Category: Daily Market Update

Daily Market Update – Jul 10, 2014 (9:15 AM)

This morning no one in Europe seemed to like the fact that a Portuguese bank delayed repayment of some short term debt as a result of some auditing problems at its main shareholder’s investment company. That investment company also happens to be owned by the founding family of the bank, so there’s a tangled web.

A few years ago CNBC was looking for their word of the year and selected my suggestion of “Eurosis,” which came at a time when European banks and national economies were in shambles. But that word proved to not really be prescient as the year went on as some good ECB leadership helped to  ease fears amid the strong suggestion that whatever was necessary would be done to support the banking systems of such nations as Spain and Greece.

This morning it’s hard to know whether the Portuguese bank issue is an isolated one or will simply be the first to come to anyone’s attention. For those who like to draw visual kind of parallels someone, maybe me, is bound to say something like “there’s never just one cockroach,” or something like that, to describe the likely situation.

Whenever you wake up in the morning and see precious metals surging and stocks plunging, you know that there’s a big story somewhere. My first thought wasn’t to think about some banking crisis in Portugal, however. My first thought was centered on the Middle East, but I thought it somewhat odd that when tuning into various TV stations this morning there was really no discussion of the weak futures and no discussion of what was its root cause.

If the lessons from 2010 and 2011 are to be heeded, it’s that problems in the European banking system aren’t necessarily the sort of things that short support the ability for it to start a contagion across the Atlantic Ocean.

Back then our own markets would respond in a sympathetic manner and then relatively quickly shrug its shoulders and wonder why we were bothering to slow down.Back then our own markets were on a decidedly upward trajectory and its momentum wasn’t about to be slowed down by much of anything and certainly not for very long. Now the momentum may not be gone, but it is stalled and the only moves higher of late have been related to assuring words from the Federal Reserve rather than from fundamental factors, such as earnings and revenues.

So this morning will be a little bit of a ride with some relief of not having spent too much opening new positions this week and having had some good luck and fortune in rolling over more than the usual number of positions for the week and having done so unusually early in the week.

I should stress the word “luck.”

Had it not been for this week’s release of the FOMC statement there would have been little reason to consider the early rollovers as there was absolutely no reason to suspect a breaking story such as greeted us this morning.

But with the market seeming to slow down, despite all of the new record highs, a little bit of caution probably has made some sense, but as with most everything that caution has to be in balance with the ability to dip a toe in even when it seems chilly.

Today may offer some opportunity even if taking advantage of any apparent opportunity can simply be  a case of being too early. However, if taking advantage of re-purchasing recently assigned positions at lower prices is the outcome being too early isn’t the worst thing in the world and simply relieves the burden of some of the intermediate drop in price had shares been part of a buy and hoid strategy.

We’ll see. We’ll see.

Daily Market Update – Jul 9, 2014 (Close)

The CEO of Wal-Mart made an observation yesterday that seemed to come as a surprise to most everyone.

He commented that despite increasing jobs numbers there hasn’t been any real improvement on the consumer spending level.

How could that possibly be the case if the economy was actually improving? The stock market has certainly been advancing in reflection of that belief, although it’s probably just a coincidence that the market had a decidedly negative day yesterday.

After all, why would they begin to focus on rational thought and reality now?

I’ve been asking that seemingly obvious question for at least the past two earnings seasons, wondering why retail sales, other than at the very high end, were continuing to disappoint everyone. It just doesn’t make sense if people are actually going back to work and increasing their ability to make discretionary purchases.

Somehow, there has been a disconnect and increasing employment statistics may not be translating into what it traditionally meant.

Add to that, or better yet, subtract from it the two revisions of GDP for the first quarter of 2014 and you really do have to wonder what economic expansion people are talking about. Ultimately any economic growth is only as good as the ability for it to improve the lives of everyday people who are given the opportunity to contribute to that expansion

The weakness in retail, insofar as it seems to have lagged increasing employment levels, preceded the winter’s horrible weather and succeeded it, as well. Still, there has been money to be made in the retail sector, despite the  continuing lack of good news.

