Author: TheAcsMan

(see all trades this option cycle)

Daily Market Update – February 7, 2014 (9:00 AM)

The Week in Review will be posted by 6 PM and the Weekend Update will be posted by Sunday 12 Noon.

The following outcomes may be possible today:

Assignment:  EBAY, GPS*, MET

Rollover:   BMY, TXN, WAG

Expiration:  AIG, ANF,  CHK, CLF, HFC,

* GPS unexpectedly announced sales, revenues and improved guidance after yesterday’s close, sending stock higher in the after-hours. The decision and announcement to do so was likely made yesterday or after Wednesday’s trading close, as there was a tremendous increase in the remaining time value of the 2/7/14 option on Thursday morning. Additionally, there was a tremendous spike in option volume at about 9:45 AM, accounting for nearly the entire day’s volume, suggesting something substantive occurred between Wednesday’s close and Thursday’s open. The same spike in option premium did not extend into the next week, suggesting that there would be some event occurring prior to the close of the week’s trading.

  Access prior Daily Market Updates by clicking here

 OTP Sector Distribution* as of February 6, 2014

 * Assumes equal number of shares in positions

Posting of trades is not a recommendation to execute trades

Monday through Thursday? See “Daily Market Update” with first edition published by 12 Noon and Closing Update published by 4:30 PM

Friday? See Week in Review for summary statistics and performance

Sunday? See Weekend Update for potential stock choices for coming week

Any day? See Performance for open and closed positions

Subscribers may see  ROI statistics  on all new, existing and closed positions on a daily updated basis

See all Trade Alerts for this monthly option cycle

(see all trades this option cycle)

Daily Market Update – February 6, 2014 (Close)

Today’s big stories were likely to be inconsequential as far as anything will ever go.

Twitter and Green Mountain Coffee Roasters were grabbing all of the headlines in the morning, which wasn’t necessarily a bad thing, as we awaited tomorrow’s Employment Situation Report.

Why anyone was surprised over the market’s response to Twitter’s earnings report is amazing. No one had any right to expect anything other than some sort of a surprise, unless the market had fully already understood Twitter and had fully discounted all possibilities. Considering that Twitter was a black box even after its IPO and considering the absence of support levels due to its rapid rise in share price, anything could have been possible as earnings were released.

What is surprising is that user engagement is already decreasing. To me it’s also surprising that they have any revenue to report at all, as many have already figured out how to get their commercial Tweets spread through the system through viral campaigns, like the supposed drunken JC Penney Tweeter during the Super Bowl.

Green Mountain is a different story.

It has a long history of making large earnings related moves and it also has a history of either delaying scheduled earnings or releasing some big news that deflects from attention to earnings related detail. Not to mention allegations of accounting irregularities and some questionable activities by its founder and past Chairman and CEO.

In this case, I think there’s a second overlay, as well, as Brian Kelly, the new and untarnished CEO of Green Mountain struck a deal with Coca Cola, his alma mater. He had been a rising star there, named as President and CEO of Coca Cola Refreshments. No small feat.

I wonder if this deal was one of Coca Cola emulating Microsoft when it made its Nokia deal in an effort to secure a potential CEO successor and bringing Stephen Elop, the Nokia CEO and a Microsoft alumnus, back home.

In that case there was also an element of Microsoft sending a lifesaver in Nokia’s direction and given Green Mountain’s core business growth Coca Cola may have done the same.

Today, I’d rather see the market’s engaged in discussing and analyzing these issues than over analyzing what tomorrow’s data may be or trying to guess what direction the market may go in response to the data.

Also, hopefully the European Central Bank’s policy statement this morning will either be a non-event for us or a net positive, as late in the week adverse news is hard to overcome when contracts expire the very next day. In the recent past the ECB has usually sent our markets higher as they’ve followed an accommodative policy, as had our own Federal Reserve.

Interestingly, as our markets have reached that 5% pullback level and we’re nearing the end of earnings season more attention is being placed on government and other economic reports. The response to Monday’s ISM is an example of a response that has otherwise been really muted for the past year. For the most part the only items the market has cared about during the bull run higher have been the FOMC minutes and the Employment Report.

