Month: September 2015

Daily Market Update – September 4,  2015  (7:00 AM)

The Week in Review will be posted by 6 PM and the Weekend Update will be posted by Noon on Sunday.

The following trade outcomes are possible today:

Assignments: GE

Rollovers:   MOS

Expirations:   BAC, CSCO, IP

The following were ex-dividend this week:   HAL (8/31 $0.18), HFC (8/31 $0.33), COH (9/3 $0.34), BAC (9/2 $0.05),                          MOS (9/1 $0.28), JOY (9/2 $0.20), KSS (9/4 $0.45), HPQ (9/4 $0.18)

The following will be ex-dividend next week: NEM (9/8 $0.025), WY (9/9 $0.31), GM (9/10 $0.36), KO (9/11 $0.33), BBY (p/11 $0.23)

Trades, if any, will be attempted to be made prior to 3:30 EDT

Daily Market Update – September 3,  2015  (Close)

Yesterday’s nearly 300 point gain was nice, but it still wasn’t enough. The net result coming after a 469 point loss is still nothing to dance about, unless you’re celebrating the fact that it could have been worse.

While I like it when things do get worse, as that tends to lift volatility, I also like stability and certainty. Settling at a lower point and trading within a range can be a nice way to spend some time while waiting for the next leg up as long as the volatility can stay elevated, which it typically does at those lower levels.

Additionally, at some point volatility won’t offset loss in portfolio value or the decrease in income generated if you’re still unable to get call contracts sold.

This morning the pre-opening futures were moderately higher. They doubled, however, when news was released that the number of Jobless Claims increased.

That seems to look as if we are going to be in a “bad news is good news” frame of mind when the Employment Situation Report is released tomorrow. Sending stock futures higher on what can only be interpreted as a negative reflection on the economy can only mean that people interpret it as another reason for the FOMC to not raise interest rates at their upcoming September meeting.

Why there’s still worry about that is one of life’s great mysteries. Most people are probably happy to see that issue leave the scene and stop sucking up so much intellectual capital, allowing us to focus on other things for a change.

But that “bad news is good news” feeling may be the tone for the week. The ADP Report on Wednesday was a little bit lower than expected, but following that large loss the previous day, it’s hard to know whether yesterday’s gain was just a bounce from Tuesday or whether the celebrating of the mildly bad news had already started.

We began this morning without the Chinese stock market’s overnight shenanigans to lead us.

Their markets are closed in celebration of the end of World War II, although it does appear as if the government is trying to send some message to the rest of the world, at the same time.

So we were left to our own devices for two days without worrying about what may be happening in their markets or what new actions their government of central bank may be imposing.

While there may be some comfort in that, there’s usually some kind of a price to be paid when getting a temporary free pass.

That price may come when we wake up next Tuesday morning after our markets had been closed for the Labor Day Holiday to see that the Chinese markets, now once again having opened, went into a Sunday and Monday night meltdown.

Instead, having been left to our own devices today, somehow we ended up squandering what started out as a 200 point gain and after slowly watching that gain erode, it completely disappeared until the final 10 minutes of trading when it recovered some respectability.

Some, but still not enough.

Over the final 2 days of the week I would have loved to have seen any opportunity to sell calls on uncovered positions, but I would especially have liked to see some assignments, particularly as I’ve been borrowing from myself to open some new positions this week. I’d have loved to repay myself or at least continue to have the opportunity to selectively buy on the dip.

That’s a lot of love to spread, but I may be capable of all of it over the final day of the week if I can get what I want. After today, though, it does look less likely.

Thanks for nothing my own devices.

Daily Market Update – September 3,  2015  (9:00 AM)

Yesterday’s nearly 300 point gain was nice, but it still wasn’t enough. The net result coming after a 469 point loss is still nothing to dance about, unless you’re celebrating the fact that it could have been worse.

While I like it when things do get worse, as that tends to lift volatility, I also like stability and certainty. Settling at a lower point and trading within a range can be a nice way to spend some time while waiting for the next leg up as long as the volatility can stay elevated, which it typically does at those lower levels.

Additionally, at some point volatility won’t offset loss in portfolio value or the decrease in income generated if you’re still unable to get call contracts sold.

This morning the pre-opening futures were moderately higher. They doubled, however, when news was released that the number of Jobless Claims increased.