Imagine what may await retail sales if and when the consumer does return, although then you have to deal with those who will sell on the news, in the belief that the market had already discounted sales growth.

No matter what happens and no matter what the issue, there’s always a ready answer and a ready opposing view.

While the Wal-Mart CEO’s question was digested yesterday, today seemed to be ready to get off to a mildly positive start heading into the afternoon’s FOMC release. It did just that and maintained that mild advance and then wasn’t quite certain how to react to the statement once it was released.

Again, while it’s not likely that there would be anything surprising in the statement, you can never tell what the reaction would be, especially in the early days of summer. Following yesterday’s sell-off there could also have been additional reason to see an exaggerated reaction to news or even the lack of news.

The only surprise contained in the minutes was actaully what was expected last month. That is how to handle the odd $5 billion remaining in the taper as it got wound down from $85 billion per month to $0 in $10 billion increments. Last month there was concern that the Federal Reserve might decide to do a $15 billion taper in the final month.

Today that’s what they announced and the market didn’t explode.

As with the last couple of days, I was looking for any opportunity to do additional rollovers in an attempt to reduce exposure to any adverse market response to the FOMC prior to this week’s expiration. As a nice side effect that also created some income without having to dip into cash reserves, as there’s enough uncertainty in the air to be hesitant about spending too much while the market is still so close to those all time highs of last week.

So far, the rollovers for the week have all bypassed next week’s monthly expiration and have used the July 25th contract date. I would like to populate next week’s list of expiring positions a little better, but the monthly contract doesn’t usually offer as wide of a selection of strike prices as do the weekly options, so that has limited the ability to create rollovers with strike prices delivering decent dividends.

That may change on Thursday when some new strike levels may be added for the coming week, but with the FOMC today, I’ll still be looking for the opportunities wherever they may end up.

So, it was just another day of sitting back and seeing what may have  developed. AS it turned out not much really did. So even while the money is available for new purchases I wasn’t expecting to add any new positions today, so I wasn’t too disappointed, especially as some rollovers and other sales got made.

Tomorrow those expectations aren’t likely to change,.but if anything can change on a dime it’s the gap between expectations and actions.

Daily Market Update – Jul 9, 2014 (9:15 AM)

The CEO of Wal-Mart made an observation yesterday that seemed to come as a surprise to most everyone.

He commented that despite increasing jobs numbers there hasn’t been any real improvement on the consumer spending level.

How could that possibly be the case if the economy was actually improving? The stock market has certainly been advancing in reflection of that belief, although it’s probably just a coincidence that the market had a decidedly negative day yesterday.

After all, why would they begin to focus on rational thought and reality now?

I’ve been asking that seemingly obvious question for at least the past two earnings seasons, wondering why retail sales, other than at the very high end, were continuing to disappoint everyone. It just doesn’t make sense if people are actually going back to work and increasing their ability to make discretionary purchases.

Somehow, there has been a disconnect and increasing employment statistics may not be translating into what it traditionally meant.

Add to that, or better yet, subtract from it the two revisions of GDP for the first quarter of 2014 and you really do have to wonder what economic expansion people are talking about. Ultimately any economic growth is only as good as the ability for it to improve the lives of everyday people who are given the opportunity to contribute to that expansion

The weakness in retail, insofar as it seems to have lagged increasing employment levels, preceded the winter’s horrible weather and succeeded it, as well. Still, there has been money to be made in the retail sector, despite the  continuing lack of good news.

Imagine what may await retail sales if and when the consumer does return, although then you have to deal with those who will sell on the news, in the belief that the market had already discounted sales growth.

No matter what happens and no matter what the issue, there’s always a ready answer and a ready opposing view.

While the Wal-Mart CEO’s question was digested yesterday, today seems to be ready to get off to a mildly positive start heading into the afternoon’s FOMC release.

Again, while it’s not likely that there will be anything surprising in the statement, you can ne
ver tell what the reaction will be, especially in the early days of summer. Following yesterday’s sell-off there may also be additional reason to see an exaggerated reaction to news or even the lack of news.

