Month: April 2016

Daily Market Update – April 25, 2016 (9:00 AM)

There’s so much going on this week, that it may only make sense that the market may be taking a break to get things underway.

In addition to lots and lots of systemically important earnings reports during the course of the week, there is an FOMC Statement release and the GDP release the following day.

Add to that the continuing creep higher of oil and commodities and there shouldn’t be too much of a shortage of events that could catalyze movements in either direction.

What we know so far from earnings is that it’s alright to have mediocre numbers, as long as those mediocre numbers at least had the decency to meet already lowered expectations.

If there were even worse than what was expected or the company continued to guide lower for the next quarter, there was a whole world of hurt awaiting.

Lots of stocks reporting earnings fell into that latter category last week and there were some really big movers.

What there wasn’t much of were really big movers to the upside, even as the market did finish higher for the week.

This week I do have some cash and am willing to dip into the smaller cash reserve than I would like to have.

With 3 ex-dividend positions and one contract expiring this week there is already some income, but as is usually the case, I’d like more.

There are some uncovered positions that may be ready to finally find some cover. For those, I’m not necessarily looking to make a killing, even as their holding periods may have been far too long.

Mostly, I just want to either add to my cash reserve or have some other opportunity to generate regular income from dead money.

While doing so, I’d at least like it to be the case that the position, once closed lost only in terms of opportunity.

While even that is too much, it’s better than losing in the absolute.

With some big events for the week occurring after we pass the mid-way mark, I’m not too keen on putting more at risk, but some of the earnings related trades have some appeal.

There’s not too much reason, for example, to think that Facebook is going to be even more adversely impacted by the FOMC Statement or the GDP.

You and I might be adversely impacted, and maybe advertisers will cut back a little, but is Twitter or Facebook really that sensitive to the kinds of events that investors try to game?

Daily Market Update – April 22, 2016 (7:30 AM)

The Weekend Update will be posted by 10 PM tonight and the Week in Review will be posted by Noon on Sunday.

The following trade outcomes are possible today:

Assignments: none

Rollovers: M

Expirations: STX puts**

**I may try to roll STX puts over, if the ex-dividend date is confirmed before today’s close. It is possible that the ex-dividend date could be as early as next week, in which case, I’d rather hold shares and potentially sell calls.

The following were ex-dividend this week:  FAST (4/22 $0.30)

The following will be ex-dividend next week:  F (2/27 $0.15), MS (2/27 $0.15), KMI (2/28 $0.125)

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

Daily Market Update – April 21, 2016 (Close)

Markets didn’t exactly march higher yesterday, but when you put the last week together, even those relatively small gains add to an impressive move higher.

The kind of move that can withstand the kind of move seen today.

Even as earnings haven’t exactly been robust, no one is really doing too much complaining as the results are in line and perhaps even better than anyone’s expectations had been.

There is a real strategy to the idea of under-promising and then living up to lowered expectations.

The problem, though, is that markets usually don’t like the news of gloomy guidance when it’s originally offered and it then becomes a whole quarter until you can try to capitalize on those lowered expectations.

So far, this quarter, even as the results are just really beginning to come through, the theme is intact.

However, what today’s trading showed and what today’s aftermarket trading showed, is that traders really don’t want another quarter with disappointing guidance.

The stocks that have done just that have fallen mightily and tomorrow could be interesting if the sell off in individual earnings related names continues.

As the market continued to move higher, even by small bits and pieces over the past few days, we had come within about 1.5% of an all time closing high on the S&P 500. That got pushed by a little today.

That’s still not too shabby, especially when you consider that there really hasn’t been an iota of good news.

The economy isn’t strong enough to warrant an increase in interest rates and oil is getting more expensive.

Oil, is actually no about 75% higher than its low from earlier in the year, yet somehow markets have taken that as being good news, even as there’s no evidence that the increase in oil price is due to increasing demand.

This morning may be ready to follow that trend, although as the futures are getting ready to give way to the market’s open, they are as flat as can be.

With a new purchase this week and a couple of positions set to expire, I would still be open to opening a new position, but that’s probably not going to be too likely.

Like last week, I wouldn’t mind being able to roll over even positions that may be in line to be assigned, if the rollover premium is 1% or more.