That seems to look as if we are going to be in a “bad news is good news” frame of mind when the Employment Situation Report is released tomorrow. Sending stock futures higher on what can only be interpreted as a negative reflection on the economy can only mean that people interpret it as another reason for the FOMC to not raise interest rates at their upcoming September meeting.

Why there’s still worry about that is one of life’s great mysteries. Most people are probably happy to see that issue leave the scene and stop sucking up so much intellectual capital, allowing us to focus on other things for a change.

But that “bad news is good news” feeling may be the tone for the week. The ADP Report on Wednesday was a little bit lower than expected, but following that large loss the previous day, it’s hard to know whether yesterday’s gain was just a bounce from Tuesday or whether the celebrating of the mildly bad news had already started.

We begin this morning without the Chinese stock market’s overnight shenanigans to lead us.

Their markets are closed in celebration of the end of World War II, although it does appear as if the government is trying to send some message to the rest of the world, at the same time.

So we are left to our own devices for two days without worrying about what may be happening in their markets or what new actions their government of central bank may be imposing.

While there may be some comfort in that, there’s usually some kind of a price to be paid when getting a temporary free pass.

That price may come when we wake up next Tuesday morning after our markets had been closed for the Labor Day Holiday to see that the CHinese markets, now once again having opened, went into a SUnday and Monday night meltdown.

Over the next 2 days, I would love to see any opportunity to sell calls on uncovered positions, but I would especially like to see some assignments, particularly as I’ve been borrowing from myself to open some new positions this week. I’d love to repay myself or at least continue to have the opportunity to selectively buy on the dip.

That’s a lot of love to spread, but I may be capable of all of it over the next two days if I can get what I want.

Daily Market Update – September 2,  2015  (Close)

Yesterday’s 469 point decline was just another in a series of unusually large moves that have come in both directions, that can’t really be called unusual anymore.

For those who look at charts, the market had done very well at defending the 2045 level on the S&P 500 after repeated attempts to assault it.

During a period of time preceding the  initial 10% correction that we had just seen, the market was making a series of lower highs and higher lows. That kind of situation is one that technicians believe predicts a large move, but they can’t quite tell you in which direction it’s going to be, so that means you move onto the next tool, which is a coin flip.

In this case that pattern did precede a precipitous drop and that 2045 support level didn’t hold.

The next support level is at about 1865 and we were getting close to re-testing that yesterday, but this morning’s bounce in the futures created some more distance from that support level and that distance not only lasted through the regular trading session, but actually grew just a bit.

That’s a good thing because there could be some concern that if that 1870 level is breached, there’s only minimal support at 1830 and the next stop is 1750, which would be right at bear market territory.

To put it into DJIA terms, that would be a drop of about 1200 points, so we are about halfway there, after yesterday’s loss.

After a quiet trading day in China overnight, our futures were pointing to what would ordinarily be a nice move higher. But after a 469 point loss the previous day, it will take a lot more to make up for that retreat.

The day’s final gain, more than 200 points was nice, but it just wasn’t nice enough.

Surprisingly, despite the very negative tone of the first 2 trading days, I’ve found reasons to buy and have also been lucky enough to find some opportunities to roll some positions over. 

As long as the primary goal is to generate income then the goal is basically to keep that ball alive and doing something more than just sitting there, especially while the broader market is declining.

With the Employment SItuation Report coming on Friday, there’s really not much that’s inherent to this market that should account for any meaningful moves until then, but we will continue trading in response to what happens overseas until that is either no longer an issue or we come to the realization that it really shouldn’t be an issue.

However, that won’t be too much of an issue as this week will be heading into its latter half as the CHinese markets will be closed as they commemorate the end of World War II in a large national event, that has even seen the closure of factories in and around Beijing days ahead of events in order to attempt and improve the air quality.

That certainly won’t be good for earnings comparisons, but given that the numbers were always suspect, that shouldn’t make too much of a difference, anyway.

While economic woes in China certainly do have an impact on many US companies, the overwhelming realization has to be that the US economy is not only Number 1, but also the best in the world at the time being regardless of having continually been written off in light of the miracle of China.

There will come a point that the market will celebrate that fact and disengage from moving in response to the Number 2 economy in the world that may have received lots of support from smoke and mirrors.

For the rest of the week I would be stunned if I actually made any more trades to open new positions. With 3 opened this week and 2 rollovers and an unusually large number of ex-dividend positions, this had th
e feeling of weeks from a long time ago.