As with the last couple of days, I’ll be looking for any opportunity to do additional rollovers in an attempt to reduce exposure to any adverse market response to the FOMC prior to this week’s expiration. As a nice side effect that also creates some income without having to dip into cash reserves, as there’s enough uncertainty in the air to be hesitant about spending too much while the market is still so close to those all time highs of last week.

So far, the rollovers for the week have all bypassed next week’s monthly expiration and have used the July 25th contract date. I would like to populate next week’s list of expiring positions a little better, but the monthly contract doesn’t usually offer as wide of a selection of strike prices as do the weekly options, so that has limited the ability to create rollovers with strike prices delivering decent dividends.

That may change on Thursday when some new strike levels may be added for the coming week, but with the FOMC today, I’ll still be looking for the opportunities wherever they may end up.

So, it’s just another day of sitting back and seeing what may develop. While the money is available for new purchases I’m not expecting to add any new positions today, but if anything can change on a dime its the gap between expectations and actions.

Daily Market Update – Jul 8, 2014 (Close)

Yesterday was, what has seemed to be a rare day. The market not only traded lower, but the broad market was weaker than the major indices indicated.

For someone who may be in the market to buy stocks in a meaningful way, yesterday’s decline wasn’t enough. It also wasn’t enough to send any signals that perhaps there was more to come.

There’s still some talk of money on the sidelines from more than 5 years ago. It’s hard to believe that could possibly be the case, but it’s just as hard to believe that anyone who has been on the sidelines that long would pick this as the right time to re-enter the markets.

While I always like to keep some money on the sidelines for unexpected opportunities, in hindsight those opportunities have been nearly every day for the past two years. I don’t know how many people that are actively invested also have cash reserves that could come into play, but what would be the catalyst to get those who do to give up on their discipline and go all in?

Also with the competition between asset classes for investment dollars, such as between stocks, bonds and real estate, you have to wonder what money is left in bonds that could come over to stocks, as well as the fact that real estate isn’t facing an exodus of investment dollars.

So you do have to wonder where the new money will come from to push stocks even higher.

Overseas money? Possibly, but with the inter-connected nature of the world’s economies and markets and shift would likely cause market casualties at their source and ripple throughout the world.

Who needs that?

Again there’s lots of focus on the yield of the 10 year Treasury as it approaches 2.6%. The thinking is now that rather than 3%, which was what everyone was watching just a few months ago as that level that would begin to draw investment dollars out of stocks and into bonds, it is 2.6%.

That either represents lowered expectations for returns or just more of the same guessing games that seek to create significance out of that which may have no significance.

One thing that has lost its significance of late has been the release of the FOMC statement each month, as it has become very predictable and often the words spoken by the various Federal Reserve Governors or the Chairman have more sway on markets for that particular moment in time. With the FOMC statement release tomorrow there wasn’t great likelihood that today would have any kind of meaningful move higher and probably not much reason to think that it would move significantly lower, either.

Yet it moved with some commitment, nonetheless and followed yesterday’s lead, although there was still no real impetus for the drop today, either.

With pre-open indications of another mildly negative open I wasn’t expecting too much reason to abandon a little bit of purchasing caution and simply hoped to be able to continue looking for some rollover opportunities for some of the many positions that expire this Friday.

Fortunately, even with all of that negativity some of those opportunities did present in addition to what looked like a potential buying opportunity in an old friend, Chesapeake Energy.

While I do find it more exciting to enter into a new position and the initial ROI is generally greater with those, it is the rollover that really makes the returns accumulate. So I certainly wouldn’t mind seeing some more of those rollovers happen tomorrow while at the same time still being able to conserve cash in anticipation of a day when it could serve me much better, and perhaps with less risk, as well.

Today’s market decline, at least in the big picture is pretty meaningless and could easily have been an artifact of volume. Any continuation, however, after tomorrow’s FOMC release could be reason to wonder if there’s something to what is now just a mere blip in the chart, taking us back all the way to levels not seen since June 30th.

