Daily Market Update – January 6, 2015 (Close)

 

 

 

 

 

SELECTIONS

MONDAY:   China, Saudi Arabia and Iran. 2016 wasn’t supposed to get off to this kind of a start

TUESDAY:   Asian markets moderated overnight, but US markets look as if they want to give back a big part of yesterday’s late session comeback. Strap on as 2016 continues.

WEDNESDAY:  News that North Korea has an H Bomb, coupled with decreasing iPhone orders added to record cash inflows into mutual funds give the market plenty of reasons to worry. I think the last of those three may be the worst of all.

THURSDAY:  Strap on again. China plummets overnight and taking Europe and US futures along the ride

FRIDAY:

 

 

 

 

 



 

                                                                                                                                           

Today's TradesCash-o-Meter

 

 

 





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Weekly Summary

  

Daily Market Update – January 6, 2016

 
 
Daily Market Update -January 6, 2015 (9:00 AM)
While world markets, with the exception of Shanghai overnight, may be distressed over the news that North Korea has likely successfully tested a hydrogen bomb, I don’t think that is really sending the S&P futures so harshly lower, as they also did to open the New Year on Monday.
Sure, the news is worrisome, but then there’s also the news that Apple iPhone orders are dropping and those shares may be poised to dip below $100, adding to the woes of Carl Icahn, who would join other mega hedge fund people, like Bill Ackman in bemoaning their recent fates.
I think, though, that the real kiss of death this morning is that so much money has been reported to have flowed into mutual funds in 2015 and especially the past 2 months.
When people start thinking it’s a good thing to put money into those vehicles, I think that’s a bad sign for what awaits.
The mutual fund investor hasn’t exactly timed things very well for the past couple of generations, so I wouldn’t get too encouraged by money pouring into those accounts.
One possibility, though, is that more money is pouring in, not because of investor confidence, but because maybe more are now at work and able to contribute to 401k plans.
I’ll leave it to someone else to figure out the details.
The morning’s futures were down about another 1.7% with about 30 minutes to go until the bell rings, so there’s not too much reason to think that things are going to suddenly turn around.
On days like this, just as was the case on Monday, sometimes the best you can hope for is that the market doesn’t close the day with selling into weakness. On Monday there was buying going on into the close and that at least offered a glimmer of hope for Tuesday.
Maybe all that we can ask is for a glimmer of hope for tomorrow.
With the constellation of concerning news this morning and this week, in general, there aren’t many good reasons to feel any optimism, although with earnings season soon ready to start, maybe some companies will be able to pull rabbits out of their hats and get us all concentrating on such fundamentals as real earnings.
That would be a nice diversion from the train wrecks going on in the rest of the world.

 

 

 

Daily Market Update -January 5, 2015 (Close)

US markets did reasonably well yesterday, despite a 272 point loss in the DJIA, as everything is relative.

Shanghai and Europe would have probably been happy with only about a 1.5% loss, as the US cut its own loss by about 40% as the session headed toward the close.

This morning we awoke to news that losses definitely moderated in Shanghai, but our own futures looked as if they wanted to give back what little buying there was in the final hour of yesterday’s trading and by noon it looked as if that was really going to be the case.

While there were certainly lots of losers yesterday and they seemed to be better distributed on the first day of trading than was the case through any part of 2015, today the market did what it did yesterday, as well. It was able to erase a decent portion of the day’s losses. So much so that today the market actually finished a very little bit higher.

The basic rules are still murky, though.

Where there initially appeared to be some promise on the heels of a growing Saudi and Iranian conflict, the energy sector started to give up those early gains fairly quickly during yesterday’s session.

One year to the next are often so different when comparing them on the basis of the markets even as very little may change in the world.

If you’ve been holding your breath for energy prices to rebound, yesterday’s inability to do so, even in the face of what could be some really substantive news, has to be just more disappointment.

There have been so many occasions over the past 15 months that energy looked as if it could have been a bargain and you would have been wrong each of those times, unless you were very short term oriented.

Unfortunately, in 2015, that was true of lots of stocks.

Bargains may not have really been bargains and you do have to wonder at what point 2016 will turn that tide.

I took one chance yesterday with what i thought was a bargain.

It was, though, nothing more than trying to re-establish a position that had been held in succession on 4 occasions over a 5 week period in October and December, that simply looked to be back to a fair price.

Not necessarily a bargain price, but a fair one.

