Author: TheAcsMan

Daily Market Update – April 24, 2015  (9:00 AM)

The Weekend 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:  Abercrombie and Fitch, Activision

Rollovers:  The Gap

Expirations:  Astra Zeneca, Best Buy, Whole Foods

The following were ex-dividend this week: Fastenal (4/24 $0.28)

The following will be ex-dividend next week: none

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

Daily Market Update – April 23, 2015  (Close)

The earnings keep pouring in this morning and the reactions were mixed, at least as far as the early bird traders were concerned..

With the general story continuing, that is that top line revenue is tending to be lower than expected, while bottom line profits are trending higher, for the most part those reports are being taken in stride.

Maybe even better than simply “taking it in stride,” as the S&P 500 was about 1.2% higher for the week as the morning was getting ready to begin and was within 0.5% of its all time closing high. By the time today came to its close, even off of its highs as ground was lost in the final hour, the market inched even closer to those highs.

Those highs are just a month old. Meanwhile the NASDAQ finally came to its new closing high some 15 years after the last one.

What this earnings season shows is that it’s amazing what can happen as you prepare yourself for the possibility of bad news. If you act adult-like, and the disappointments do come along as expected, there seems to be less of a reason to panic or over-react.

That has definitely been the case as this earnings season has gotten underway and is now in full swing. The expectations were low due to currency head winds and the relief has been palpable as the numbers are being released. Even decreasing forward guidance, which is usually a kiss of death, hasn’t been  keeping the market from moving forward.

When you are led to believe that the market values growth above everything else, it is a rare sight to see it moving higher even when prospects for growth are being dashed. But as long as that strategy of under-promising or having lowered expectations seems to be working, then imagine what the next earnings season could bring if results are better than we’ve been anticipating.

Interestingly, Caterpillar, which reported this morning and was up sharply in the pre-open trading said nothing about the singular factor that has been depressing top line revenues for just about everyone else.

With just about everyone else pointing a finger at currency exchange Caterpillar hasn’t said much about that and shares were soaring, perhaps because the market values immunity from natural laws.

That immunity seems odd, considering how much Caterpillar has a stake in all parts of the globe. That immunity didn’t last, though, as Caterpillar actually ended up spending a significant amount of time trading at a loss and closed almost unchanged.

Another form of immunity came as Dow Chemical reported its earnings this morning. Its CEO, Andrew Liveris, again reiterated that his company is essentially ambivalent about the price of oil. He said that a few months ago as Dow Chemical was getting caught up with the slide seen in energy prices, but based on its price actions, no one seemed to believe him.

It has been a case of “that’s my story and I sticking to it,” but lately it appears as if investors have come around to his logic, which presumably is based on more than just logic.

With now just 1 day left in this weekly cycle, there’s some opportunity remaining for some rollovers and perhaps even s
ome assignments. This morning’s early weakness in the futures made that prospect look less encouraging, but even with the gains having faded by the close, at least they were gains.

Without some continued strength, especially a strong pop higher, there’s not too much likelihood of being able to sell new calls on currently uncovered positions, so while I would like to see assignments, I may prefer now to have the opportunity to rollover some positions instead, so as to create the weekly income I’ve gotten accustomed to getting, as the bills won’t pay themselves.

Daily Market Update – April 23, 2015  (8:15 AM)

The earnings keep pouring in this morning and the reactions  are mixed, so far.

With the general story continuing, that is that top line revenue is tending to be lower than expected, while bottom line profits are trending higher, for the most part those reports are being taken in stride.

Maybe even better than simply “taking it in stride,” as the S&P 500 is about 1.2% higher for the week and now is within 0.5% of its all time closing high.

It’s amazing what can happen as you prepare yourself for the possibility of bad news. If you act adult-like, and the disappointments do come along as expected, there seems to be less of a reason to panic or over-react.

That has definitely been the case as this earnings season has gotten underway and is now in full swing. The expectations were low due to currency headwinds and the relief has been palpable as the numbers are being released. Even decreasing forward guidance, which is usually a kiss of death, hasn’t been  keeping the market from moving forward.

When you are led to believe that the market values growth above everything else, it is a rare sight to see it moving higher even when prospects for growth are being dashed. But as long as that strategy of under-promising or having lowered expectations seems to be working, then imagine what the next earnings season could bring if results are better than we’ve been anticipating.

