Month: August 2015

Daily Market Update – August 13,  2015  (Close)

Waking up in the morning and learning that the world’s second largest economy had devalued its currency for the third consecutive day should have added some credance to those believing that the People’s Bank of China was planning an overall 10% reduction in the Yuan’s value.

I don’t really follow, nor do I understand currencies, but that’s pretty huge.

As it is, the 3 days of central bank action, which also included moving in to support the currency on the same day that it was devalued, has already led to a large move and disrupted markets all around. Worldwide stocks, bonds and currencies have felt the impact of the move.

For those following interest rates and pointing to them just a few weeks ago that the die was cast, well those rates are down about 12% in the past month.

That’s huge, too.

Today they were up almost 3% and you probably know how big that kind of a move is, too.

This morning the PBOC said that it is done, but it’s not entirely clear if that is something to really accept on face value. The government of China has taken some very strong steps in an effort to control their economy, stock market and currency. What has to be of some concern is that reports from a few years ago that questioned the reality of the Chinese economic expansion may really have all been true. What was alleged at that time was that the government was engaged in a huge move to grow cities and population centers and was essentially building ghost towns with the most modern of amenities.

Lots of activity and lots of economic growth fueled by government projects, but without any reasonable expectation that they would lead to any real kind of economic growth after the projects were completed.

So we’ll see whether the fears of a Chinese bubble, which were once laughed at, may be the real reality.

What is especially of concern is that the trustworthiness of the data released by the Chinese government may be as suspect as the data released by its publicly traded companies.

That’s fine when the news is all good and markets head higher, but it’s not so good on the way down.

This morning’s futures, though, wa taking its lead from the really nice come back in the market that was seen yesterday. After having been down about 270 points, the bounce started at about noon. It looked as if Apple was leading that charge higher, just like in the old days. It had been sharply lower, but turned things around before the general market and the market then seemed to follow.

Technicians will simply say that the 2045 level of support in the S&P 500 held and would disregard any individual stock as having played a role in moving a broad basket of stocks.

That gain lasted most of the day but finally withered out in the final 30 minutes as materials and energy stocks reversed their previous gains on the week.

WIth now just one day left in the week, there is still a chance for some assignments or rollovers, so the hope at this point is simply that tomorrow doesn’t take its cue from some of the week’s earlier responses to the situation in China, and instead focuses on our own economic fundamentals.

For now, with more retail sales earnings reports being released, those fundamentals may not be so great, even as the JOLTS Report showed more people leaving their jobs for new jobs, which typically means new jobs with higher salaries.

As today’s Retail Sales Report was released, there will be time over this week and next to digest what in line retail sales data may mean for the FOMC given a context of major retailers reporting very disappointing revenues in the early stages of their reporting.

We may as we
ll also try to figure out what all of that means for the market, as it looks for any fuel to light up a rally.

Daily Market Update – August 13,  2015  (8:30 AM)

Waking up in the morning and learning that the world’s second largest economy had devalued its currency for the third consecutive day should have added some credance to those believing that the People’s Bank of China was planning an overall 10% reduction in the Yuan’s value.

I don’t really follow, nor do I understand currencies, but that’s pretty huge.

As it is, the 3 days of central bank action, which also included moving in to support the currency on the same day that it was devalued, has already led to a large move and disrupted markets all around. Worldwide stocks, bonds and currencies have felt the impact of the move.

For those following interest rates and pointing to them just a few weeks ago that the die was cast, well those rates are down about 12% in the past month.

That’s huge, too.

This morning the PBOC says that it is done, but it’s not entirely clear if that is something to really accept on face value. The government of China has taken some very strong steps in an effort to control their economy, stock market and currency. WHat has to be of some concern is that reports from a few years ago that questioned the reality of the CHinese economic expansion may really have all been true. What was alleged at that time was that the government was engaged in a huge move to grow cities and population centers and was essentially building ghost towns with the most modern of amenities.

Lots of activity and lots of economic growth fueled by government projects, but without any reasonable expectation that they would lead to any real kind of economic growth after the projects were completed.

So we’ll see whether the fears of a Chinese bubble, which were once laughed at, may be the real reality.

What is especially of concern is that the trustworthiness of the data released by the CHinese government may be as suspect as the data released by its publicly traded companies.

That’s fine when the news is all good and markets head higher, but it’s not so good on the way down.

