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Weekly Up to Date Performance
January 12 – 16, 2015
This was a fascinating week.
Only one new position was added this week and it ended the week 3.6% higher, beating the unadjusted S&P 500 by an unusually large 4.8% and the unadjusted S&P 500 by 3.8%, as the market finally moved higher on Friday, after 4 very bad days of trading and very discouraging counter movements when occasional rally attempts were underway.
The market itself lost 1.2% on an unadjusted basis and 0.2% an unadjusted basis, adding to a recent collection of bad weeks for markets.
Just as with last week, the large discrepancy between adjusted and unadjusted S&P 500 performance is because no trades were initiated on the Mondays of those two weeks, each of which had very large downward moves. The adjusted relative performance, therefore, only measures relative performance for that period of time that money is put at risk.
However, another relative performance advantage was again seen in the existing positions, this week as they finished the week % lower, but still surpassed the S&P 500 for the week by %, again, with no real stand-outs to account for that out-performance.
Two positions were closed this week, despite another week of poor market action. So far, based on only 3 closed positions for 2015, as opposed to more than 200 for each of the past two years, those positions were 4.7% higher, as compared to the 2.4% advance for the time adjusted market. That represents a 99.1% difference and includes the long suffering shares of LiuLuLemon that were finally assigned after more than a year of holding and somehow actually managed to out-perform the S&P 500 for the period of its holding.
Well, this was yet another interesting week, for sure. That has now made for three of those in a row and all three have been very different, even though the end results have roughly been the same; all dragging the market lower.
At some point there may be a theme in the making. Depending on your perspective that theme in the making is either one to be nervous about or one that offers opportunities.
While I’m not necessarily nervous about all of the widespread uncertainty, I was very happy to have some positions assigned this week and would have been much happier had more gotten assigned.
It was the slowest trading week for a long time with only one new position added. Fortunately, despite the really bad trading action, there was some opportunity to get some rollovers done, but having sold some calls on uncovered positions would have been a nice touch.
To some degree, it was gratifying to again out-perform the broader market, although it’s much more meaningful if that out-performance happens to end you up with more money than less. As least this week did the former, again, in a surprisingly strong way, just like last week, although there’s not too much doubt that Friday’s close was a key factor.
What made this week especially interesting was that everything went haywire all at once.
Interest rates, currencies, stocks, precious metals and oil were all incredibly volatile.
There wasn’t anything really resembling good news this week other than the three consecutive days of oil closing higher during the final hour of trading.
The fact that oil went down so sharply and so precipitously led many to believe that the decline was fueled by speculators. If that’s the case, the climb higher may also hold some surprises.
With a 3 day weekend ahead, lots can happen in international markets to test that theory by the time we’re able to get back into the game on Tuesday morning, but what is clear is that for the past week and a half, the stock market and oil have re-coupled, after a very short time of having gone their own ways.
Whether that’s good or bad depends on your view, but if you hold lots of energy positions and are long the market, the coupling is good if the slide was artificially induced to some degree.
Friday’s final hour close was great, but most people are wary of really large climbs higher, believing that they only serve to mask bearish trends. There’s no doubt that we’ve seen a flurry of those large moves higher, but there’s also no doubt that they’ve come amidst a number of large moves lower.
So far, even with today’s unexpectedly large gain, the recent net result of all of those large moves has still been to the downside, as the S&P 500 is still almost 4% below its very recent high just a few weeks ago and we’re now in the unusual position of having witnessed a triple bottom.
It was unusual enough to have seen a double bottom, especially since for almost the past 3 years we’ve seen great regularity in the size of the declines and their spacing.
Every two months has been the formula, not every two weeks.
So does that make me nervous?
No, it makes me think that there will maybe be the chance of having some sustained volatility and we haven’t seen that since the beginning of 2012.
What also made this week interesting was a mention of good and bad volatility by bankers, who were moaning about their fixed income and currency trading losses.
The good volatility is the kind that sees lots of volleying back and forth. It’s even better if it’s on an intra-day basis. The bad kind is when you see sustained moves higher and lower.
If all of this uncertainty brings a game of volleyball back to the market, I would replace nervousness with happiness and would be very happy to be playing that game.
(Note: Duplicate mention of positions reflects different priced lots):
New Positions Opened: FAST
Puts Closed in order to take profits: none
Calls Rolled over, taking profits, into the next weekly cycle: none
Calls Rolled over, taking profits, into extended weekly cycle: GDX (1/30), HAL (1/30)
Calls Rolled over, taking profits, into the monthly cycle: GME, DOW
Calls Rolled Over, taking profits, into a future monthly cycle: none
Calls Rolled Up, taking net profits into same cycle: none
New STO: none
Put contracts expired: none
Put contracts rolled over: none
Long term call contracts sold: none
Calls Assigned: DNKN, LULU
Calls Expired: AZN, MAT, SBGI
Puts Assigned: none
Stock positions Closed to take profits: none
Stock positions Closed to take losses: none
Calls Closed to Take Profits: none
Ex-dividend Positions: CHK (1/13 $0.09), FCX (1/12 $0.31), WFM (1/14 $0.14)
Ex-dividend Positions Next Week: none
For the coming week the existing positions have lots that still require the sale of contracts: AGQ, ANF, AZN, BP, CHK, CLF, COH, DOW, FCX, HAL, HFC, .JCP, JOY, LVS, MAT, MCP, MOS, NEM, RIG, SBGI, WFM, WLT (See “Weekly Performance” spreadsheet or PDF file)
* If you don’t have a program to read or modify spreadsheets, you can download the OpenOffice Suite at no cost.