Category: Daily Market Update

Daily Market Update – January 26, 2016 (7:30 AM)

Yesterday was just more of the same.

Oil was much lower and the stock market went much lower.

Everyone keeps waiting for something to give.

Either oil finally starts to move higher or someone comes to the realization that oil at these levels and with continuing job growth, this would be a good time to take advantage of the low input costs and build for future growth.

But yesterday wasn’t going to be that day.

This morning, oil is up slightly as are the stock futures. Never mind that Shanghai plunged overnight.

That was so much yesterday’s story and we’re on to new things now

As has been the story for 2016 and the final month of 2015, the gains that we’ve been seeing on days here and there haven’t come close to offsetting the losses of the days before or the losses to come the days after.

Since the post-August recovery high seen in the early part of December 2015, the S&P 500 is about 11% lower and there haven’t been many days like the last two of the previous week that saw two decent sized day’s gains come in succession.

Earnings keep coming in and will start building to a crescendo in the next couple of weeks, but so far, everyone’s expectation of being disappointed with those earnings reports are being met.

If earnings aren’t going to lift the market and there’s no reason to believe that economic activity will result in oil demand and price increasing any time soon, it’s hard to know what will bring good news.

The FOMC meets this week and GDP is announced on Friday, but what can either do to lead to optimism?

This morning the 10 Year Treasury Note is again below 2%.

It’s not likely that you could find anyone who would have bet on that being the case a few months ago. You definitely won’t find any people who are deeply engaged in the financial sector who would have predicted that to be the case and it’s not likely that you would have found any bond traders, either, who would have guessed this morning’s rate.

And those are reportedly the smartest guys around.

With nothing to do yesterday, I don’t see any reason to believe that this morning’s early strength has any meaning, nor that yesterday’s sell-off was happening at the bottom.

Mark Faber, a noted gloom guy, mentioned yesterday that the average stock was now trading 26% below its 2015 high.

I don’t know how he arrived at that figure and how he selected stocks to exclude from his calculation or whether the calculation was weighted by market capitalization or anything at all, but it definitely feels that way once you exclude the very few winning stocks of the past 13 months.

With the 2016 action added in, the list of winning stocks is only getting smaller, at this point.

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Daily Market Update – January 25, 2016 (Close)

The week gets off to its start once again being led by the price of oil, which was again sinking in the early morning.

After about a 23% increase in the price in just a couple of days, you can’t blame people for taking short term profits, especially as there was no real news to account for the rise in price, other than perhaps having been in a really oversold condition.

That’s not good enough to sustain a move.

The good news was that the stock market was still following the oil market, but it was not doing so in a big way.

Maybe that’s because traders were still snowed in somewhere, even though things should be reasonably back to normal and you don’t really need to leave your house to trade.

At least that was the situation early in the session, but that all changed.

I was not too anxious to do much of anything this week, so I’m glad that today did nothing to entice me. I certainly didn’t want to chase the late week gains, but I’d have been happy to commit some money if I thought those gains were going to be more than just transient ones, as has been the case for the past 2 months.

And today.

There are still some potentially big market movers this week with an FOMC announcement and the latest GDP report, but it’s really anyone’s guess what the FOMC will say in light of the less than robust economic activity since rates were raised and there’s no clue as to what GDP may look like after a lackluster holiday sales season.

What’s also a big question mark is how any news would be greeted. Will good news be bad or will it be good?

At the moment it’s hard to see any news being interpreted as being good.

That’s more than enough uncertainty to keep me on the sidelines awaiting some kind of meaningful feeling of where things are headed.

What we do have this week are some big earnings announcements.

So far, no one has been bowled over by the first 2 weeks of those, but maybe some good news from the likes of Apple and Microsoft could give markets some reason to be optimistic about what may be in our future.

For one, I just hope that there is a reason to have that optimism and get back on a path of some trading activity.

Last week was just horrible in not having made any trades at all.

At least this week has a number of ex-dividend positions to generate some income, but ultimately, it’s trades that drive the ship.

Today that ship was in dock and it may not be going anywhere too soon.

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Daily Market Update – January 25, 2016 (9:00 AM)

The week gets off to its start once again being led by the price of oil, which is again sinking.

After about a 23% increase in the price in just a couple of days, you can’t blame people for taking short term profits, especially as there was no real news to account for the rise in price, other than perhaps having been in a really oversold condition.

That’s not good enough to sustain a move.

The good news is that the stock market is still following the oil market, it’s not doing so in a big way.

Maybe that’s because traders are still snowed in somewhere, even though things should be reasonably back to normal and you don’t really need to leave your house to trade.

