Month: May 2016

Daily Market Update – May 18, 2016 (Close)

Despite what you may have heard about the Additive Law of Addition, it really does matter in which order you invest your money.

Do you remember the nearly 200 point gains of last Monday?

How about the 200 point gains of the previous week?

Well, you might then recall that on both occasions those gains were wiped out the very next day.

If you invested on either of the up days, there’s a good chance that you weren’t very happy the day after.

But reverse things, if the market heads sharply lower and you take the opportunity to dig into your cash reserves, you might be much happier the following day.

For the most part, the latter, that is investing at the lows of the day only to see a big reversal the next have been mostly fairy tales.

They just haven’t become reality and so often, what may have looked like a bargain following a large drop, whether in an individual stock or in the broader market, hasn’t been a bargain at all.

That now brings us to mid-week and futures were again flat.

That was the case for the preceding days of the week, as well. There had been no clue of what was brewing in the markets.

Actually, even as those big moves were happening, it’s not too likely that anyone had a clue as to why they were happening.

This morning, as for the next 2, there is still some earnings news.

While we await those reports for a handful of remaining important companies, there’s still the issue of oil and whether the market will continue to mostly follow along.

Now you can also add to it the newly re-discovered belief that the FOMC may have found a reason to increase rates sooner rather than later and maybe more than once between now and the end of the year.

That was confirmed as the FOMC minutes for the previous month were released. There are FOMC hawks circling.

A few weeks ago I couldn’t wait for earnings season to begin, but more importantly I couldn’t wait for the May 2016 option cycle to end.

With more expiring positions on this Friday than has been the case for all of 2016, I’m hoping to get some trades done and maybe even see an assignment or two.

The way things have been going back and forth lately, however, I have my fingers crossed more than is my customary amount.

At least there was an opportunity to once again rollover those recent Marathon Oil shares and slowly build the return on that position while waiting and waiting some more for some clarity to finally show its face.

Daily Market Update – May 18, 2016 (7:30 AM)

Despite what you may have heard about the Additive Law of Addition, it really does matter in which order you invest your money.

Do you remember the nearly 200 point gains of last Monday?

How about the 200 point gains of the previous week?

Well, you might then recall that on both occasions those gains were wiped out the very next day.

If you invested on either of the up days, there’s a good chance that you weren’t very happy the day after.

But reverse things, if the market heads sharply lower and you take the opportunity to dig into your cash reserves, you might be much happier the following day.

For the most part, the latter, that is investing at the lows of the day only to see a big reversal the next have been mostly fairy tales.

They just haven’t become reality and so often, what may have looked like a bargain following a large drop, whether in an individual stock or in the broader market, hasn’t been a bargain at all.

That now brings us to mid-week and futures are again flat.

That was the case for the preceding days of the week, as well. There had been no clue of what was brewing in the markets.

Actually, even as those big moves were happening, it’s not too likely that anyone had a clue as to why they were happening.

This morning, as for the next 2, there is still some earnings news.

While we await those reports for a handful of remaining important companies, there’s still the issue of oil and whether the market will continue to mostly follow along.

Now you can also add to it the newly re-discovered belief that the FOMC may have found a reason to increase rates sooner rather than later and maybe more than once between now and the end of the year.

A few weeks ago I couldn’t wait for earnings season to begin, but more importantly I couldn’t wait for the May 2016 option cycle to end.

With more expiring positions on this Friday than has been the case for all of 2016, I’m hoping to get some trades done and maybe even see an assignment or two.

The way things have been going back and forth lately, however, I have my fingers crossed more than is my customary amount.

Daily Market Update – May 17, 2016 (Close)

Yesterday’s nearly 200 point gain in the DJIA was pretty unexpected, especially given that the futures were virtually unchanged as the opening bell began to ring.

What we are hearing from all of the Federal Reserve Governors who are speaking this week is that we shouldn’t be surprised if the FOMC still has the opportunity to raise interest rates another 2 or even 3 times in whatever is left in 2016.