That may be changing as we become used to the idea of a continued taper and as some political dysfunction shows sign of abating and leaving us with fewer manufactured crises.

If we can get a decent employment number tomorrow, and the ADP data yesterday gives some hope for that, suddenly there appears to be less reason to expect a further drop in markets and I’m beginning to feel some optimism going forward.

Based on the way today’s market went, optimism was the call of the day.

That optimism would really take hold if we could also see volatility maintained at this level or even higher. Instead volatility for the broad market decreased, while for some individual stocks and sectors it remains at its recent highs, in fact, even higher than just yesterday. A good example of that is in the retail sector where suddenly good results from L Brands and Kohls have sent this week’s premiums rocketing higher compared to yesterday.

Today, as yesterday, I was looking for possible DOH Trades as well as any early rollovers,  as I wasn’t expecting much exciting to happen and certainly wasn’t expecting an unbridled march higher.

As would happen nothing exciting did happen except that was enough to send the market nearly 200 points higher.

The speculation is that today’s rise was in expectation of tomorrow’s employment numbers which are thought to be spectacular, perhaps in the 300,000 range or more and that the unemployment rate is going to come in at 6.5%.

For those keeping track, 6.5% was one of the thresholds that we were told the FOMC had set when deciding whether to initiate the taper program. Reportedly Janet Yellen prefers a 6% level, so in some wild scenario it could be conceivable that the next FOMC would have announcement of a slowing or postponement of the taper. If the market believes that may be the case today’s gain could vanish.

The speculation about the fun never ends.

  Access prior Daily Market Updates by clicking here

 OTP Sector Distribution* as of February 6, 2014

 * Assumes equal number of shares in positions

Posting of trades is not a recommendation to execute trades

Monday through Thursday? See “Daily Market Update” with first edition published by 12 Noon and Closing Update published by 4:30 PM

Friday? See Week in Review for summary statistics and performance

Sunday? See Weekend Update for potential stock choices for coming week

Any day? See Performance
for open and closed positions

Subscribers may see  ROI statistics  on all new, existing and closed positions on a daily updated basis

See all Trade Alerts for this monthly option cycle

Subscribers may see  ROI statistics  on all new, existing and closed positions on a daily updated basis

(see all trades this option cycle)

Daily Market Update – February 5, 2014 (Close)

This morning the ADP Employment numbers were released.

Ever since they started doing so there’s been lots of disagreement over how accurately ADP’s numbers parallel the government’s Non-farm Payroll statistics that come out two days later. Regardless of the validity of the ADP Report it still has the capability of moving markets.

After last month’s disappointing official numbers the ADP number was pretty much on target for expectations but the market showed some mild disappointment in the pre-open trading, however, it got over that disappointment very quickly.

At this point we’ll have to wait until Friday to have it settled and to see how the market reacts.

About 2 weeks ago I collected some data looking at the relationship, if any, between the Employment Situation Report and market performance. Watching the release of that most recent report and seeing the market react to very disappointing numbers by pushing the market higher got me thinking that it seemed as if the market always went higher with the announcement of those official numbers.

Who knew that in the comfort of my retirement I would actually once again find myself running t-tests?

Looking at 3 years of statistics there was no association between the reporting of data, regardless of its content and how the market did, neither in the week leading up to the report nor the week following. Neither did the day before the report release have any predictive value.

That is unless you looked at the past 18 months.

During that time period there was a statistically significant likelihood that on the week preceding the report and the day preceding the report that the market would move higher.

For those interested in such things the chance that the market went randomly higher on the day of the Employment Situation Report release was less than 4% and less than 2% when considering the prior week.

While that seemed compelling, as with all statistics it helps to look beyond the numbers and try to have an understanding of possible confounders or environmental factors that may have played a role.

Perhaps coincidentally the past 18 months reflected the beginning of the third and final phase of Quantitative Easing.

Because of that possibility I wasn’t terribly excited about being further long the market in anticipation of an additional Employment Situation Report fueled run higher, considering that there appears to also be an association between the announcement of the taper and the market’s fortunes.