Hopefully, while I do like the higher level of volatility and the better premiums it creates, I would give some of that up for the chance to make some call sales on uncovered positions.

I know that may be asking for too much, but you never know unless you ask.

Daily Market Update – September 2,  2015  (8:30 AM)

Yesterday’s 469 point decline was just another in a series of unusually large moves that have come in both directions, that can’t really be called unusual anymore.

For those who look at charts, the market had done very well at defending the 2045 level on the S&P 500 after repeated attempts to assault it.

During a period of time preceding the  initial 10% correction that we had just seen, the market was making a series of lower highs and higher lows. That kind of situation is one that technicians believe predict a large move, but they can’t quite tell you in which direction it’s going to be, so that means you move onto the next tool, which is a coin flip.

In this case that pattern did precede a precipitous drop and that 2045 support level didn’t hold.

The next support level is at about 1865 and we were getting close to re-testing that yesterday, but this morning’s bounce in the futures creates some more distance from that support level.

There could be some concern that if that 1870 level is breached, there’s only minimal support at 1830 and the next stop is 1750, which would be right at bear market territory.

To put it into DJIA terms, that would be a drop of about 1200 points, so we are about halfway there, after yesterday’s loss.

After a quiet trading day in China overnight, our futures are pointing to what would ordinarily be a nice move higher. But after a 469 point loss the previous day, it will take a lot more to make up for that retreat.

Surprisingly, despite the very negative tone of the first 2 trading days, I’ve found reasons to buy and have also been lucky enough to find some opportunities to roll some positions over. 

As long as the primary goal is to generate income then the goal is basically to keep that ball alive and doing something more than just sitting there.

WIth the Employment SItuation Report coming on Friday, there’s really not much that’s inherent to this market that should account for any meaningful moves until then, but we will continue trading in response to what happens overseas until that is either no longer an issue or we come to the realization that it really shouldn’t be an issue.

While economic woes in China certainly do have an impact on many US companies, the overwhelming realization has to be that the US economy is not only Number 1, but also the best in the world at the time being.

There will come a point that the market will celebrate that fact and disengage from moving in response to the Number 2 economy in the world that may have received lots of support from smoke and mirrors.

FOr the rest of the week I would be stunned if I actually made any more trades to open new positions. With 3 opened this week and 2 rollovers and an unusually large number of ex-dividend positions, this had the feeling of weeks from a long time ago.

Hopefully, while I do like the higher level of volatility and the better premiums it creates, I would give some of that up for the chance to make some call sales on uncovered positions.

I know that may be asking for too much, but you never know unless you ask.

Daily Market Update – September 1,  2015  (Close)

There are some nights that I go to bed just knowing that the following day is not likely to be a very good one.

Last night was one of those nights as the S&P 500 futures were tumbling and the outlook for China and Japan weren’t looking very good as their opens were getting near.

I tend to wake up even earlier than usual the next morning to see whether overseas markets were able to turn around, but more importantly to see whether our futures were able to turn around in the early hours of the morning.

Not as if there was really anything that could be done about it, other than having an extra cup of coffee.

Many times those markets do turn around because the overnight futures trading is really very light and it doesn’t take that much to stop what may be looking like a hemorrhage, but isn’t really.

For anyone that actually looks at individual stock prices in the pre-open, you may recall how Holly Frontier had fallen $12 one morning last week on a volume of about 305 shares. Once the opening bell rang, Holly Frontier started trading at a loss of about $1, pretty much where it ended the day even as the market fell by more than 3%.

This morning it was United Continental that was down about 20% in the pre-open on also just a couple of hundred of shares.

This morning, though, it looked as if the selling in the S&P 500 futures had gotten worse from the previous evening.

Overnight China fell, but not as much as has become their norm lately, but Japan also fell and they fell with Chinese market-like quality and quantity, approaching a 5% decline for their session.

Hong Kong, too and Europe was now following.

The news from China wasn’t very good, especially as you start seeing some more desperate kind of moves, which includes some coerced buying by brokerage houses and increasing threats of arresting and punishing “malicious short sellers.”

Last week’s impressive recovery during the middle of the week took the S&P 500 out of correction territory, but this morning’s early losses would put it right back. That tends to be the pattern of markets that feature really large moves higher, as we’ve definitely been seeing over the past few months and especially pronounced over the last few weeks.

The net sum of all of the large moves higher and large moves lower tends to be a negative one and in a meaningful way.