That seems so counter to what retail earnings reports have been reflecting, but just as traders took bad news last week as actually being bad news, it is possible that the thought of an economy healthy enough to support two small interest rate increases, is an economy healthy enough to support stocks.

After all, where does economic growth go but to the top and bottom lines of companies?

Good theory, but like so many other good theories of the past couple of years, let’s just wait and see.

You didn’t have to wait very long to see, because today the market simply gave everything back on interest rate fears and news about some high profile investors.

This morning’s futures were at least holding onto yesterday’s gains, but to a large degree that was because of Home Depot’s strong showing.

That changed, too.

In addition to those shares hitting new highs came the news that they saw a 9% increase in revenues.

That meant people were spending their money somewhere. Maybe not at Macy’s for sweaters, but at Home Depot for faucets.

Ultimately, the latter is probably better for the economy as it deals in products that tend to retain value or add to net value better than a set of matching stemware.

But that’s just another theory.

The basic theories were all tested when also this morning came news of the changes in holdings of some of the big boys, like Buffett, Einhorn, Soros and others.

No surprise that gold was ubiquitous, but as many have learned, it’s usually not a good idea to try and ride the coat-tails of the big boys, whose actions are divulged long after they occurred.

Opportunity has a way of vanishing.

With all of the television commercials lately for gold and the news that Soros and others have piled in, that may be the proverbial shark making a jump.

It’s not too likely, for example, that any of those investors would jump in after a 20% increase in price, but the coat-tail riders do and they are often buying the same goods that the savvy guys have now decided to sell.

Funny how that works.

Icahn sold Apple, so did others and they drove the price even lower. Maybe just low enough to entice Buffett.

Fear begets greed in others.

With today’s decline and now talk of even a June 2016 interest rate hike getting some attention, I’m not greedy enough to give up the fear that keeps me from spending any money on what seem like cheap prices.

Maybe tomorrow, but you could have said that yesterday, as well.

Daily Market Update – May 17, 2016 (7:30 AM)

Yesterday’s nearly 200 point gain in the DJIA was pretty unexpected, especially given that the futures were virtually unchanged as the opening bell began to ring.

What we are hearing from all of the Federal Reserve Governors who are speaking this week is that we shouldn’t be surprised if the FOMC still has the opportunity to raise interest rates another 2 or even 3 times in whatever is left in 2016.

That seems so counter to what retail earnings reports have been reflecting, but just as traders took bad news last week as actually being bad news, it is possible that the thought of an economy healthy enough to support two small interest rate increases, is an economy healthy enough to support stocks.

After all, where does economic growth go but to the top and bottom lines of companies?

Good theory, but like so many other good theories of the past couple of years, let’s just wait and see.

This morning’s futures are at least holding onto yesterday’s gains, but to a large degree that’s because of Home Depot’s strong showing.

In addition to those shares hitting new highs comes the news that they saw a 9% increase in revenues.

That means people are spending their money somewhere. Maybe not at Macy’s for sweaters, but at Home Depot for faucets.

Ultimately, the latter is probably better for the economy as it deals in products that tend to retain value or add to net value better than a set of matching stemware.

But that’s just another theory.

Also this morning came news of the changes in holdings of some of the big boys, like Buffett, Einhorn, Soros and others.

No surprise that gold was ubiquitous, but as many have learned, it’s usually not a good idea to try and ride the coat-tails of the big boys, whose actions are divulged long after they occurred.

Opportunity has a way of vanishing.

With all of the television commercials lately for gold and the news that Soros and others have piled in, that may be the proverbial shark making a jump.

It’s not too likely, for example, that any of those investors would jump in after a 20% increase in price, but the coat-tail riders do and they are often buying the same goods that the savvy guys have now decided to sell.

Funny how that works.

