Month: June 2016

Daily Market Update – June 8, 2016 (7:30 AM)

On Monday, Janet Yellen spoke and the market listened.

They tried listening a little bit more yesterday, but the words may have gotten too faint, especially by the final hour.

This morning, if looking to put a positive spin on things, the market hasn’t done what if often has in the past few years.

It hasn’t just reflexively gone in the opposite direction. At least not yet.

This morning the futures are flat after having given up some decent gains yesterday, but when it’s all said and done, we are still within 1% of the all time high on the S&P 500.

Granted, the level is still being sustained by a narrow foundation, but years from now all that anyone will know is what the level happens to be. Years after the fact, no one ever looks at the underlying causes of where the market stands unless there is some large move.

What can be said with some certainty is that not much is going on and maybe what we thought might be going on next week, now won’t happen.

Following last week’s Employment Situation Report there are now even those saying that a recession is possible.

The odds of that, according to JP Morgan economists of occurring in the next 12 months, is now considered larger than was the likelihood of an interest rate hike in June, just a week ago.

Maybe Yellen is right that we shouldn’t put too much emphasis on a single data point. After all, we could just as easily get big revisions next month or the month after, but that’s not how the universe of traders works. They focus on only the latest number and rarely look at the big picture. If one number takes you in one direction today and does so with conviction, no one should be surprised if the following data another conflicting number takes traders in a totally different direction.

Reverse the order of events and the outcomes are reversed as well, even as the net change may not be.

The individual investor is left hoping to be lucky, if deciding to capitalize on some economic news.

With the week at the halfway point, it may simply end up as another week with little to nothing to show for it, in terms of active trading.

While no one expects any FOMC action next week, their words may still carry clout, so it may be difficult to commit in any meaningful way next week, either.

Daily Market Update – June 7, 2016 (Close)

Yesterday, Janet Yellen spoke and the market listened.

They tried listening a little bit more today, but the words may have gotten too faint, especially by the final hour.

What they heard was the Federal Reserve Chairman speak as if she had been a believer in the value of hedges.

Not that she was talking about any particular hedging strategies, she was just hedging any commitment by being all over the place.

Whatever she said was counter-balanced by something else that she said.

In essence, it was a perfect hedge.

She said that the economy was living up to expectations and that last week’s single point of data from the Employment Situation Report shouldn’t be projected forward.

At the same time she threw water on the idea that there was enough economic strength to consider an interest rate increase next week, although she didn’t really come out and say so.

What she did was to leave investors with the idea that the FOMC was still going to keep giving the gift of cheap money.

As a result, investors started buying and they did so through most of today, as well.

Clearly, traders prefer cheap money to a growing economy. As much as they may have given an indication of being ready to accept that increase, they surely would rather it not happen.

What they also didn’t seem to mind was an economic forecast that said that there was a 36% chance of a recession in the next 12 months.

So here we are, getting ready to now trade on a Wednesday morning and the S&P 500 sits barely 1% below its all time high after a small gain today..

I did nothing yesterday, nor today and am not certain that there is reason to do much tomorrow, although there are still some ex-dividend positions that I wouldn’t mind owning or adding to existing positions.

Otherwise, I don’t mind watching my asset values increase, even though it continues to be hard to understand why this is all happening.

More expensive energy prices, precious metals getting more expensive and no sign of the economy strengthening seems like an odd combination to move the market to new highs.

While maybe low interest rates gives some a reason to explore stocks, it seems like a strange thing to do when one is nearing its lows and the other its highs.

Daily Market Update – June 7, 2016 (8:00 AM)

Yesterday, Janet Yellen spoke and the market listened.

What they heard was the Federal Reserve Chairman speak as if she had been a believer in the value of hedges.

Not that she was talking about any particular hedging strategies, she was just hedging any commitment by being all over the place.

Whatever she said was counter-balanced by something else that she said.

In essence, it was a perfect hedge.

She said that the economy was living up to expectations and that last week’s single point of data from the Employment Situation Report shouldn’t be projected forward.