Daily Market Update – Jul 8, 2014 (8:00 AM)

Yesterday was, what has seemed to be a rare day. The market not only traded lower, but the broad market was weaker than the major indices indicated.

For someone who may be in the market to buy stocks in a meaningful way, yesterday’s decline wasn’t enough. It also wasn’t enough to send any signals that perhaps there was more to come.

There’s still some talk of money on the sidelines from more than 5 years ago. It’s hard to believe that could possibly be the case, but it’s just as hard to believe that anyone who has been on the sidelines that long would pick this as the right time to re-enter the markets.

While I always like to keep some money on the sidelines for unexpected opportunities, in hindsight those opportunities have been nearly every day for the past two years. I don’t know how many people that are actively invested also have cash reserves that could come into play, but what would be the catalyst to get those who do to give up on their discipline and go all in?

Also with the competition between asset classes for investment dollars, such as between stocks, bonds and real estate, you have to wonder what money is left in bonds that could come over to stocks, as well as the fact that real estate isn’t facing an exodus of investment dollars.

So you do have to wonder where the new money will come from to push stocks even higher.

Overseas money? Possibly, but with the inter-connected nature of the world’s economies and markets and shift would likely cause market casualties at their source and ripple throughout the world.

Who needs that?

Again there’s lots of focus on the yield of the 10 year Treasury as it approaches 2.6%. The thinking is now that rather than 3%, which was what everyone was watching just a few months ago as that level that would begin to draw investment dollars out of stocks and into bonds, it is 2.6%.

That either represents lowered expectations for returns or just more of the same guessing games that seek to create significance out of that which may have no significance.

One thing that has lost its significance of late has been the release of the FOMC statement each month, as it has become very predictable and often the words spoken by the various Federal Reserve Governors or the Chairman have more sway on markets
for that particular moment in time. With the FOMC statement release tomorrow there isn’t great likelihood that today will have any kind of meaningful move higher and probably not much reason to think that it would move significantly lower, either.

With pre-open indications of another mildly negative open I’m not expecting too much reason to abandon a little bit of purchasing caution and would continue looking for some rollover opportunities for some of the many positions that expire this Friday.

While I do find it more exciting to enter into a new position and the initial ROI is generally greater with those, it is the rollover that really makes the returns accumulate. So I certainly wouldn’t mind seeing those rollovers happen while at the same time still being able to conserve cash in anticipation of a day when it could serve me much better, and perhaps with less risk, as well.

Daily Market Update – Jul 7, 2014 (Close)

After a nice 3 1/2 days off from trading it looks as if there’s little memory of what got the markets to their new highs last week.

If you can recall back just a few weeks when the market got a nice boost from the FOMC and then Janet Yellen’s press conference remarks, that boost was very short lived, as well, never having any impact on the following week.

This past week’s boost, as opposed to the tiny steps that marked the large number of previous new highs en route to Dow 17000, was somewhat larger and more decisive. That alone should have created some momentum and optimism but in a world where short term memories are scant, maybe 3 1/2 days is just too long to sustain anything.

So it maybe it shouldn’t be a little surprising that the pre-open futures weren’t reflecting any of that optimism that ended last week’s trading, although with volume very likely to be light again this week, there’s no telling what kind of exaggerated moves may happen.

When the day finally settles the market had done as it did for the first half of last week and traded ina  narrow range, going lower, with the broad market weaker than the DJIA. There was really no news for today’s mild weakness and really no news for any kind of move.

Although there is an FOMC statement release this week, it’s an otherwise very quiet week on the news front.

On the events front it is the start of earnings season again, although it does get difficult to know where one season begins and the previous one ends.

With a large number of positions set to expire this week I do get a little concerned about potential fallout from the FOMC release even though there’s very little reason to suspect that it will contain anything surprising in nature.