This morning’s futures, though, is taking its lead from the really nice come back in the market that was seen yesterday. After having been down about 270 points, the bounce started at about noon. It looked as if Apple was leading that charge higher, just like in the old days. It had been sharply lower, but turned things around before the general market and the market then seemed to follow.

Technicians will simply say that the 2045 level of support in the S&P 500 held and would disregard any individual stock as having played a role in moving a broad basket of stocks.

WIth two days now left in the week, there is still a chance for some assignments or rollovers, so the hope at this point is simply that these last two days don’t take their cue from some of the week’s earlier responses to the situation in China, and instead focuses on our own economic fundamentals.

For now, with more retail sales earnings reports being released, those fundamentals may not be so great, even as the JOLTS Report showed more people leaving their jobs for new jobs, which typically means new jobs with higher salaries.

As today’s Retail Sales Report is released, there will be time over this week and next to digest what poorer than expected retail sales may mean for the FOMC and what that may mean for the market, as it looks for any fuel to light up a rally.

Daily Market Update – August 12,  2015  (Close)

Yesterday was a major disappointment following Monday’s very nice and broad rally, but probably shouldn’t have come as too much of a surprise to anyone. That is except for the few that thought that maybe Monday was the start of something that would take us to new highs.

As it is, after yesterday’s 200+ point loss that made Monday seem as if it never existed, the S&P 500 is barely 2.5% below those all time highs.

This morning that figure was going to get larger as the futures were again down sharply again being whipsawed by China as its markets again fell and late in their trading day the government stepped in to support the currency.

Given that it devalued it just a couple of days earlier it was a little unusual that it was now stepping in to support it. History has long shown that governments attempting to support their currency against what the market is doing tends to be a waste of time.

If there was any doubt as to whether there would be any thing actually going on while the Federal Reserve was on its vacation, China has left no doubt that it was fully capable of filling whatever voids we might have.

So this morning our futures were again down triple digits as we awaited the first of the major national retailers getting ready to report their earnings. Most of those, other than Wal-Mart shouldn’t be terribly impacted by currency and may in fact find benefit to the devaluation of the Chinese Yuan. Although the news of the Chinese currency was just beginning to get digested, that could result in providing improved guidance, which could easily offset disappointing earnings, if that is going to be retail’s theme this quarter.

Of course, that could lead to some minor deflation on our end if the price of consumer goods, largely imported from China falls or even stays the same. That would make it a little more difficult to find the data justifying an interest rate increase.

While most everyone agrees that it’s likely that we will see that increase come in September, suddenly there is reason to re-think that target.

Meanwhile, Macys did get retail off to a start early this morning and it reported disappointing revenues and wasn’t giving positive guidance, either. It blamed a decrease in foreign tourist shopping, an indirect result of the US Dollar’s relative strength.

Everything is increasingly connected.

This morning the market’s were down before the opening bell, but the numbers had improved just a little, or at least they may have stabilized. However, if Macys was going to be reflective of what other retailers are going to report, there may not be much reason to expect the market doing anything to turn things around this week or maybe not even next week.

But if you thought that Tueday was a whipsaw day, you would have really been impressed with the way today ended, after the DJIA having been down by about 260 points, only to close the day barely unchanged, while the S&P 500 actually gained a bit.

Since Wednesdays are usually slow days, I didn’t expect to do much today, but being reluctant to see any of those positions that were expiring this week potentially slip away from being assigned and then further slip away from being rolled over, thought that I might do something.

Because of that, there might have been reason to consider some early rollovers just to capture some more income and forego the possibility of collecting some cash from assignments.

That was the view from this morning, but as is always the case,the view is subject to change and very likely to change.

I’m glad it did and I didn’t.

Daily Market Update – August 12,  2015  (8:30 AM)

Yesterday was a major disappointment following Monday’s very nice and broad rally, but probably shouldn’t have come as too much of a rurprise to anyone. That is except for the few that thought tha maybe Monday was the start of something that would take us to new highs.

As it is, after yesterday’s 200+ point loss that made Monday seem as if it never existed, the S&P 500 is barely 2.5% below those all time highs.

This morning that figure is going to get larger as the futures are again down sharply again being whipsawed by China.as its markets again fell and late in their trading day the government stepped in to support the currency.

Given that it devalued it just a couple of days earlier it was a little unusual that it was now stepping in to support it. History has long shown that governments attempting to support their currency against what the market is doing tends to be a waste of time.