Last week I didn’t get to do that, instead taking the assignment, but I’m still at the stage where I’d prefer to make money from existing positions rather than from laying out or recycling cash.

We’ll see what tomorrow will now hold as the evening has been one earnings and guidance disappointment after another

Daily Market Update – April 21, 2016 (9:00 AM)

Markets didn’t exactly march higher yesterday, but when you put the last week together, even those relatively small gains add to an impressive move higher.

Even as earnings haven’t exactly been robust, no one is really doing too much complaining as the results are in line and perhaps even better than anyone’s expectations had been.

There is a real strategy to the idea of under-promising and then living up to lowered expectations.

The problem, though, is that markets usually don’t like the news of gloomy guidance when it’s originally offered and it then becomes a whole quarter until you can try to capitalize on those lowered expectations.

So far, this quarter, even as the results are just really beginning to come through, the theme is intact.

As the market continues to move higher, even by small bits and pieces over the past few days, we are now within about 1.5% of an all time closing high on the S&P 500.

That’s not too shabby, especially when you consider that there really hasn’t been an iota of good news.

The economy isn’t strong enough to warrant an increase in interest rates and oil is getting more expensive.

Oil, is actually no about 75% higher than its low from earlier in the year, yet somehow markets have taken that as being good news, even as there’s no evidence that the increase in oil price is due to increasing demand.

This morning may be ready to follow that trend, although as the futures are getting ready to give way to the market’s open, they are as flat as can be.

With a new purchase this week and a couple of positions set to expire, I would still be open to opening a new position, but that’s probably not going to be too likely.

Like last week, I wouldn’t mind being able to roll over even positions that may be in line to be assigned, if the rollover premium is 1% or more.

Last week I didn’t get to do that, instead taking the assignment, but I’m still at the stage where I’d prefer to make money from existing positions rather than from laying out or recycling cash.

We’ll see what today and tomorrow will hold.

Daily Market Update – April 20, 2016 (Close)

Yesterday stocks were able to come back after giving up their triple point gain. The numbers were probably better than they appeared, with both the DJIA and S&P 500 being dragged down by a few really big declines after the report of earnings.

With earnings season still fresh, the theme is already beginning to shape up.

What we’re seeing so far is that the guidance from the previous quarter had really lowered expectations and as long as this quarter’s earnings reports are in the neighborhood, then investors wouldn’t run for the hills.

Maybe that’s why guidance for the following quarter continues to be less than optimistic.

So companies are generally presenting numbers better than expected, but still giving reduced guidance for the next quarter.

What economic expansion?

As oil is slowly heading higher on a net basis, with a series of large moves higher and large moves lower, at some point that new more expensive commodity has to weigh in on things.

You would think that to be the case, even as it never really seems to have weighed in while oil was heading lower and stayed there for the longest of times.

Even now, those prices seem to be a relative bargain, but no one is rejoicing in a tangible way by spending their money.

This morning markets recovered from their early morning losses in the futures and may find some reason to go higher, even as oil is again markedly weaker this morning.

But by now, those 2% moves seem small and inconsequential as they go back and forth with a net result of having been steadily moving higher since the low of about $26/barrel just a couple of months ago.

The new line in the sand is $40 and oil seems to be building a base in defense of that level.

In the meantime, the S&P 500 is barely 1.5% off from its all time highs, so it’s hard to really get an understanding of what anything means.

With earnings being mediocre and oil climbing higher, along with precious metals, maybe its the falling interest rate environment that’s feeding stocks.

But we all know that’s supposed to end. It’s just that the FOMC’s crystal ball has been really, really cloudy.

Mine hasn’t been better, but for now, I don’t mind going along for the ride, even if not trading too much.

That, too, will change.

Daily Market Update – April 19, 2016 (Close)

Yesterday stocks showed that they could go their own way apart from oil, oil oil’s rebound later in the day didn’t hurt things.

This morning’s futures had stocks and oil once again moving hand in hand, as what should have been the expected disappointment coming from Doha is going to be forgotten quickly.

Back in the days, OPEC was a real cartel and the countries comprising it were relatively united in their aim to squeeze the most out of the world.