Interestingly, Caterpillar, which reported this morning and is up sharply in the pre-open trading said nothing about the singular factor that has been depressing top line revenues for just about everyone else.

With just about everyone else pointing a finger at currency exchange Caterpillar hasn’t said much about that and shares were soaring, perhaps because the market values immunity from natural laws.

That immunity seems odd, considering how much Caterpillar has a stake in all parts of the globe.

Another form of immunity came as Dow Chemical reported its earnings this morning. Its CEO, Andrew Liveris, again reiterated that his company is essentially ambivalent about the price of oil. He said that a few months ago as Dow Chemical was getting caught up with the slide seen in energy prices, but based on its price actions, no one seemed to believe him.

It has been a case of “that’s my story and I sticking to it,” but lately it appears as if investors have come around to his logic, which presumably is based on more than just logic.

With 2 days left in this weekly cycle, there’s some opportunity remaining for some rollovers and perhaps even some assignments. However, this morning’s early weakness in the futures, although improving a bit as earnings have been coming in, makes it a little more tenuous.

Without some continued strength, especially a strong pop higher, there’s not too much likelihood of being able to sell new calls on currently uncovered positions, so while I would like to see assignments, I may prefer now to have the opportunity to rollover some positions instead, so as to
create the weekly income I’ve gotten accustomed to getting, as the bills won’t pay themselves.

Daily Market Update – April 22, 2015  (Close)

What started off with some promise as IBM reported its earnings after the closing bell on Monday turned into some disappointment as a handful of DJIA components also reported earnings prior to the open on Tuesday.

The net result was more of the same.

Companies reporting improved bottom lines but without meeting top line expectations, with currency exchange being top at the list for reasons given.

This time the market wasn’t too pleased, after having given a pass to those reporting similar experiences during the first week of earnings season. The displeasure was probably muted a little as the bottom lines were still better than expected, as those expectations were already lowered across the board.

As a result the DJIA had flirted with a triple digit loss going into the final minutes of trading, but was able to pare that down just a bit, but the broader S&P 500 didn’t perform as weakly as the DJIA.

With yesterday’s pullback, the DJIA is a full 1% away from its historical April performance since 2000, but if anything is really clear, it’s just how quickly sentiment changes and the markets move to keep pace,

This morning were more earnings reports from DJIA components, including Boeing and Coca Cola, but this time those early indications were positive, although those conference calls were scheduled to begin after the market opens this morning, so it could have been anyone’s guess as to where they could have pulled the DJIA and whether another dichotomy between it and the S&P 500 would occur today.

The market looked as if it may get off to a mildly lower start, but the kind that neither seems to have conviction nor to be based on any economic news or otherwise. As it would turn out before 11 AM could roll around the market turned higher and just continued along that way as both McDonalds and Coca Cola reversed their early negativity and move nicely higher. This time, however, the DJIA and the broader market stayed well aligned.

This morning Existing Home Sales were released and while I usually don’t think too much about that report, it comes during a very quiet week and may have a little more importance, as may the Petroleum Status Report.

Those sales showed a nice increase, actually the best monthly change in more than 4 years.

The Existing Home Sales were expected to be higher as the excuse of bad winter weather is thought to be fully exhausted at this point. A strong number, especially a very strong number could have been negative for the market if it would start to ignite interest rate concerns again. It’s been a few weeks since we’ve been so hyper-focused on interest rates, but sooner or later that issue will re-surface and it’s hard to imagine how that would be a catalyst for anything other than a short term move lower, despite the general consensus that a reasoned methodical increase in rates would be a good thing for all concerned.

The report, however, didn’t frighten anyone and may have been the impetus for the market’s turnaround.

With only 2 new positions added this week, despite having cash reserves replenished with last week’s assignments, I don’t think there will be too many reasons to consider dipping into cash to add additional positions.

While there’s still plenty of time left for the week to unfold, I’m hoping that the week’s income stream will find some help from rollovers, although I might be willing to forego the income if it meant assignments of some positions that are currently possible assignment candidates.

While I would still like to see some new covered positions created from those sitting idly and not earning their keep, this week doesn’t look as promising as the past two, unless something can spark a fire. While there’s a temptation to look at some longer time frame contracts to try and squeeze something out of those positions, the volatility just keeps getting lower and lower and the premiums follow in the same direction.