Over the past two weeks the market has been spurred ahead by comments from Janet Yellen that should be reflected in the language used and the selection of words in the FOMC statement. With the belief that interest rates will be kept low until 2015 and news that the employment rate is dropping, equity markets shouldn’t find themselves spooked by anything that may be conta
ined in Wednesday’s release.

However, given that next week is the end of the July cycle that means that every position with a contract expiring this week could potentially be rolled over on Wednesday, without having had to wait for the appearance of the weekly option on Thursday, as is normally the case.

At least that gives some greater flexibility in dealing with existing positions and any concerns for a surprise coming on Wednesday afternoon.

For the coming week with adequate cash there is certainly opportunity to add new positions, but the possibility of rolling over some of those existing positions may create ample cash streams to reduce the reliance on new positions to do so.

That would actually suit me just fine, as I wouldn’t mind a relatively quiet week for new positions. I would like to maintain cash near its current level so I don’t expect to be terribly aggressive with adding new positions.

However, the greatest likelihood is that with all of those positions set for this Friday’s expiration there’s reason to want to look at the July 19 contracts or beyond for any new positions in some attempt to diversify just a little.

As has been the case lately, there’s probably good reason to sit back and see how the market actually opens once the trading starts for the rest of us. This week, I would love to see some additional strength, if only to have the opportunity to rollover or see assignments on a wide scale. At the moment I find that more appealing than being able to pick up a broad selection of newly created bargains.

As the day took shape there wasn’t much reason to consider adding anything to the portfolio as there wasn’t really any movement in prices from the early established declines and there was absolutely no indication of any trend or direction other than the disappointment of not following through on last week’s good news.

For some, that’s reason enough to refrain, but at least there was some opportunity to do some of those early rollovers and even get coverage for one existing position to start the week.

Those may have been baby steps, too, but they may still get us to the hoped for destination if enough of them can be put together by Friday.

Daily Market Update – Jul 7, 2014 (9:30 AM)

After a nice 3 1/2 days off from trading it looks as if there’s little memory of what got the markets to their new highs last week.

If you can recall back just a few weeks when the market got a nice boost from the FOMC and then Janet Yellen’s press conference remarks, that boost was very short lived, as well, never having any impact on the following week.

This past week’s boost, as opposed to the tiny steps that marked the large number of previous new highs en route to Dow 17000, was somewhat larger and more decisive. That alone should have created some momentum and optimism but in a world where short term memories are scant, maybe 3 1/2 days is just too long to sustain anything.

So it maybe it shouldn’t be a little surprising that the pre-open futures weren’t reflecting any of that optimism that ended last week’s trading, although with volume very likely to be light again this week, there’s no telling what kind of exaggerated moves may happen.

Although there is an FOMC statement release this week, it’s an otherwise very quiet week on the news front.

On the events front it is the start of earnings season again, although it does get difficult to know where one season begins and the previous one ends.

With a large number of positions set to expire this week I do get a little concerned about potential fallout from the FOMC release even though there’s very little reason to suspect that it will contain anything surprising in nature.

Over the past two weeks the market has been spurred ahead by comments from Janet Yellen that should be reflected in the language used and the selection of words in the FOMC statement. With the belief that interest rates will be kept low until 2015 and news that the employment rate is dropping, equity markets shouldn’t find themselves spooked by anything that may be contained in Wednesday’s release.

However, given that next week is the end of the July cycle that means that every position with a contract expiring this week could potentially be rolled over on Wednesday, without having had to wait for the appearance of the weekly option on Thursday, as is normally the case.

At least that gives some greater flexibility in dealing with existing positions and any concerns for a surprise coming on Wednesday afternoon.

For the coming week with adequate cash there is certainly opportunity to add new positions, but the possibility of rolling over some of those existing positions may create ample cash streams to reduce the reliance on new positions to do so.

That would actually suit me just fine, as I wouldn’t mind a relatively quiet week for new positions. I would like to maintain cash near its current level so I don’t expect to be terribly aggressive with adding new positions.

However, the greatest likelihood is that with all of those positions set for this Friday’s expiration there’s reason to want to look at the July 19 contracts for any new positions in some attempt to diversify just a little.