If there was any doubt as to whether there would be any thing actually going on while the Federal Reserve was on its vqacation, China has left no doubt that it was fully capable of filling whatever voids we might have.

So this morning our futures are again down triple digits as we await the first of the major national retailers getting ready to report their earnings. Most of those, other than Wal-Mart shouldn’t be terribly impacted by currency and may in fact find benefit to the devaluation of the Chinese Yuan. Although the news of the CHinese currency is just beginning to get digested, that could result in providing improved guidance, which could easily offset disappointing earnings, if that is going to be retail’s theme this quarter.

Of course, that could lead to some minor deflation on our end if the price of consumer goods, largely imported from China falls or even stays the same. That would make it a little more difficult to find the data justifying an interest rate increase.

While most everyone agrees that it’s likely that we will see that increase come in September, suddenly there is reason to re-think that target.

Meanwhile, Macys did get retail off to a start early this morning and it reported disappointing revenues and wasn’t giving positive guidance, either. It blamed a decrease in foreign tourist shopping, an indirect result of the US Dollar’s relative strength.

Everything is increasingly connected.

This morning the market’s are down before the opening bell, but the numbers have improved just a little, or at least they may have stabilized. However, if Macys is going to be reflective of what other retailers are going to report, there may not be much reason to expect the market doing anything to turn things around this week or maybe not even next week.

Since Wednesdays are usually a slow day, I don’t expect to do much today, but would be reluctant to see any of those positions that were expiring this week potentially slip away from being assigned and then further slip away from being rolled over.

Becasue of that, there may be reason to consider some early rollovers just to capture some more income and forego the possibility of collecting some cash from assignments.

That’s the view from this morning, but as is always the case, subject to change and very likely to change.

Daily Market Update – August 11,  2015  (Close)

Yesterday’s big news, which people are still scratching their heads over, was the news that Google is going to become a subsidiary of a new holding company to be named “Alphabet.”

It was in the name of earnings transparency that sent Google shares soaring in the after hours. As far as investors are concerned the re-organization will split out Google earnings and then lump everything else together. Now, everything is lumped together so investors may not really have a good way of measuring how Google’s core business, the only one that really makes money, is doing.

The re-organization is a good example of why company founders might want to consider having dual class stocks. It makes it much easier to make decisions when your shareholders have no vote or say in matters.

The big story of the day before the Google news was that the market was up more than 200 points and never faltered on its way there.

It seems that the real impetus for the rise was the announcement that Greece was going to get access to capital by having agreed to a third bail out  That seemed to be much more important than the earlier overnight news that the Chinese stock markets had climbed 5%. The moment that news was announced the market really took off, seemingly oblivious to the history of this sort of thing, but that’s going to be a recurring problem for some other day.

This morning the early news was again related to China, but this time it’s not so good for us. The Chinese government announced an unexpected devaluation of their currency, which isn’t a very good thing for US companies doing significant business in China, as the strong USD is already problematic.

Making US goods even more expensive in local markets isn’t going to help sell more Teslas or even KFC drumsticks. You can already picture the amended guidance that is likely to come from many companies prior to the next quarter’s earnings reports.

The reaction of the futures this morning to that news was to take the market down by as many points as it had been higher yesterday morning prior to the Greek news.

That the market gaves up those nice gains from yesterday, shouldn’t be too surprising, even if there was no adverse news from China. It hasn’t exactly been easy stringing together two or more nicely positive market days, so why should today have been any different?

With no new purchases yesterday to begin the week and the closing of the Texas Instruments position, there was some opportunity to add a new position today in the face of broad weakness. I was happy yo have had the opportunity to get a rollover trade down so early in the week and for a position expiring next week, to boot. Additionally, it was nice getting the week started with the sale of some calls on an uncovered position, but there’s still much more needed in that regard.

I thought that the morning’s purchase of a stock going ex-dividend tomorrow was well timed and with as little as 3 hours to go until the market was to close I had concerns of those shares potentially being assigned away early as it was bucking the strong downward trend.

That changed, though.

It will be interesting to see whether the market can shake off today’s sell-off that, like yesterday, showed no signs of giving up steam.

The good news, however, may start coming from national retailers this week as they begin to report their earnings. Perhaps not so much related to their performance in the past quarter, but rather looking ahead to the next quarter when their cheaper imports from China may help to increase their profit margins and could conceivably lead to lower consumer prices, or at least a slow down in the rate of increase.