That may be the theme for 2016, or at least this early and unsettled part.

I’d like to have the opportunity to re-establish positions in those stocks that I’ve repeatedly owned over the last 3 to 4 months of 2015, when otherwise my opening of new positions had been very sparse.

For 2016, I wouldn’t mind repeatedly re-inventing the wheel and not looking to far a field for what could serve as an income stream.

For today  I didn’t expect to be doing much, other than looking for some opportunities to roll over positions that may expire this or next week, in addition to any of those recurring opportunities in some familiar stocks.

Since my expectations were low, I couldn’t be overly disappointed with the outcome of sitting and watching silently.

Tomorrow will probably be more of the same.

Most of December was spent watching the ticker and not making very many trades.

January may not be very different, but it’s far too early to tell, as there are still plenty of people who hold onto the myth of those January rallies.

You never know what myths can become real, but for now, I wouldn’t mind seeing some strength in energy and a continued irrational coupling of the market in a move higher with energy.

That would at least bring one different thing into 2016 and maybe some of those other a
reas that were hit so hard in 2015 could show some strength at the expense of the handful that thrived in 2015.

Daily Market Update – January 5, 2016

 

 

 

Daily Market Update -January 5, 2015 (7:30 AM)

US markets did reasonably well yesterday, despite a 272 point loss in the DJIA, as everything is relative.

Shanghai and Europe would have probably been happy with only about a 1.5% loss, as the US cut its own loss by about 40% as the session headed toward the close.

This morning we awoke to news that losses definitely moderated in Shanghai, but our own futures looked as if they wanted to give back what little buying there was in the final hour of yesterday’s trading.

There were certainly lots of losers yesterday and they seemed to be better distributed on the first day of trading than was the case through any part of 2015.

Where there initially appeared to be some promise on the heels of a growing Saudi and Iranian conflict, the energy sector started to give up those early gains fairly quickly during yesterday’s session.

One year to the next are often so different when comparing them on the basis of the markets even as very little may change in the world.

If you’ve been holding your breath for energy prices to rebound, yesterday’s inability to do so, even in the face of what could be some really substantive news, has to be just more disappointment.

There have been so many occasions over the past 15 months that energy looked as if it could have been a bargain and you would have been wrong each of those times, unless you were very short term oriented.

Unfortunately, in 2015, that was true of lots of stocks.

Bargains may not have really been bargains and you do have to wonder at what point 2016 will turn that tide.

I took one chance yesterday with what i thought was a bargain.

It was, though, nothing more than trying to re-establish a position that had been held in succession on 4 occasions over a 5 week period in October and December, that simply looked to be back to a fair price.

Not necessarily a bargain price, but a fair one.

That may be the theme for 2016, or at least this early and unsettled part.

I’d like to have the opportunity to re-establish positions in those stocks that I’ve repeatedly owned over the last 3 to 4 months of 2015, when otherwise my opening of new positions had been very sparse.

For 2016, I wouldn’t mind repeatedly re-inventing the wheel and not looking to far a field for what could serve as an income stream.

For today  I don’t expect to be doing much, other than looking for some opportunities to roll over positions that may expire this or next week, in addition to any of those recurring opportunities in some familiar stocks.

Otherwise, it will probably be more of the same.

Most of December was spent watching the ticker and not making very many trades.

January may not be very different, but it’s far too early to tell, as there are still plenty of people who hold onto the myth of those January rallies.

You never know what myths can become real, but for now, I wouldn’t mind seeing some strength in energy and a continued irrational coupling of the market in a move higher with energy.

That would at least bring one different thing into 2016 and maybe some of those other areas that were hit so hard in 2015 could show some strength at the expense of the handful that thrived in 2015.

Daily Market Update – January 4, 2016 (Close)

 

 

 

Daily Market Update -January 4, 2015 (Close)

They say that the first week of the New Year determines the first month and that the first month determines the outcome for the who year.

Hopefully that’s not going to be the case.

No one really expected to wake up on the first Monday of the New Year to news than Iran and Saudi Arabia were at each other’s throats even more.

If this was 2015, we might have expected that any rise in the price of oil coming from the uncertainty associated with conflict in that region, would have resulted in the US stock market moving higher.

But late last week it seemed as if some normalcy was beginning to return to that relationship and so this morning markets aren’t going up in response.

Maybe, though, they’re just not going down as low as they might ordinarily have done, given what happened overnight in the Shanghai market.