In hindsight, starting the week with a 325 point loss seemed to indicate that playing the market for Friday’s report wouldn’t have been a very good idea.

However, about half of the weekly gains seen in Employment Situation Weeks came on the day of the report, suggesting that there might be some advantage to adding long positions prior to Thursday’s close.

While I generally don’t consider index ETF trading, I may look at the possibility of purchasing some SPDR S&P 500 Trust shares with the anticipation of closing the position at the end of Friday’s trading by selling slightly out of the money call options on the position, as premiums are beginning to reflect increasing volatility.

Otherwise, I’m expecting little activity for the remainder of the week, while remaining hopeful that the market shows some stability and even strength as the week comes to a close, as it would be nice to get back to seeing assignments and rollovers just like the old days.

Today was just that kind of day as the market traded in a tight range, something that it had done for most of 2013, but very little of 2014, thus far.

A little telling is that even with today’s very muted action the short term volatility continues to rise and is nearing the October high, which itself was a low high as far as highs go. So the market is still nervous and waiting for any kind of meaningful and sustained move, regardless of direction.

For my part, I hope that this Friday’s performance breaks that recent pattern of downward moving weekly closes and I wouldn’t mind seeing the market take a little r
est at this level, particularly if volatility can stay here or even move a little higher.

There’s nothing wrong with wishing for the best of all worlds. We’ve had it before, why not again?

  Access prior Daily Market Updates by clicking here

 OTP Sector Distribution* as of February 4, 2014

 * Assumes equal number of shares in positions

Posting of trades is not a recommendation to execute trades

Monday through Thursday? See “Daily Market Update” with first edition published by 12 Noon and Closing Update published by 4:30 PM

Friday? See Week in Review for summary statistics and performance

Sunday? See Weekend Update for potential stock choices for coming week

Any day? See Performance for open and closed positions

Subscribers may see  ROI statistics  on all new, existing and closed positions on a daily updated basis

See all Trade Alerts for this monthly option cycle

(see all trades this option cycle)

Daily Market Update – February 5, 2014 (9:30 AM)

This morning the ADP Employment numbers were released.

Ever since they started doing so there’s been lots of disagreement over how accurately ADP’s numbers parallel the government’s Non-farm Payroll statistics that come out two days later. Regardless of the validity of the ADP Report it still has the capability of moving markets.

After last month’s disappointing official numbers the ADP number was pretty much on target for expectations but the market showed some mild disappointment in the pre-open trading, however, it got over that disappointment very quickly.

At this point we’ll have to wait until Friday to have it settled and to see how the market reacts.

About 2 weeks ago I collected some data looking at the relationship, if any, between the Employment Situation Report and market performance. Watching the release of that most recent report and seeing the market react to very disappointing numbers by pushing the market higher got me thinking that it seemed as if the market always went higher with the announcement of those official numbers.

Who knew that in the comfort of my retirement I would actually once again find myself running t-tests?

Looking at 3 years of statistics there was no association between the reporting of data, regardless of its content and how the market did, neither in the week leading up to the report nor the week following. Neither did the day before the report release have any predictive value.

That is unless you looked at the past 18 months.

During that time period there was a statistically significant likelihood that on the week preceding the report and the day preceding the report that the market would move higher.

For those interested in such things the chance that the market went randomly higher on the day of the Employment Situation Report release was less than 4% and less than 2% when considering the prior week.

While that seemed compelling, as with all statistics it helps to look beyond the numbers and try to have an understanding of possible confounders or environmental factors that may have played a role.

Perhaps coincidentally the past 18 months reflected the beginning of the third and final phase of Quantitative Easing.

Because of that possibility I wasn’t terribly excited about being further long the market in anticipation of an additional Employment Situation Report fueled run higher, considering that there appears to also be an association between the announcement of the taper and the market’s fortunes.

In hindsight, starting the week with a 325 point loss seemed to indicate that playing the market for Friday’s report wouldn’t have been a very good idea.