From the FOMC’s perspective that might not be a good thing if they’re hell bent on raising rates, but there’s plenty of time for hypotheticals to play themselves out before the September FOMC meeting.

It’s all about the give and take and the ups and downs.

You would be forgiven if beginning to feel a little bit sea sick, though.

Daily Market Update – August 11,  2015  (8:30 AM)

Yesterday’s big news, which people are still scratching their heads over, was the news that Google is going to become a subsidiary of a new holding company to be named “Alphabet.”

It was in the name of earnings transparency that sent Google shares soaring in the after hours. As far as investors are concerned the re-organization will split out Google earnings and then lump everything else together. Now, everything is lumped together so investors may not really have a good way of measuring how Google’s core business, the only one that really makes money, is doing.

The re-organization is a good example of why company founders might want to consider having dual class stocks. It makes it much easier to make decisions when your shareholders have no vote or say in matters.

The big story of the day before the Google news was that the market was up more than 200 points and never faltered on its way there.

It seems that the real impetus for the rise was the announcement that Greece was going to get access to capital by having agreed to a third bail out  That seemed to be much more important than the earlier overnight news that the Chinese stock markets had climbed 5%. The moment that news was announced the market really took off, seemingly oblivious to the history of this sort of thing, but that’s going to be a recurring problem for some other day.

This morning the early news is again related to China, but this time it’s not so good for us. The Chinese government announced an unexpected devaluation of their currency, which isn’t a very good thing for US companies doing significant business in China, as the strong USD is already problematic.

Making US goods even more expensive in local markets isn’t going to help sell more Teslas or even KFC drumsticks. You can already picture the amended guidance that is likely to come from many companies prior to the next quarter’s earnings reports.

The reaction of the futures this morning to that news is to take the market down by as many points as it had been higher yesterday morning prior to the Greek news.

If the market gives up some of those nice gains from tomorrow, it shouldn’t be too surprising, even if there was no adverse news from China. It hasn’t exactly been easy stringing together two or more nicely positive market days, so why should today have been any different?

With no new purchases yesterday to begin the week and the closing of the Texas Instruments position, there may be some opportunity to add a new position today in the event that there is some broad weakness or even just in a particular sector. I was happy yo have had the opportunity to get a rollover trade down so early in the week and for a position expiring next week, to boot. Additionally, it was nice getting the week started with the sale of some calls on an uncovered position, but there’s still much more needed in that regard.

It will be interesting to see whether the market can shake off this early morning sell-off in the futures that has been growing as more people are apparently waking up to the news and doing something about it.

The good news, however, may start coming from national retailers this week as they begin to report their earnings. Perhaps not so much related to their performance in the past quarter, but rather looking ahead to the next quarter when their cheaper imports from China may help to increase their profit margins and could conceivably lead to lower consumer prices, or at least a slow down in the rate of increase.

From the FOMC’s perspective that might not be a good thing if they’re hell bent on raising rates, but there’s plenty of time for hypotheticals to play themselves out before the September FOMC meeting.

It’s all about the give and take.

Daily Market Update – August 10,  2015  (Close)

On the economic news front this is a relatively quiet week, although Wednesday’s JOLTS report could be a sleeper.

It is a report that Janet Yellen herself mentioned about 6 months ago that it was one of the key reports that she looks at. The key pieces of information that can be gotten out of the JOLTS report is whether there’s optimism in the job market and whether there is upward pressure on wages.

The latter is especially important as despite generally strong Employment Situation Reports, the growth in jobs has been, to a degree, discounted, because those new jobs weren’t being accompanied by wages growth.

Other than when she first brought our attention to that report when the market took its information and drove prices higher, it has done nothing to spur any one’s

It is a quiet month for Federal Reserve Governors’ speeches, but we do have 2 of those this week and there may be some more hints regarding what the FOMC may have in mind for their September meeting. Even though there’s still not too much data that would seem to support an interest rate increase at that time, it increasingly appears that despite averring to be data driven, the FOMC is ready, anxious and itching to finally pull the trigger. 

Otherwise there is a Retail Sales Report, but what really counts is when the retailers themselves start reporting their quarterly earnings and that begins this week with JW Nordstrom and then gets really busy the following week.

Overnight, China got the week started on a good note as its markets rose about 5%.