With that market down 7% on halted trading, the contagion spread to Europe this morning.

If our own futures market had followed Germany, instead of looking at a loss of 300 points, we would be about double that amount.

Germany itself was only down about 60% of what transpired in Shanghai, so maybe it is that oil spike that’s giving us some cushion as we got set to begin the day.

That seemed to work for a while, until oil inexplicably reversed course and the market went down more and more, although it did recover significantly from its nadir.

Considering that some of our own weaknesses in 2015 were related to earlier sharp declines in Shanghai, there may be very good reason for concern as the year gets underway.

With a little bit of cash and a few positions expiring this week, I wasn’t too anxious to go and chase the market in what could have been a bargain hunter’s delight.

I thought that I would much rather sit back and see if there was any truth to the contention that the year after a flat year is typically a good year.

You wouldn’t know that by the competing contention about the role of the first week of the year and the outcome of the rest of the year.

As the day does progressed, I was prepared to part with some money if there appeared to be some stability, and I surprised myself by doing so before the stability appeared, but I wasn’t reaching to deeply down the well for that money. I think that I was still be inclined to sit back and watch.

While in 2015 there were a number of days that large early losses were reversed during the course of the day, that’s not a typical pattern and very often a period of stability is followed by a second leg lower, so I wasn’t overly interested in testing the waters too much.

I’d rather not get caught in the second leg.

That wouldn’t be the most auspicious way to begin 2016.

While it may be a difficult first day and maybe a difficult first week, my eyes are going to be focused also on a fairly large number of positions that are set to expire next week as the January 2016 cycle comes to an end.

That coincides with the start of earnings season, so there may be lots of things to be thinking about as we try to sort out the international issues.


Daily Market Update – January 4, 2014

 

 

 

Daily Market Update -January 4, 2015 (9:00 AM)

They say that the first week of the New Year determines the first month and that the first month determines the outcome for the who year.

Hopefully that’s not going to be the case.

No one really expected to wake up on the first Monday of the New Year to news than Iran and Saudi Arabia were at each other’s throats even more.

If this was 2015, we might have expected that any rise in the price of oil coming from the uncertainty associated with conflict in that region, would have resulted in the US stock market moving higher.

But late last week it seemed as if some normalcy was beginning to return to that relationship and so this morning markets aren’t going up in response.

Maybe, though, they’re just not going down as low as they might ordinarily have done, given what happened overnight in the Shanghai market.

With that market down 7% on halted trading, the contagion spread to Europe this morning.

If our own futures market had followed Germany, instead of looking at a loss of 300 points, we would be about double that amount.

Germany itself was only down about 60% of what transpired in Shanghai, so maybe it is that oil spike that’s giving us some cushion as we get set to begin the day.

Considering that some of our own weaknesses in 2015 were related to earlier sharp declines in Shanghai, there may be very good reason for concern as the year gets underway.

With a little bit of cash and a few positions expiring this week, I’m not too anxious to go and chase the market in what could be a bargain hunter’s delight.

I think that I would much rather sit back and see if there’s any truth to the contention that the year after a flat year is typically a good year.

You wouldn’t know that by the competing contention about the role of the first week of the year and the outcome of the rest of the year.

As the day does progress, if there appears to be some stability, I think that I would still be inclined to sit back and watch.

While in 2015 there were a number of days that large early losses were reversed during the course of the day, that’s not a typical pattern and very often a period of stability is followed by a second leg lower.

I’d rather not get caught in the second leg.

That wouldn’t be the most auspicious way to begin 2016.

While it may be a difficult first day and maybe a difficult first week, my eyes are going to be focused also on a fairly large number of positions that are set to expire next week as the January 2016 cycle comes to an end.

That coincides with the start of earnings season, so there may be lots of things to be thinking about as we try to sort out the international issues.


Dashboard – January 4 – 8, 2015

 

 

 

 

 

SELECTIONS

MONDAY:   China, Saudi Arabia and Iran. 2016 wasn’t supposed to get off to this kind of a start

TUESDAY:   Asian markets moderated overnight, but US markets look as if they want to give back a big part of yesterday’s late session comeback. Strap on as 2016 continues.

WEDNESDAY:  News that North Korea has an H Bomb, coupled with decreasing iPhone orders added to record cash inflows into mutual funds give the market plenty of reasons to worry. I think the last of those three may be the worst of all.