However, about half of the weekly gains seen in Employment Situation Weeks came on the day of the report, suggesting that there might be some advantage to adding long positions prior to Thursday’s close.

While I generally don’t consider index ETF trading, I may look at the possibility of purchasing some SPDR S&P 500 Trust shares with the anticipation of closing the position at the end of Friday’s trading by selling slightly out of the money call options on the position, as premiums are beginning to reflect increasing volatility.

Otherwise, I’m expecting little activity for the remainder of the week, while remaining hopeful that the market shows some stability and even strength as the week comes to a close, as it would be nice to get back to seeing assignments and rollovers just like the old days.

  Access prior Daily Market Updates by clicking here

 OTP Sector Distribution* as of February 4, 2014

 * Assumes equal number of shares in positions

Posting of trades is not a recommendation to execute trades

Monday through Thursday? See “Daily Market Update” with first edition published by 12 Noon and Closing Update published by 4:30 PM

Friday? See Week in Review for summary statistics and performance

Sunday? See Weekend Update for potential stock choices for coming week

Any day? See Performance for open and closed positions

Subscribers may see  ROI statistics  on all new, existing and closed positions on a daily updated basis

See all Trade Alerts for this monthly option cycle

(see all trades this option cycle)

Daily Market Update – February 4, 2014 (Close)

A couple of years ago the last time we really had a market that was going through some corrections the United States stock markets were in an unusual position.

Rather than leading the world we were being wagged and our markets were following in response to European and Asian markets that were struggling with their own issues, particularly currency and monetary policy related.

We’re not used to following.

In addition to those kinds of woes the United States markets have continually fallen under the pressures of the Chinese markets, especially when it appeared as if the data was truthful.

Over the past 18 months or so the US markets have not been held hostage by events in other markets, although Chinese economic news has still been impactful.

Yesterday, however, there was some widespread belief that our own markets, which were already teetering a little, were sent over the cliff as the Nikkei and Russian stock markets gave the push, as they officially entered correction territory.

With the Nikkei dropping another 4% in its trading overnight it’s comforting to see that our own markets are resisting, thus far, following that path lower.

The word this morning was that the start to February was the worst seen since 1982. For his part, Peyton Manning says he’s seen worse starts, but for those that remember, 1982 was the beginning of the re-awakening of the stock market and the beginning of a 5 year bull market, until shortly after Alan Greenspan became Chairman of the Federal Reserve.

If that’s what it takes to ignite a fire I’m all for it. Besides you really don’t appreciate the heights until you’ve seen the depths.

The market crash in 1987 came just 2 months after Greenspan took office. The market decline in 2007 started almost 2 years after Bernanke took office. On the other hand, Janet Yellen’s first day was greeted with a 325 point loss, but today looks to be more hospitable.

For those that were daring and made some of the new trades yesterday, i don’t think there will be many more this week, although I’m not closed to the idea, but am not drinking any Kool-Ade if the market enjoys some kind of substantive bounce back.

Before making too much of an additional commitment I want to have some level of comfort that I’ll be seeing some assignments this week, but as we’ve seen the past few weeks it doesn’t take much to change everything. One day will do it, especially if it’s a Friday and the clock runs out on you.

After yesterday’s fall there’s a lot of ground that needs to be recovered, but at least we do have a few days to do so, although Friday’s Employment Situation Report brings a new challenge.

In the meantime it’s time for all of those who have been saying that they would be buyers on any dips to come and put their money where their mouths are. Instead many are seemingly busy either re-writing their personal history or patting themselves on the back for having predicted a correction consistently over the course of the past year.

Like me.

At least I did my part and opened some new positions.

As the market came to a close it didn’t come even close to erasing yesterday’s loss. However, on a very positive note despite several attempts to pare back the gains today the market fought back, even though the opposition may have been taking a rest after all of its efforts yesterday. Most impressive was that it did so one last time during the final hour of trading.

During the course of the day there were a number of trades that I had entered, including new positions in Intel, International Paper and Eli Lilly, but then canceled the orders, as I still had some doubts about today’s initial reaction to the stresses in the market and also mindful of the potential stress to come on Friday with the Employment Situation Report.