For now, the volatility seems to have gotten off of its pattern of the past few years and is over-due for a little spike. Until that day comes, unless there is also the opportunity to take advantage of some earnings related premiums, I think there’s reason to sit tight before committing to those longer term time frames.

Right now, I’d just be happy to get through the week.

Daily Market Update – April 22, 2015  (8:00 AM)

What started off with some promise as IBM reported its earnings after the closing bell on Monday turned into some disappointment as a handful of DJIA components also reported earnings prior to the open on Tuesday.

The net result was more of the same.

Companies reporting improved bottom lines but without meeting top line expectations, with currency exchange being top at the list for reasons given.

This time the market wasn’t too pleased, after having given a pass to those reporting similar experiences during the first week of earnings season. The displeasure was probably muted a little as the bottom lines were still better than expected, as those expectations were already lowered across the board.

As a result the DJIA had flirted with a triple digit loss going into the final minutes of trading, but was able to pare that down just a bit, but the broader S&P 500 didn’t perform as weakly as the DJIA.

With yesterday’s pullback, the DJIA is a full 1% away from its historical April performance since 2000, but if anything is really clear, it’s just how quickly sentiment changes and the markets move to keep pace,

This morning are more earnings reports from DJIA components, including Boeing and Coca Cola, but this time those early indications were positive, although those conference calls were scheduled to begin after the market opens this morning, so it can still be anyone’s guess as to where they may pull the DJIA and whether another dichotomy between it and the S&P 500 occurs today.

The market looks as if it may get off to a mildly lower start, but the kind that neither seems to have conviction nor to be based on any economic news or otherwise.

This morning Existing Home Sales are released and while I usually don’t think too much about that report, it comes during a very quiet week and may have a little more importance, as may the Petroleum Status Report.

The Existing Home Sales are expected to be higher as the excuse of bad winter weather is thought to be fully exhausted at this point. A strong number, especially a very strong number could be negative for the market if it starts to ignite interest rate concerns again. It’s been a few weeks since we’ve been so hyper-focused on interest rates, but sooner or later that issue will re-surface and it’s hard to imagine how that would be a catalyst for anything other than a short term move lower, despite the general consensus that a reasoned methodical increase in rates would be a good thing for all concerned.

With only 2 new positions added this week, despite having cash reserves replenished with last week’s assignments, I don’t think there will be too many reasons to consider dipping into cash to add additional positions.

While there’s still plenty of time left for the week to unfold, I’m hoping that the week’s income stream will find some help from rollovers, although I might be willing to forego the income if it meant assignments of some positions that are currently possible assignment candidates.

While I would still like to see some new c
overed positions created from those sitting idly and not earning their keep, this week doesn’t look as promising as the past two, unless something can spark a fire. While there’s a temptation to look at some longer time frame contracts to try and squeeze something out of those positions, the volatility just keeps getting lower and lower and the premiums follow in the same direction.

For now, the volatility seems to have gotten off of its pattern of the past few years and is over-due for a little spike. Until that day comes, unless there is also the opportunity to take advantage of some earnings related premiums, I think there’s reason to sit tight before committing to those longer term time frames.

Right now, I’d just be happy yo get through the week.

Daily Market Update – April 21, 2015  (Close)

Yesterday was an unexpected surprise and it helped to correct last Friday’s blight on April, which has been a good month, at least by 2015 standards.

The market is up about 1.5% for the month and is now less than 1% from its highs on the S&P 500.

 By April standards, though, it still has a way to go, until meeting the average gains seen. In the 21st century, at least, April is by far the best performing month and is no slouch when looking at its performance over the past 100 years.

With still plenty of trading days left in April that 2.1% average gain is still well within reach, especially since a day like yesterday can add 1% in the blink of an eye.

This week and next will be an earnings reporting deluge and it started this morning, with a number of DJIA components beginning to chime in and helping the DJIA push forward again this morning in the pre-open futures trading.

That early optimism gave way, however, as the earnings of those DJIA components disproportionately weighed down that narrow index while the S&P 500 was only very mildly lower.

As today’s earnings were released for some key companies there are currently a number of common themes as earnings are being released, whether currency fluctuations are part of the equation, or not.

Companies seem to be missing on their top lines and not faring too poorly on their bottom lines. At the same time the buy backs continue to be announced. Forget about what Larry Fink said last week about those generous buy backs and dividend hikes, since those decisions were made by the  Board of Directors before his comments and by the next quarter no one will remember, even foot-note fetishists.

