Energy plans to focus on liquidity maximization and cash generation. CHK has undergone a large capex cut, maintaining a flat production level. Because capex and production depend on the prices of crude oil and natural gas, CHK has proved itself to be flexible and responsive. This should aid CHK when the oil market picks up.
Chesapeake Energy (CHK) traded at $7.92 on September 14, which was above its 20-day moving average. The trailing one-month return of CHK was 5.74% and 8.94% for the trailing five days. CHK has 20 “hold” recommendations and seven “buy” recommendations compared with eight “sell” recommendations. The day’s volume rose to 28,107,293 stocks from the previous day’s volume of 8,242,727 stocks for CHK. The other major stocks from the energy sector that rose on September 14 were Marathon Oil Corp. (MRO), Ensco (ESV), FMC Technologies (FTI), and Denbury Resources (DNR).
In the next article, let’s look at the component sector performances of SPY, as well as the overall US stock market response for the day.