So far, this recent series of very large moves higher has certainly been consistent with history.

With the morning looking as if it was about to get off to a very sour start, it probably wasn’t a great time to go hunting for anything that looked like a bargain, as that hasn’t necessarily been a good strategy of late, despite those occasional appearances to the contrary.

Still, it was hard to resist a small position in General Electric for the day and somehow a couple of rollover opportunities popped up, as well, despite what would be another 400+ down session.

At this point, probably the best thing the market could do would be to re-group at this lower level and build the kind of technical support necessary to launch a move higher than can be sustained. These quantum leaps higher are basically worthless, as they represent points that people who wished that they had gotten out earlier then simply take the new opportunity presented to them to cash out.

That sort of thing doesn’t happen when the recovery from a severe drop is slow and methodical.

Forget about technical analysis and support and resistance levels. It’s all about basic investor psychology th
at continually balances fear and greed.

With that drop the fear is definitely overtaking the greed, as there’s not too much evidence of bottom dipping going on.

Today was expected to be a likely day of observation, but maybe the rest of the week may turn out that way, as it culminates with the Employment Situation Report.

The August data is usually on the low side, but a larger than expected number might lead to selling, at least the way our mindset has been for the past year or more. However, we may now be finding ourselves at a cross road in the realization that our economy is a relative winner against the rest of the world and a rate increase would just be confirmation of that fact.

I hope that number is a good one on Friday, not just for what it means for individuals in the workforce, but for what it could mean as it may be the start of a market resurgence based on optimism for accelerating economic growth.

Daily Market Update – September 1,  2015  (8:00 AM)

There are some nights that I go to bed just knowing that the following day is not likely to be a very good one.

Last night was one of those nights as the S&P 500 futures were tumbling and the outlook for China and Japan weren’t looking very good as their opens were getting near.

I tend to wake up even earlier than usual the next morning to see whether overseas markets were able to turn around, but more importantly to see whether our futures were able to turn around in the early hours of the morning.

Many times they do because the overnight futures trading is really very light and it doesn’t take that much to stop what may be looking like a hemorrhage, but isn’t really.

For anyone that actually looks at individual stock prices in the pre-open, you may recall how Holly Frontier had fallen $12 one morning last week on a volume of about 305 shares. Once the opening bell rang, Holly Frontier started trading at a loss of about $1, pretty much where it ended the day even as the market fell by more than 3%.

This morning, though, it looks as if the selling in the S&P 500 futures has gotten worse.

Overnight China fell, but not as much as has become their norm lately, but Japan also fell and they fell with Chinese market-like quality.

Hong Kong, too and Europe is now following.

The news from China isn’t very good, especially as you start seeing some more desperate kind of moves, which includes some coerced buying by brokerage houses and increasing threats of punishing “malicious short sellers.”

Last week’s impressive recovery during the middle of the week took the S&P 500 out of correction territory, but this morning’s early losses will put it right back. That tends to be the pattern of markets that feature really large moves higher, as we’ve definitely been seeing over the past few months and especially pronounced over the last few weeks.

The net sum of all of the large moves higher and large moves lower tends to be a negative one and in a meaningful way.

So far, this recent series of very large moves higher has certainly been consistent with history.

With the morning looking as if it about to get off to a very sour start, it’s probably not a good time to go hunting for anything that looks like a bargain, as that hasn’t necessarily been a good strategy of late, despite those occasional appearances to the contrary.

At this point, probably the best thing the market could do would be to re-group at this lower level and build the kind of technical support necessary to launch a move higher than can be sustained. These quantum leaps higher are basically worthless, as they represent points that people who wished that they had gotten out earlier then simply take the new opportunity presented to them to cash out.

That sort of thing doesn’t happen when the recovery from a severe drop is slow and methodical.

Forget about technical analysis and support and resistance levels. It’s all about basic investor psychology that continually balances fear and greed.

Today is likely to be one of observation and that may be the case for the rest of the week, as well, which culminates with the Employment Situation Report.

The August data is usually on the low side, but a larger than expected number might lead to selling, at least the way our mindset has been for the past year or more. However, we may now be finding ourselves at a cross road in the realization that our economy is a relative winner against the rest of the world and a rate increase would just be confirmation of that fact.

I hope that number is a good one on Friday, not just for what it means for individuals in the workforce, but for what it could mean as it may be the start of a market resurgence based on optimism for accelerating economic growth.