That changed when Saudi Arabia decided it might be a bad idea to seriously injure the economies of the nations that actually buy your product. It also changed when Saudi Arabia saw other nations with increasing production, who found it necessary to keep production going to keep themselves in power.

It’s hard to have a cartel with any real influence when there is no real agenda anymore,

It’s also hard to artificially try to influence price when there are producers around the world who aren’t part of the club or won’t follow the edicts.

But this morning oil was again higher and WTI was again above $40 and likely to move higher, although with continued volatility.

It did move higher today, but stocks were ambivalent about following and gave up much of their earlier gain on the day.

Ultimately, it’s just a question of when stocks will come to the realization that more expensive oil shouldn’t really be a catalyst for higher stock prices, unless the oil price increase reflects real growth in demand.

But, that’s a question for another day.

For now, earnings are coming in and the market seems to be reasonably happy if lowered expectations are met and seems not to care about the less than optimistic guidance that is being delivered to date.

Today’s market wasn’t helped too much by IBM, but the broader S&P 500, which shouldn’t have been impacted as much as the DJIA by IBM’s weakness, had other issues to contend with, such as Google and Netflix.

I made one purchase yesterday and was ready to make an additional one yesterday and again today, but that one, too, was in the retail sector.

That gave me some reason for pause, because a few years ago I was overweight in retail and it took some time to dig out, so I’m not necessarily eager to be in the same position, as I’m now still overweight in oil and commodities and have been waiting the longest time to see some sunlight.

With a couple of positions set to expire this week and one ex-dividend position, I’d still like to generate some more income on the week, so I won’t yet put the wallet away.

On the other hand, I don’t mind the passivity, as long as it sees the market moving higher and pulling me along with it.

I’d be especially happy if some of the market’s move higher continues to be disproportionately based in oil and commodities, as that’s made 2016 a good year to date, just as it had made 2015 not such a good year. Today it was definitely weighted on that side of the equation, as oil and commodities continued their climb.

With volatility falling, there’s less reason to look at longer term option contracts at the moment, although I’d still love the opportunity to get some call sales on uncovered positions and may prefer to get something rather than just let those positions sit there and do nothing.

Daily Market Update – April 19, 2016 (7:30 AM)

Yesterday stocks showed that they could go their own way apart from oil, oil oil’s rebound later in the day didn’t hurt things.

This morning’s futures have stocks and oil once again moving hand in hand, as what should have been the expected disappointment coming from Doha is going to be forgotten quickly.

back in the days, OPEC was a real cartel and the countries comprising it were relatively united in their aim to squeeze the most out of the world.

That changed when Saudi Arabia decided it might be a bad idea to seriously injure the economies of the nations that actually buy your product. It also changed when Saudi Arabia saw other nations with increasing production, who found it necessary to keep production going to keep themselves in power.

It’s hard to have a cartel with any real influence when there is no real agenda anymore,

It’s also hard to artificially try to influence price when there are producers around the world who aren’t part of the club or won’t follow the edicts.

But this morning oil is again higher and WTI is again above $40 and likely to move higher, although with continued volatility.

It’s just a question of when stocks will come to the realization that more expensive oil shouldn’t really be a catalyst for higher stock prices, unless the oil price increase reflects real growth in demand.

That’s a question for another day.

For now, earnings are coming in and the market seems to be reasonably happy if lowered expectations are met and seems not to care about the less than optimistic guidance that is being delivered to date.

I made one purchase yesterday and was ready to make an additional one, but that one, too, was in the retail sector.

That gave me some reason for pause, because a few years ago I was overweight in retail and it took some time to dig out, so I’m not necessarily eager to be in the same position, as I’m now still overweight in oil and commodities and have been waiting the longest time to see some sunlight.

With a couple of positions set to expire this week and one ex-dividend position, I’d still like to generate some more income on the week, so I won’t yet put the wallet away.

On the other hand, I don’t mind the passivity, as long as it sees the market moving higher and pulling me along with it.

I’d be especially happy if some of the market’s move higher continues to be disproportionately based in oil and commodities, as that’s made 2016 a good year to date, just as it had made 2015 not such a good year.

With volatility falling, there’s less reason to look at longer term option contracts at the moment, although I’d still love the opportunity to get some call sales on uncovered positions and may prefer to get something rather than just let those positions sit there and do nothing.