But it’s clear that CEOs don’t know what to do with all of their money, as there’s no reason to expand or grow the businesses, as consumer or industrial demand doesn’t seem to be there yet. So they spend the money on buy backs, often when shares are near historic highs or near post-2009 highs.

It’s always easier to spend other people’s money, especially when share performance may be a metric by which you are being judged.

I don’t know if I’ll be around to have an opinion in hindsight, but as this market expansion is now 6 years old, you do have to wonder how long it continues and what, if anything, will be left in that rainy day corporate fund.

Warren Buffett had it right in 2008.

But I don’t know if corporate America has it in them to be greedy when others are fearful. They certainly didn’t in the 2007-2009 period when the market was crumbling. You didn’t see many stick their necks out and use shareholder’s money to buy back shares when they were becoming cheaper and cheaper.

Back then those kind of actions would have been taken to stem the tide. Now the buy backs are undertaken to go with the tide.

Which one of those
sounds like it’s the work of a real leader? Any one can go with the flow, but it takes a real leader and some bravery to try and go against the momentum and take a stand.

As long as the market keeps going higher it’s hard to complain.

As this week will likely be nothing more than whatever earnings allow it to be, I hope that the upward trend continues. I’d like to see some more assignments and I’m not certain that I want to make too many more purchases, especially as the trend may take the market higher.

In that case, I’d rather go along for the ride, too, and follow that tide.

Daily Market Update – April 21, 2015  (8:30 AM)

Yesterday was an unexpected surprise and it helped to correct last Friday’s blight on April, which has been a good month, at least by 2015 standards.

The market is up about 1.5% for the month and is now less than 1% from its highs on the S&P 500.

 By April standards, though, it still has a way to go, until meeting the average gains seen. In the 21st century, at least, April is by far the best performing month and is no slouch when looking at its performance over the past 100 years.

With still plenty of trading days left in April that 2.1% average gain is still well within reach, especially since a day like yesterday can add 1% in the blink of an eye.

This week and next will be an earnings reporting deluge and it started this morning, with a number of DJIA components beginning to chime in and helping the DJIA push forward again this morning in the pre-open futures trading.

There are currently a number of common themes as earnings are being released, whether currency fluctuations are part of the equation, or not.

Companies seem to be missing on their top lines and not faring too poorly on their bottom lines. At the same time the buy backs continue to be announced.

They don’t know what to do with all of their money, but there’s no reason to expand or grow the businesses, as consumer or industrial demand doesn’t seem to be there yet. So they spend the money on buy backs, often when shares are near historic highs or near post-2009 highs.

I don’t know if I’ll be around to have an opinion in hindsight, but as this market expansion is now 6 years old, you do have to wonder how long it continues and what, if anything, will be left in that rainy day fund.

Warren Buffett had it right in 2008.

But I don’t know if corporate America has it in them to be greedy when others are fearful. They certainly didn’t in the 2007-2009 period when the market was crumbling. You didn’t see many stick their necks out and use shareholder’s money to buy back shares when they were becoming cheaper and cheaper.

Back then those kind of actions would have been taken to stem the tide. Now the buy backs are undertaken to go with the tide.

Which one of those sounds like it’s the work of a real leader? Any one can go with the flow, but it takes a real leader and some bravery to try and go against the momentum and take a stand.

As long as the market keeps going higher it’s hard to complain.

As this week will likely be nothing more than whatever earnings allow it to be, I hope that the upward trend continues. I’d like to see some more assignments and I’m not certain that I want to make too many more purchases, especially as the trend may take the market higher.

In that case, I’d rather go
along for the ride, too, and follow that tide.

Daily Market Update – April 20, 2015  (Close)

Last week ended on a really sour note, but luckily that didn’t get in the way of any assignments and rollovers that were being counted on as the week started.

This morning the futures looked as if they wanted to regain some of what was lost but without any real foundation for justifying that attempt at a recovery.

Since there wasn’t too much of a reason for the week ending loss either, it shouldn’t then be much of a surprise if reasons are thrown to the wind.

But who needs a foundation anyway, as the market not only indicated higher, but actually never looked back and recovered about 75% of Friday’s loss

This week has very little of substantive economic news and is even light on the non-consequential kind of news so there aren’t likely to be too many catalysts coming at us, although items like the Petroleum Status Report, New Homes Starts and Durable Goods may take on more importance than they often do with so little competition for attention.