As has been the case lately, there’s probably good reason to sit back and see how the market actually opens once the trading starts for the rest of us. This week, I would love to see some additional strength, if only to have the opportunity to rollover or see assignments on a wide scale. At the moment I find that more appealing than being able to pick up a broad selection of newly created bargains.

Daily Market Update – Jul 3, 2014 (8:00 AM)

The Week in Review will be posted by 6 PM and the Week in Review will be posted by Noon on Sunday.

The possible outcomes today include:

Assignments: LVS

Rollovers: KSS

Expirations:  HFC

Trades, if any, will be attempted to be made prior to 12:30 PM EDT. The market closes early today to begin  the July 4th holiday.

Happy and safe celebration to all.

Daily Market Update – Jul 2, 2014 (Close)

Yesterday was a great example of how you can make something from nothing at all and that it’s so much easier when there’s little volume to fight back against the move.

Today was justa great example of how the market can be open all day long and no one would even have known about it, as it traded in an even more narrow range than on Monday.

Yesterday was something totally different, though. There wasn’t much reason for yesterday’s rise, but it was the kind that could easily perpetuate itself as the DJIA was approaching 17000. Those kind of round numbers tend to attract buying. As much as professional traders profess that such numbers have no meaning to them, it’s clear that market dynamics do seem to care, for whatever reason.

The market did close at another new high, but that 17000 wasn’t breached today. The tendency is that when those big round numbers are breached, they are done so in a pretty convincing fashion.

I certainly have no complaints because yesterday did offer an opportunity for a number of rollovers, leaving only a handful left for this shortened trading week. As for the rest of the portfolio, sometimes it really is better letting the market do the heavy lifting and simply enjoying the ride. Yesterday was one of those days, just occasionally punctuated with some unexpected rollover opportunities.

I don’t have any complaints about today, either, but it was nothing like yesterday, at least on an activity basis.

With markets closing in the early afternoon on Thursday, just a few trading hours after the release of the Employment Situation Report, that didn’t leave too much time to recover in the event of a drop and certainly didn’t leave too much time to trade, so yesterday’s activity was very welcome.

It was nice seeing the opportunity to execute the rollovers, Ideally, it’s always best to sell calls into strength, just as it is to sell puts into weakness.

You just never know what tomorrow brings and the shares of JP Morgan were a perfect example of that.

With shares having been due to expire this week at $58 and being within easy reach of that on Tuesday, who would have known of the unfortunate news to come after the close reporting that Jamie Dimon had been diagnosed with throat cancer? Given that other major banks went nicely higher today, you would have to believe that JP Morgan’s drop was related to the bad news regarding its Chairman.

Yesterday was a rare opportunity of strong price strength coming early in the week that happened to have an early expiration to boot. It was a Tuesday, but effectively was like a Thursday when it came to  option premiums and beginning to look for rollover opportunities.

With only a few new purchases for yet another week it always feels a little better being able to generate weekly income streams from existing positions. Yesterday’s activity didn’t leave much else to rollover this week, but there is still the chance that some more buying opportunities may appear this week using next week or the monthly cycle’s ending week option contracts. Somewhat unusually, there aren’t very many positions yet scheduled to expire at the cycle’s end, so if premiums allow, I may be more interested in those expirations rather than for next week.

Added into the equation is the beginning of earnings season prior to the end of the cycle. Just one more thing to keep eyes on. The past few quarters were very punishing for any company earnings disappointments and price recoveries tended to be much longer than during other times in this bull cycle. By and large, analysts have thought that earnings were in line, but ignored the impact of massive stock re-purchases and their contribution to raising EPS statistics. With much of the corporate cost cutting having already been done in previous years, the only real mechanism to increase earnings is through revenue and most everyone understands that revenues have not been stellar, as it tends to take a robust workforce and economy to drive revenues.

Yet, the march higher continued.

What will be interesting to see is whether the second quarter will show any kind of bounce back from the numbers of the previous quarter that were widely attributed to weather. The expectation would be for considerable improvement, so there is an immediate environment being established for disappointment to be the theme.