At the same time she threw water on the idea that there was enough economic strength to consider an interest rate increase next week, although she didn’t really come out and say so.

What she did was to leave investors with the idea that the FOMC was still going to keep giving the gift of cheap money.

As a result, investors started buying.

They prefer cheap money to a growing economy.

What they didn’t seem to mind was an economic forecast that said that there was a 36% chance of a recession in the next 12 months.

So here we are, getting ready to trade on a Tuesday morning and the S&P 500 sits barely 1% below its all time high and moving higher as the opening bell nears.

I did nothing yesterday and am not certain that there is reason to do much today, although there are still some ex-dividend positions that I wouldn’t mind owning or adding to existing positions.

Otherwise, I don’t mind watching my asset values increase, even though it continues to be hard to understand why this is all happening.

More expensive energy prices, [recious metals getting more expensive and no sign of the economy strengthening seems like an odd combination to move the market to new highs.

While maybe low interst rates gives some a reason to explore stocks, it seems like a strange thing to do when one is nearing its lows and the other its highs.

Daily Market Update – June 6, 2016 (Close)

Everyone wanted to know what Janet Yellen was going so say today after Friday’s real shocker of an Employment Situation Report.

As the market did so frequently last week, in fact, in 3 of its 4 trading days, it recovered from steep losses. It did so also in response to that news on Friday, but it really leaves many to wonder what’s next.

What most firmly believe is that an interest rate hike next week is not next.

What we might have reasonably expected to hear today was some dancing around the news and whether the economy may in fact be prone to a recession or whether the Federal Reserve Chairman believes that the economy is strong enough to warrant an interest rate increase.

Guess what?

What we heard was a lot of hedging, which is a investor’s way of saying “dancing around.”

It could have been pretty interesting this afternoon, but the market took the less than clear Yellen-speak as representing the best of all worlds. 

She basically said that the economy was on track, but that there may not be enough to warrant an interest rate hike just yet.

Ahead of that speech and follow up period for questions, the market’s futures trading were understandably pretty flat, just as the previous week ended exactly unchanged, even as volatility dropped another 10%.

With a little more money to spend, I wasn’t that eager to do so, but am still very willing, even after not having spent any today.

Instead it was watching the market show some optimism and not minding seeing existing positions move higher, especially energy and commodities.

With lots of ex-dividend positions this week and the monthly cycle coming to its end next week, I just want to have some predictable stream of income and those may be sufficient to keep me happy, especially if there can be a few more days like today with existing holdings continuing to out-perform the broader market.

I still wouldn’t completely rule out taking a plunge, though.

Once again, I wouldn’t mind rolling over the single expiring position this week, even if it is in the money.

When volatility is high, either in general or for a specific stock, that is often not a bad thing to do as the accumulating enhanced premiums give you a larger and larger cushion.

If the stock is already deeply in the money, that amount is just further cushion.

Otherwise, I don’t expect too much action this week either. Willing or not, it does take more than that to pull the trigger when it’s really not very clear what the sentiment is right now.

It’s hard to tell whether the market is happy that there is a lower chance of a rate hike or whether it will come to its senses and realize that a rate hike would have meant that the economy looked to be headed in the right direction.

After Friday’s Employment Situation Report and downward revisions to previous months, it may be harder to come to the conclusion that things are moving in the right direction, even as the unemployment rate is dropping.

Along with increasing gas prices and slowed job growth, what reason is there to be happy?

At least Janet Yellen didn’t burst anyone’s hopes and dreams today, as she said little of substance, bu
t
why would there have been too much expectation for her to really say anything substantive ahead of next week’s meeting?

So many questions, yet so few answers.

Daily Market Update – June 6, 2016 (8:00 AM)

Everyone wants to know what Janet Yellen is going so say today after Friday’s real shocker of an Employment Situation Report.

As the market did so frequently last week, in fact, in 3 of its 4 trading days, it recovered from steep losses. It did so also in response to that news on Friday, but it really leaves many to wonder what’s next.

What most firm;y believe is that an interest rate hike next week is not next.