I’d love to see tomorrow be another day like much of today even if only to have opportunity to pick up cover for some positions, as nothing beats selling calls into price strength. Hopefully, the Nikkei futures which are spiking 3% higher as our own markets come to a close will provide some leadership for us tomorrow.

Sometimes it’s nice to be wagged for a change.

  Access prior Daily Market Updates by clicking here

 OTP Sector Distribution* as of February 4, 2014

 * Assumes equal number of shares in positions

Posting of trades is not a recommendation to execute trades

Monday through Thursday? See “Daily Market Update” with first edition published by 12 Noon and Closing Update published by 4:30 PM

Friday? See Week in Review for summary statistics and performance

Sunday? See Weekend Update for potential stock choices for coming week

Any day? See Performance for open and closed positions

Subscribers may see  ROI statistics  on all new, existing and closed positions on a daily updated basis

See all Trade Alerts for this monthly option cycle

(see all trades this option cycle)

Daily Market Update – February 4, 2014 (9:30 AM)

A couple of years ago the last time we really had a market that was going through some corrections the United States stock markets were in an unusual position.

Rather than leading the world we were being wagged and our markets were following in response to European and Asian markets that were struggling with their own issues, particularly currency and monetary policy related.

We’re not used to following.

In addition to those kinds of woes the United States markets have continually fallen under the pressures of the Chinese markets, especially when it appeared as if the data was truthful.

Over the past 18 months or so the US markets have not been held hostage by events in other markets, although Chinese economic news has still been impactful.

Yesterday, however, there was some widespread belief that our own markets, which were already teetering a little, were sent over the cliff as the Nikkei and Russian stock markets gave the push, as they officially entered correction territory.

With the Nikkei dropping another 4% in its trading overnight it’s comforting to see that our own markets are resisting, thus far, following that path lower.

The word this morning was that the start to February was the worst seen since 1982. For his part, Peyton Manning says he’s seen worse starts, but for those that remember, 1982 was the beginning of the re-awakening of the stock market and the beginning of a 5 year bull market, until shortly after Alan Greenspan became Chairman of the Federal Reserve.

If that’s what it takes to ignite a fire I’m all for it. Besides you really don’t appreciate the heights until you’ve seen the depths.

The market crash in 1987 came just 2 months after Greenspan took office. The market decline in 2007 started almost 2 years after Bernanke took office. On the other hand, Janet Yellen’s first day was greeted with a 325 point loss, but today looks to be more hospitable.

For those that were daring and made some of the new trades yesterday, i don’t think there will be many more this week, although I’m not closed to the idea, but am not drinking any Kool-Ade if the market enjoys some kind of substantive bounce back.

Before making too much of an additional commitment I want to have some level of comfort that I’ll be seeing some assignments this week, but as we’ve seen the past few weeks it doesn’t take much to change everything. One day will do it, especially if it’s a Friday and the clock runs out on you.

After yesterday’s fall there’s a lot of ground that needs to be recovered, but at least we do have a few days to do so, although Friday’s Employment Situation Report brings a new challenge.

In the meantime it’s time for all of those who have been saying that they would be buyers on any dips to come and put their money where their mouths are. Instead many are seemingly busy either re-writing their personal history or patting themselves on the back for having predicted a correction consistently over the course of the past year.

Like me.

At least I did my part and opened some new positions

.

  Access prior Daily Market Updates by clicking here

 
OTP Sector Distribution* as of February 3, 2014

 * Assumes equal number of shares in positions

Posting of trades is not a recommendation to execute trades

Monday through Thursday? See “Daily Market Update” with first edition published by 12 Noon and Closing Update published by 4:30 PM

Friday? See Week in Review for summary statistics and performance

Sunday? See Weekend Update for potential stock choices for coming week

Any day? See Performance for open and closed positions

Subscribers may see  ROI statistics  on all new, existing and closed positions on a daily updated basis

See all Trade Alerts for this monthly option cycle

Subscribers may see  ROI statistics  on all new, existing and closed positions on a daily updated basis