THURSDAY:  Strap on again. China plummets overnight and taking Europe and US futures along the ride

FRIDAY:. There may be some rebound today, if the futures are any tell, but even a big rebound wouldn’t be enough to offset the first 4 days of the New Year

 

 

 

 

 



 

                                                                                                                                           

Today's TradesCash-o-Meter

 

 

 





 “SNEAK PEEK AT NEXT WEEK” APPEARS ON FRIDAYS

Sneak PeekPie Chart Distribution

 

 

 

 

 

 

 

Weekly Summary

  

Weekend Update – January 3, 3016

The "What If" game is about as fruitless as it gets, but is also as much a part of human nature as just about anything else.

How else could I explain having played that game at a high school reunion?

That may explain the consistent popularity of that simple question as a genre on so many people’s must read lists as the New Year begins.

Historical events lead themselves so beautifully to the "What If" question because the cascading of events can be so far reaching, especially in an interconnected world.

Even before that interconnection became so established it didn’t take too much imagination to envision far reaching outcomes that would have been so wildly different around the world even a century or more later.

Imagine if the Union had decided to cede Fort Sumpter and simply allowed the South to go its merry way. Would an abridged United States have been any where near the force it has been for the past 100 years? What would that have meant for Europe, the Soviet Union, Israel and every other corner of the world?

Second guessing things can never change the past, but it may provide some clues for how to approach the future, if only the future could be as predictable as the past.

Looking back at 2015 there are lots of "what if" questions that could be asked as we digest the fact that it was the market’s worst performance since 2008.

In that year the S&P 500 was down about 37%, while in 2015 it was only down 0.7%. That gives some sense of what kind of a ride we’ve been on for the past 7 years, if the worst of those years was only 0.7% lower.

But most everyone knows that the 0.7% figure is fairly illusory.

For me the "what if" game starts with what if Amazon (AMZN), Alphabet (GOOG), Microsoft (MSFT) and a handful of others had only performed as well as the averages.

Of course, even that "what if" exercise would continue to perpetuate some of the skew seen in 2015, as the averages were only as high as they were due to the significant out-performance of a handful of key constituent components of the index. Imagining what if those large winners had only gone down 0.7% for the year would still result in an index that wouldn’t really reflect just how bad the underlying market was in 2015.

While some motivated individual could do those calculations for the S&P 500, which is a bit more complex, due to its market capitalization calculation, it’s a much easier exercise for the DJIA.

Just imagine multiplying the 10 points gained by Microsoft , the 30 pre-split points gained by Nike (NKE), the 17 points by UnitedHealth Group (UNH), the 26 points by McDonalds (MCD) or the 29 points by Home Depot (HD) and suddenly the DJIA which had been down 2.2% for 2015, would have been another 761 points lower or an additional 4.5% decline.

Add another 15 points from Boeing (BA) and another 10 from Disney (DIS) and we’re starting to inch closer and closer to what could have really been a year long correction.

Beyond those names the pickings were fairly slim from among the 30 comprising that index. The S&P 500 wasn’t much better and the NASDAQ 100, up for the year, was certainly able to boast only due to the performances of Amazon, Netflix (NFLX), Alphabet and Facebook (FB).

Now, also imagine what if historically high levels of corporate stock buybacks hadn’t artificially painted a better picture of per share earnings.

That’s not to say that the past year could have only been much worse, but it could also have been much better.

Of course you could also begin to imagine what if the market had actually accepted lower energy and commodity prices as a good thing?

What if investors had actually viewed the prospects of a gradual increase in interest rates as also being a good thing, as it would be reflective of an improving, yet non-frothy, economy?

And finally, for me at least, What if the FOMC hadn’t toyed with our fragile emotions and labile intellect all through the year?

Flat line years such as 2015 and 2011 don’t come very often, but when they do, most dispense with the "what if" questions and instead focus on past history which suggests a good year to follow.

But the "what if" game can also be prospective in nature, though in the coming year we should most likely ask similar questions, just with a slight variation.

What if energy prices move higher and sooner than expected?

What if the economy expands faster than we expected?

What if money is running dry to keep the buyback frenzy alive?

Or, what if corporate earnings actually reflect greater consumer participation?

You may as well simply ask what if rational thought were to return to markets?

But it’s probably best not to ask questions when you may not be prepared to hear the answer.

As usual, the week’s potential stock selections are classified as being in the Traditional, Double Dip Dividend, Momentum or "PEE" categories.