Icahn sold Apple, so did others and they drove the price even lower. Maybe just low enough to entice Buffett.

Fear begets greed in others.

Daily Market Update – May 16, 2016 (Close)

Earnings, earnings and more earnings last week.

As opposed to the previous week when the earnings really didn’t matter, last week the market really did care about what the retailers had to say.

They cared, but they didn’t like what they heard, even as Friday’s Retail Sales report wasn’t that bad.

Something has to be amiss to account for a seeming disconnect between what the likes of Macy’s says and what the official government statistics say.

Maybe we’ll get some insight this week as there are lots more retailer earnings to come.

There is also the release of the previous month’s FOMC minutes, so maybe there may be some more insight there, as one Federal Reserve Governor just suggested that there still may be room for 2 or 3 rate increase still in 2016.

That comes now as the conventional wisdom is saying that a June 2016 rate hike is off the table.

I have some money and am willing to spend it on some new positions, but with about 8 contracts expiring this week, I’d much rather have a chance for some rollovers or see some assignments.

I actually did try to rollover the newly ex-dividend Marathon Oil position again today, but may have been a bit too greedy and never did get the trade closed.

This morning futures were completely flat, even as there is some optimism over where oil was headed next.

Goldman Sachs had issued a positive outlook, calling for a $60 price, although 2 things should be considered.

The first is that Goldman Sachs has had a fairly abysmal track record on commodities over the past year, including oil.

The second is that the Goldman Sachs analysts have missed the 80% or so rise in West Texas Intermediate crude oil in 2016.

It may be a little bit like Stanley Druckenmiller coming out as a gold bull the previous week.

Maybe the easy money has already been made.

But with strong oil all through the session and a further biog boost given by Warren Buffett and news that he picked up a big position in Apple and was willing to bankroll Dan Gilbert’s pursuit of Yahoo, the market was in a jolly mood all day long.

From my perspective, if I’m going to sit around all day long and do nothing, I’d rather make some money in the process.

Daily Market Update – May 16, 2016 (7:30 AM)

Earnings, earnings and more earnings last week.

As opposed to the previous week when the earnings really matter, last week the market really did care about what the retailers had to say.

They cared, but they didn’t like what they heard, even as Friday’s Retail Sales report wasn’t that bad.

Something has to be amiss to account for a seeming disconnect between what the likes of Macy’s says and what the official government statistics say.

Maybe we’ll get some insight this week as there are lots more retailer earnings to come.

There is also the release of the previous month’s FOMC minutes, so maybe there may be some more insight there, as one Federal Reserve Governor just suggested that there still may be room for 2 or 3 rate increase still in 2016.

That comes now as the conventional wisdom is saying that a June 2016 rate hike is off the table.

I have some money and am willing to spend it on some new positions, but with about 8 contracts expiring this week, I’d much rather have a chance for some rollovers or see some assignments.

This morning futures are completely flat, even as there is some optimism over where oil is headed next.

Goldman Sachs has issued a positive outlook, calling for a $60 price, although 2 things should be considered.

The first is that Goldman Sachs has had a fairly abysmal track record on commodities over the past year, including oil.

The second is that the Goldman Sachs analysts have missed the 80% or so rise in West Texas Intermediate crude oil in 2016.

It may be a little bit like Stanley Druckenmiller coming out as a gold bull the previous week.

Maybe the easy money has already been made.

Daily Market Update – May 13, 2016 (7:30 AM)

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

The following trade outcomes are possible today:

Assignments:   none

Rollovers:   none

Expirations:   none

Yesterday’s early rollover of the in the money position of Marathon oil was done in the hopes that shares may get assigned today in advance of Monday’s ex-dividend date. However, even if not, the position may represent a good opportunity for serial rollover at this price level and with this kind of volatility, leading to the high premium.

The following were ex-dividend this week:   none

The following will be ex-dividend next week:  MRO (5/16 $0.05)

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