I’m not too anxious to do much of anything this week. I certainly don’t want to chase the late week gains, but I’d be happy to commit some money if I thought those gains were going to be more than just transient ones, as has been the case for the past 2 months.

There are some potentially big market movers this week with an FOMC announcement and the latest GDP report, but it’s really anyone’s guess what the FOMC will say in light of the less than robust economic activity since rates were raised and there’s no clue as to what GDP may look like after a lackluster holiday sales season.

What’s also a big question mark is how any news would be greeted. Will good news be bad or will it be good?

That’s more than enough uncertainty to keep me on the sidelines awaiting some kind of meaningful feeling of where things are headed.

What we do have this week are some big earnings announcements.

So far, no one has been bowled over by the first 2 weeks of those, but maybe some good news from the likes of Apple and Microsoft could give markets some reason to be optimistic about what may be in our future.

For one, I just hope that there is a reason to have that optimism and get back on a path of some trading activity.

Last week was just horrible in not having made any trades at all.

At least this week has a number of ex-dividend positions to generate some income, but ultimately, it’s trades that drive the ship.

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Daily Market Update – January 22, 2016 (7:30 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:   none

Rollovers:   none

Expirations:  BAC

The following were ex-dividend this week:  none

The following will be ex-dividend next week: F (1/27 $0.15), FAST (1/27 $0.30), KMI (1/28 $0.125)

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

Daily Market Update – January 21, 2016 (Close)

There was an impressive 300 point gain yesterday, but unfortunately it followed a 550 point loss earlier in the trading session.

So the day finally ended being about 250 points lower.

Today was another day of big swings, but it ended up with a decent gain, just as it looked like the gains in the futures were going to lead to another plunge after the first 30 minutes or so of trading.

If you’re keeping track it is starting to feel like 2008 and 2009 when people didn’t want to keep track and reportedly weren’t even opening their brokerage statement mailings each month.

If you are keeping track it’s really amazing that after nearly 3 weeks of trading in 2016 every single DJIA and NASDAQ 100 stock is lower on the year.

For its part Japan’s Nikkei Index is in bear correction territory and I don’t even know if there’s a word to describe the Chinese markets.

Meanwhile, the S&P 500 was down 10% on the year as the morning was about to get underway and was now  about 14% below its all time high and about 12% below its December high.

Today’s gain helps, but not too much. What would help would be stringing a few of these gains together.

The turn of economic events hasn’t really been an issue, at least not in the United States as a reason to account for what it is that we’re seeing.

Continued shock from China’s economy and its stock markets, together with oil just going lower and lower is a really potent combination, but US companies aren’t helping themselves with their earnings reports, so far.

The expectations were for lower earnings, but as those expectations have become reality, the response has still been surprise.

It’s difficult to compare favorably to the past few years when so many companies were buying up their own shares as their prices were going higher and higher. Without the same kind of purchasing not only will EPS reports not move any higher as the share float decreases, but also there isn’t an underlying support mechanism for price with corporate buying drying up.

Just as in 2008 and 2009, just when you would think that it would make sense for companies to start buying up their shares when they were relatively cheap, the money has often been used up in buying sprees at just the wrong time.

So that catalyst is gone for now and it looks like earnings won’t be that catalyst either.

At the moment it looks hard to identify what would lead price higher, much less substantively higher.

With China and oil leading the way down, unless they reverse course, they would still be a potent offset to anything that could sent markets higher.

People had for years been saying that the growth being reported in China was illusory, with lots of growth coming from infrastructure projects, such as building new cities, that had no possibility of ever becoming productive in their own rights.

So it may be a while before China becomes a positive for US markets unless some real tangible consumer led growth starts coming to life.

Oil, on the other hand, while still a supply and demand driven commodity, briefly showed some life a couple of weeks ago, when for a few hours it spiked as there were rumors of potential Saudi and Iranian conflict.

That may be what it takes for oil to get going again in any meaningful kind of way.

So 2016
may be a very long and frustrating year ahead and if Larry Fink is correct and employment rates drop, it will be a tumultuous year all around.

Daily Market Update -January 21, 2016 (7:30 AM)

There was an impressive 300 point gain yesterday, but unfortunately it followed a 550 point loss earlier in the trading session.

So the day finally ended being about 250 points lower.

If you’re keeping track it is starting to feel like 2008 and 2009 when people didn’t want to keep track and reportedly weren’t even opening their brokerage statement mailings each month.

If you are keeping track it’s really amazing that after nearly 3 weeks of trading in 2016 every single DJIA and NASDAQ 100 stock is lower on the year.