For those, myself included, who have been expecting some kind of a resurgence in energy prices and were disbelieving when some were calling for even further drops only to see those calls come true, it’s not really clear what the market’s reaction might be if that rebound did occur.

While the market frequently followed oil lower and then occasionally rebounded when oil did so, it’s hard to envision the market responding favorably in the face of sustained oil price stability or strength.

I’ve given up the idea that the resurgence would begin any day now and instead am more willing to put that misguided faith into the health of financial sector stocks.

Unless the FOMC is going to toy with us further or the economy isn’t going to show the kind of strength that warranted an interest rate increase or warrants future increases, financials should fare well going forward.

This week I’m considering MetLife (MET), Morgan Stanley and American Express (AXP), all well off from their 2015 highs.

MetLife, down 12% during 2015 is actually the best performer of that small group. As with Morgan Stanley, almost the entirety of the year’s loss has come in the latter half of the year when the S&P 500 was performing no worse than it had during the first 6 months of the year.

Both Morgan Stanley and MetLife have large enough option premiums to consider the sale of the nearest out of the money call contracts in an attempt to secure some share appreciation in exchange for a somewhat lo0wer option premium.

In both cases, I think the timing is good for trying to get the best of both worlds, although Morgan Stanley will be among the relatively early earnings reports in just a few weeks and still hasn’t recovered from its last quarter’s poorly received results, so it would help to be prepared to manage the position if still held going into earnings in 3 weeks.

By contrast, American Express reports on that same day, but all of 2015 was an abysmal one for the company once the world learned that its relationship with Costco (COST) was far more important than anyone had believed. The impending loss of Costco as a branded partner in the coming 3 months has weighed heavily on American Express, which is ex-dividend this week.

I would believe that most of that loss in share has already been discounted and that disappointments aren’t going to be too likely, particularly if the consumer is truly making something of a comeback.

There has actually been far less press given to retail results this past holiday season than for any that I can remember in the recent and not so recent past.

Most national retailers tend to pull rabbits out of their hats after preparing us for a disappointing holiday season, with the exception of Best Buy (BBY), which traditionally falls during the final week of the year on perpetually disappointing numbers.

Best Buy has already fallen significantly in th e past 3 months, but over the years it has generally been fairly predictable in its ability to bounce back after sharp declines, whether precipitous or death by a thousand cuts.

To my untrained eye it appears that Best Buy is building some support at the $30 level and doesn’t report full earnings for another 2 months. Perhaps it’s its reputation preceding it at this time of the year, but Best Buy’s current option premium is larger than is generally found and I might consider purchasing shares and selling out of the money calls in the anticipation of some price appreciation.

Under Armour (UA) is in a strange place, as it is currently in one of its most sustained downward trends in at least 5 years.

While Nike, its arch competitor, had a stellar year in 2015, up until a fateful downtrend that began in early October, Under Armour was significantly out-performing Nike, even while the latter was some 35% above the S&P 500’s performance.

That same untrained eye sees some leveling off in the past few weeks and despite still having a fairly low beta reflecting a longer period of observation than the past 2 months, the option premium is continuing to reflect uncertainty.

With perhaps some possibility that cold weather may finally be coming to areas where it belongs this time of the year, it may not be too late for Under Armour to play a game of catch up, which is just about the only athletic pursuit that I still consider.

Finally, Pfizer (PFE) has been somewhat mired since announcing a planned merger, buyout, inversion or whatever you like to have it considered. The initially buoyed price has fallen back, but as with Dow Chemical (DOW) which has also fallen back after a similar merger announcement move higher, it has returned to the pre-announcement level.

I view that as indicating that there’s limited downside in the event of some bad news related to the proposed merger, but as with Dow Chemical, Best Buy and Under Armour, the near term option premium continues to reflect perceived near term risk.

Whatever Pfizer;’s merger related risk may be, I don’t believe it will be a near term risk. From the perspective of a call option seller that kind of perception in the face of no tangible news can be a great gift that keeps giving.

Traditional Stocks: MetLife. Morgan Stanley, Pfizer

Momentum Stocks: Best Buy, Under Armour

Double-Dip Dividend: American Express (1/6 $0.29)

Premiums Enhanced by Earnings: none

Remember, these are just guidelines for the coming week. The above selections may become actionable – most often coupling a share purchase with call option sales or the sale of covered put contracts – in adjustment to and consideration of market movements. The overriding objective is to create a healthy income stream for the week, with reduction of trading risk.