The rest of the week is framed by this morning’s ADP Report and followed by tomorrow’s Employment Situation Report. The ADP number was much larger than expected and had no revisions. Considering that their statistics are based on their payroll processing business you would have to wonder why there would ever be revisions.

The pre-open trading greeted that number with a yawn and gave up a small piece of the early gains upon the news.

It’s hard to imagine much that could or more appropriately, should, have an impact on markets, there’s some anxiety over a disappointing number, even as expectations are for another 200,000+ new jobs statistic. That nervousness is based on GDP revisions and the knowledge that it is most likely going to be a very lightly traded day, again introducing the low volume wild card.

With all of that, I’m glad it’s a short week and opportunity came along when it did.

Daily Market Update – Jul 2, 2014 (8:30 AM)

Yesterday was a great example of how you can make something from nothing at all and that it’s so much easier when there’s little volume to fight back against the move.

There wasn’t much reason for yesterday’s rise, but it was the kind that could easily perpetuate itself as the DJIA was approaching 17000. Those kind of round numbers tend to attract buying. As much as professional traders profess that such numbers have no meaning to them, it’s clear that market dynamics do seem to care, for whatever reason.

I certainly have no complaints because yesterday did offer an opportunity for a number of rollovers, leaving only a handful left for this shortened trading week. As for the rest of the portfolio, sometimes it really is better letting the market do the heavy lifting and simply enjoying the ride. Yesterday was one of those days, just occassionaly punctuated with some unexpected rollover opportunities.

With markets closing in the early afternoon on Thursday, just a few trading hours after the release of the Employment Situation Report, that didn’t leave too much time to recover in the event of a drop and certainly didn’t leave too much time to trade.

It was nice seeing the opportunity to execute the rollovers, Ideally, it’s always best to sell calls into strength, just as it is to sell puts into weakness.

Yesterday was a rare opportunity of strong price strength coming early in the week that happened to have an early expiration to boot. It was a Tuesday, but effectively was like a Thursday when it came to  option premiums and beginning to look for rollover opportunities.

With only a few new purchases for yet another week it always feels a little better being able to generate weekly income streams from existing positions. Yesterday’s activity didn’t leave much else to rollover this week, but there is still the chance that some more buying opportunities may appear this week using next week or the monthly cycle’s ending week option contracts. Somewhat unusually, there aren’t very many positions yet scheduled to expire at the cycle’s end, so if premiums allow, I may be more interested in those expirations rather than for next week.

Added into the equation is the beginning of earnings season prior to the end of the cycle. Just one more thing to keep eyes on. The past few quarters were very punishing for any company earnings disappointments and price recoveries tended to be much longer than during other times in this bull cycle. By and large, analysts have thought that earnings were in line, but ignored the impact of massive stock re-purchases and their contribution to raising EPS statistics. With much of the corporate cost cutting having already been done in previous years, the only real mechanism to increase earnings is through revenue and most everyone understands that revenues have not been stellar, as it tends to take a robust workforce and economy to drive revenues.

Yet, the march higher continued.

What will be interesting to see is whether the second quarter will show any kind of bounce back from the numbers of the previous quarter that were widely attributed to weather. The expectation would be for considerable improvement, so there is an immediate environment being established for disappointment to be the theme.

The rest of the week is framed by this morning’s ADP Report and followed by tomorrow’s Employment Situation Report. The ADP number was much larger than expected and had no revisions. Considering that their statistics are based on their payroll processing business you would have to wonder why there would ever be revisions.

The pre-open trading greeted that number with a yawn and gave up a small piece of the early gains upon the news.

It’s hard to imagine much that could or more appropriately, should, have an impact on markets, there’s some anxiety over a disappointing number, even as expectations are for another 200,000+ new jobs statistic. That nervousness is based on GDP revisions and the knowledge that it is most likely going to be a very lightly traded day, again introducing the low volume wild card.

With all of that, I’m glad it’s a short week and opportunity came along when it did.