What we may hear today is some dancing around the news and whether the economy may in fact be prone to a recession or whether the Federal Reserve Chairman believes that the economy is strong enough to warrant an interest rate increase.

It should be pretty interesting this afternoon.

Ahead of that speech and follow up period for questions, the market’s futures trading is understandably pretty flat, just as the previous week ended exactly unchanged, even as volatility dropped another 10%.

With a little more money to spend, I’m not that eager to do so, but am still very willing.

With lots of ex-dividend positions this week and the monthly cycle coming to its end next week, I just want to have some predictable stream of income and those may be sufficient.

I still wouldn’t completely rule out taking a plunge, though.

Once again, I wouldn’t mind rolling over the single expiring position this week, even if it is in the money.

When volatility is high, either in general or for a specific stock, that is often not a bad thing to do as the accumulating enhanced premiums give you a larger and larger cushion.

If the stock is already deeply in the money, that amount is just further cushion.

Otherwise, I don’t expect too much action this week either. Willing or not, it does take more than that to pull the trigger when it’s really not very clear what the sentiment is right now.

It’s hard to tell whether the market is happy that there is a lower chance of a rate hike or whether it will come to its senses and realize that a rate hike would have meant that the economy looked to be headed in the right direction.

After Friday’s Employment Situation Report and downward revisions to previous months, it may be harder to come to the conclusion that things are moving in the right direction, even as the unemployment rate is dropping.

Along with increasing gas prices and slowed job growth, what reason is there to be happy?

Daily Market Update – June 3, 2016 (7:00 AM)

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

The following trade outcomes are possible today:

Assignments:  HFC *, MRO *

Rollovers:   none

Expirations:   none

** Even if in the money and bound for assignment, it is possible that I may decide to rollover these positions

The following were ex-dividend this week:  MOS (5/31 $0.275), ANF (6/1 $0.20), BAC (6/1 $0.05), COH (6/1 $0.34)

The following will be ex-dividend next week:   BBY (6/10 $0.28), HPQ (6/6 $0.12),KSS (6/6 $0.50), NEM (6/7 $0.025), GM (6/8 $0.38), WY (6/8 $0.31)

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

Daily Market Update – June 2, 2016 (7:00 AM)

Tomorrow is the day that many have been waiting for.

It seems that for about the past year or so, every upcoming Employment Situation Report is given the same label.

Each one is referred to as the most important Employment Situation Report since the previous one.

Every now and then there may be some truth to the hyperbole.

My guess is that if tomorrow’s number comes in strong, investors will rally the market, maybe even approaching or exceeding the previous high on the S&P 500.

That would be a real affirmation of the way the market has seemed to come to accept the prospect of a rate hike coming with the June 2016 FOMC meeting.

After that, it’s anyone’s guess what happens when the FOMC finally does make a decision.

Will it be a repeat of December?

But what if the FOMC delays a decision even if the numbers are good or what if the numbers don’t seem to support an increase in just a couple of weeks?

Then it’s really a guessing game.

In that case, the market may simply go back to what it has done for most of 2016 and just follow oil, although the correlation has been getting weaker lately.

Between now and the FOMC Statement there will be a number of Federal Reserve Governors speaking their minds, including the most important one of all, but they have all been sending such mixed messages that’s it’s really hard to know whether the various members of the Federal Reserve are truly expressing their opinions or just sending test balloons out.

That’s what happens when the Federal reserve gets too concerned about stock markets and loses focus and maybe its ability to have an objective approach to analysis and action.

For me, my analysis is that mere mortals can’t know what is even reasonable probability of occurring and my actions show how ambivalent and uncertain I am.

The market, though, as measured by Volatility, seems very certain, as volatility is so very low.

That usually means the market is heading for a surprise.

Just like after December’s decision, maybe.

I’m just about this week’s ex-dividend positions and perhaps an opportunity to get either assignments or rollovers of both positions expiring this week.

Two positions is still a paltry number, but anything in play is either a means for more income production or more for building up cash reserves, so I’m hoping some rational thought holds up until this week comes to its end.