Although our own futures trading this morning wasn’t reflecting that kind of optimism, it’s far better than waking up on a Monday morning and discovering that the Chinese markets fell 5% overnight. We’ve been there and we’ve done that recently.

How long China can continue keeping its markets behaved is anyone’s guess, as it has thus far been successful in preventing a meltdown, but there have been a series of very sharp moves up and down and that should always be a cause for concern.

Today’s 5% gain came even with bad economic news, so you have to wonder if they are taking on some of the perverse interpretations of the news as we occasionally do.

Instead of taking our cue this morning from China, at about 8:15 AM this morning the futures took a jump higher on what was perceived as good news coming from Greece and their access to capital.

We’ll take whatever good news there is and wherever it may come from at this point.

What really came as a surprise is that the rally not only had legs and never wavered through the day, but it actually doubled the gains from the futures by the time the closing bell came around.

This week, with my cash reserves at their lowest levels in at least 5 years, I would be more than happy to see the existing positions set to expire this week get assigned. Without wanting to jinx that from occurring, there is a decent chance of that being the case, but I would also welcome the opportunity to roll them over, otherwise.

Another surprise came today as there was an opportunity to roll over those Twitter puts all the ay to January 2016. That should give time for something to happen that would stem the tide of bad news and corporate mis-steps.

Certainly, as was the case last week, I’d also welcome any chance to sell some new calls on uncovered positions, but again that may take a phenomenon that we haven’t seen much of lately, which is stringing together a couple of positive days. After 7 straight losing sessions you might think that we were due for something good.

At least the
re was one opportunity to get those calls sold, so that’s a start.

Then there was the chance to close out that Texas Instruments position and maybe use the money to do something else, so maybe there’s some hope yet for this week.

Who would have guessed that it might be Greece, but we have a full day of trading ahead to see what kind of staying power that news may have.

Daily Market Update – August 10,  2015  (8:30 AM)

On the economic news front this is a relatively quiet week, although Wednesday’s JOLTS report could be a sleeper.

It is a report that Janet Yellen herself mentioned about 6 months ago that it was one of the key reports that she looks at. The key pieces of information that can be gotten out of the JOLTS report is whether there’s optimism in the job market and whether there is upward pressure on wages.

The latter is especially important as despite generally strong Employment Situation Reports, the growth in jobs has been, to a degree, discounted, because those new jobs weren’t being accompanied by wages growth.

Other than when she first brought our attention to that report when the market took its information and drove prices higher, it has done nothing to spur any one’s

It is a quiet month for Federal Reserve Governors’ speeches, but we do have 2 of those this week and there may be some more hints regarding what the FOMC may have in mind for their September meeting. Even though there’s still not too much data that would seem to support an interest rate increase at that time, it increasingly appears that despite averring to be data driven, the FOMC is ready, anxious and itching to finally pull the trigger. 

Otherwise there is a Retail Sales Report, but what really counts is when the retailers themselves start reporting their quarterly earnings and that begins this week with JW Nordstrom and then gets really busy the following week.

Overnight, China got the week started on a good note as its markets rose about 5%.

Although our own futures trading this morning wasn’t reflecting that kind of optimism, it’s far better than waking up on a Monday morning and discovering that the Chinese markets fell 5% overnight. We’ve been there and we’ve done that recently.

How long China can continue keeping its markets behaved is anyone’s guess, as it has thus far been successful in preventing a meltdown, but there have been a series of very sharp moves up and down and that should always be a cause for concern.

Today’s 5% gain came even with bad economic news, so you have to wonder if they are taking on some of the perverse interpretations of the news as we occasionally do.

Instead of taking our cue this morning from China, at about 8:15 AM this morning the futures took a jump higher on what was perceived as good news coming from Greece and their access to capital.

We’ll take whatever good news there is and wherever it may come from at this point.

This week, with my cash reserves at their lowest levels in at least 5 years, I would be more than happy to see the existing positions set to expire this week get assigned. Without wanting to jinx that from occurring, there is a decent chance of that being the case, but I would also welcome the opportunity to roll them over, otherwise.

Certainly, as was the case last week, I’d also welcome any chance to sell some new calls on uncovered positions, but again that may take a phenomenon that we haven’t seen much of lately, which is stringing together a couple of positive days. After 7 straight losing sessions you might think that we were due for something good.

Who would have guessed that it might be Greece, but we have a full day of trading ahead to see what kind of staying power that news may have.