Daily Market Update – September 2, 2014




Daily Market Update – September 2, 2014 (8:30 AM)

The big story this morning is that the traders are back now that Labor Day has come and gone.

It’s really not as if anyone went away for the summer, it’s just that they had other things to do besides trading all day long. Market volume was abysmally low during the climb higher and the only really elevation in trading activity came during the very brief decline earlier in the summer.

But this week people start coming back and volume should also be increasing, as if they had absolutely no ability to conduct business from the Hamptons.

Fortunately there was nothing on a geo-political front occurring during this past long holiday weekend to shake things up, because that could have been a messy way to get a shortened week off to a start. As a result the market looks as if it will get off to a really benign start and there’s very little scheduled news during the week to create expectations for market reactions in either direction..

Although there is the monthly Employment Situation Report on Friday and a number of Federal Reserve Governors will be speaking during the week, including the one most recent dissenting voter, there’s not likely to be much in the way of surprise coming from these scheduled events.

That, again, puts the spotlight on geo-political events and that could also take markets in either direction, although with the NATO meeting this week it’s hard to see how anything could move the markets higher as a result of those events, unless an acquiescent Putin is the end result. However, if the market has any ability to draw upon its recent past, it will realize that the appearance of any kind of acquiescence or agreeability is just a precursor to another bit of disagreeable action.

But what are you going to do? Wait until something happens? That’s actually not a bad idea, except to predicate everything on waiting is probably not a good way to go, but keeping something back for any kind of surprise isn’t necessarily a bad strategy.

Recycling money from assignments is an intermediate approach to dealing with uncertainty. It’s not really committing new money and it doesn’t have to include all of the recently freed up cash, although it easily could and even more.

As usual, when I have funds from assignments looking to be recycled I like to see the market get off to a weak start for the week, but lately that hasn’t been the case, as August had a four week winning streak, with each week getting off to a good start, so I’m not likely to recycle all of it this week.

However, with only a single position set to expire this week that means that there is little to be rolled over into next week, which itself has a mere three positions set to expire. That means I do need to populate this week’s list of income producing stocks and either create the possibility of freeing up cash for next week or at least creating additional income streams from the rollover of any new positions. As a result I’ll probably be looking for new positions with expirations coming this week rather than thinking about the use of expanded options or the monthly. While I would have liked to focus on dividend paying positions, there aren’t too many worthy ones this week that could be of any use.

With the market appearing to get off to a very flat start there’s not much reason to aggressively get into the hunt. Instead, as has been the recent pattern, I’ll wait to see if there is any kind of direction to be established. The downside to waiting, however, is that premiums are already extremely low thanks to the non-existent volatility and are further driven to their depths by having lost one day of time value with the holiday passed.

As far as a constellation of factors goes, those forming this week aren’t very propitious.

The market is at all time highs,  premiums are at all time lows and we are being held hostage by events external to the market in far off lands.

Not my favorite way to get a week off to a start, but somehow it usually works out anyway.