There’s also some speculation about European Union news and a Greek exit from the EU perhaps coming to a head this week, but it’s still difficult to envision how that would happen or be allowed to happen.

But what the week does have is lots of earnings reports, as this week and next will mark the peak and crescendo of this earnings season.

So far, the market has been taking less than stellar news with great stride and not punishing any company that’s following the path of under-delivering on already lowered expectations.Other than that little detour taken last Friday, the mediocre earnings that had been coming through were part of the formula that continued to send stocks higher.

With more assignments occurring last Friday than during any other week of 2015, it’s nice to have some more cash available. That’s especially true when assignments don’t happen as those stocks have run away from their strikes. That Friday sell-off helped to rein in some of those prices and even put them back into range for re-purchase.

With the May 2015 option cycle getting its start today, there are already positions set for expiration in each of the weeks of this monthly cycle.

With some cash in hand I expect to be adding some new positions, but will probably focus on those with a weekly expiration.

However, following that Friday sell-off and this morning’s indication of some kind of a rally, I wasn’t expecting to rush in because there’s really not too much sense of where the needle would fall. I don’t think most people expected that the market would soar today and they usually don’t ask why when things are going well.

I would have liked to have seen some continuation of Friday’s sell-off or at least some effort to digest those losses before snapping back.

As the morning did get off to its start I would have been especially happy if there was more opportunity to sell calls on currently uncovered positions. Each of the last two weeks were good for that and that represents a way of generating income without having to put anything additional at risk.

Maybe tomorrow, perhaps, although it may be too much to ask to have a second day like today. Although with IBM reporting earnings after the closing bell today and already having had a huge day today, who knows, maybe they can be the IBM of old and be the market leader they way they used to do.

Otherwise, it’s back to market watching tomorrow.

As always the best of weeks has its combination of assignments, rollovers and newly covered positions and at least with the market getting off to a reasonable start for the week, so far there aren’t any hopes and dreams being dashed

Daily Market Update – April 20, 2015  (9:00 AM)

Last week ended on a really sour note, but luckily that didn’t get in the way of any assignments and rollovers that were being counted on as the week started.

This morning the futures looks like it wants to regain some of what was lost but without any real foundation for justifying that attempt at a recovery.

Since there wasn’t too much of a reason for the week ending loss either, it shouldn’t then be much of a surprise if reasons are thrown to the wind.

This week has very little of substantive economic news and is even light on the non-consequential kind of news so there aren’t likely to be too many catalysts coming at us, although items like the Petroleum Status Report, New Homes Starts and Durable Goods may take on more importance than they often do with so little competition for attention.

There’s also some speculation about European Union news and a Greek exit from the EU perhaps coming to a head this week, but it’s still difficult to envision how that would happen or be allowed to happen.

But what the week does have is lots of earnings reports, as this week and next will mark the peak and crescendo of this earnings season.

So far, the market has been taking less than stellar news with great stride and not punishing any company that’s following the path of under-delivering on already lowered expectations.Other than that little detour taken last Friday, the mediocre earnings that had been coming through were part of the formula that continued to send stocks higher.

With more assignments occurring last Friday than during any other week of 2015, it’s nice to have some more cash available. That’s especially true when assignments don’t happen as those stocks have run away from their strikes. That Friday sell-off helped to rein in some of those prices and even put them back into range for re-purchase.

With the May 2015 option cycle getting its start today, there are already positions set for expiration in each of the weeks of this monthly cycle.

With some cash in hand I expect to be adding some new positions, but will probably focus on those with a weekly expiration.

However, following that Friday sell-off and this morning’s indication of some kind of a rally, I’m not likely to rush in because there’s really not too much sense of where the needle will fall.

I would have liked to have seen some continuation of Friday’s sell-off or at least some effort to digest those losses before snapping back.

As the morning does get off to its start if the advance can hold, I would be especially happy if there’s more opportunity to sell calls on currently uncovered positions. Each of the last two weeks were good for that and that represents a way of generating income without having to put anything additional at risk.

As always the best of weeks has its combination of assignments, rollovers and newly covered positions and at least with the market getting off to a reasonable start for the week, so far there aren’t any hopes and dreams being dashed