For its part Japan’s Nikkei Index is in bear correction territory and I don’t even know if there’s a word to describe the Chinese markets.

Meanwhile, the S&P 500 is down 10% on the year and is now  about 14% below its all time high and about 12% below its December high.

The turn of economic events hasn’t really been an issue, at least not in the United States as a reason to account for what it is that we’re seeing.

Continued shock from China’s economy and its stock markets, together with oil just going lower and lower is a really potent combination, but US companies aren’t helping themselves with their earnings reports, so far.

The expectations were for lower earnings, but as those expectations have become reality, the response has still been surprise.

It’s difficult to compare favorably to the past few years when so many companies were buying up their own shares as their prices were going higher and higher. Without the same kind of purchasing not only will EPS reports not move any higher as the share float decreases, but also there isn’t an underlying support mechanism for price with corporate buying drying up.

Just as in 2008 and 2009, just when you would think that it would make sense for companies to start buying up their shares when they were relatively cheap, the money has often been used up in buying sprees at just the wrong time.

So that catalyst is gone for now and it looks like earnings won’t be that catalyst either.

At the moment it looks hard to identify what would lead price higher, much less substantively higher.

With China and oil leading the way down, unless they reverse course, they would still be a potent offset to anything that could sent markets higher.

People had for years been saying that the growth being reported in China was illusory, with lots of growth coming from infrastructure projects, such as building new cities, that had no possibility of ever becoming productive in their own rights.

So it may be a while before China becomes a positive for US markets unless some real tangible consumer led growth starts coming to life.

Oil, on the other hand, while still a supply and demand driven commodity, briefly showed some life a couple of weeks ago, when for a few hours it spiked as there were rumors of potential Saudi and Iranian conflict.

That may be what it takes for oil to get going again in any meaningful kind of way.

So 2016 may be a very long and frustrating year ahead and if Larry Fink is correct and employment rates drop, it will be a tumultuous year all around.

Daily Market Update -January 20, 2016 (Close)

Yesterday was just another in a series of nothing but disappointments in 2016.

But what in the world do you say about today?

It was a day that the DJIA came back from its lows by 300 points, yet still finished the day 250 points lower.

What looked like it might be a good gain for the day yesterday, with the market following oil decidedly higher, turned into wasting a 200 point gain as oil decided to turn lower.

While the DJIA closed up slightly higher, it was clear that it wasn’t done following the path of oil, which has had nothing to make anyone think that it was going to head higher anytime soon.

With Iranian oil now coming on line and no one looking as if they’re going to cut back on production, there is really going to be a glut of the stuff and no one’s economy is stepping in to use the cheap stuff as an excuse to ramp up anything.

This morning, as oil was again down sharply, it was not too surprising that the market was continuing in the same path.

This morning, the futures were down nearly 300 points and just adding more misery to what 2016 has already been for most everyone.

Yesterday’s turnaround was pretty stunning, but not in a good way It’s getting hard to envision what, besides a sustained increase in the price of oil could lead to an equally sustained move higher in US stock markets.

Today’s turnaround was pretty stunning, too, but in a far better way.

With China still continuing to be a mess and with no one really knowing what the depth of that mess really is and with some of the belief that our own market could have another 10% downside ahead of it and could be a harbinger for some layoffs, you really have to wonder what the FOMC is thinking and what they will do, if anything.

While most came to the realization that having an interest rate increase would be a good thing, as it would have reflected the need to gently tap the brakes on a growing economy, now comes the realization that maybe the FOMC should have waited for some real tangible evidence of that growth.

With market psyches so fragile, it’s not to certain that they could then see an FOMC action to again reduce rates as anything but really bad news for the economy and therefore for company earnings and stock valuations.

Most people, even those who may be value hunters haven’t been biting at stocks at these lower price levels.

Yesterday was another good example of why it has been a mistake to do so as the market was headed higher. Those climbs have been very transitory for the past 2 months and have only led to more disappointment except for those who may have been very, very short term oriented,

The moves have been on a dime, as yesterday showed and even when thinking that a new position was in the clear, all it has taken is to turn away from the screen for a few minutes and to see that optimism get replaced by gloom.

That’s not a very healthy market and it seems so bizarre to want to see the price of oil climb higher and to want to see interest rates do the same.

When was the last time you lived in a world like that?

Daily Market Update -January 20, 2016 (7:30 AM)

Yesterday was just another in a series of nothing but disappointments in 2016.

What looked like it might be a good gain for the day, with the market following oil decidedly higher, turned into wasting a 200 point gain as oil decided to turn lower.

While the DJIA closed up slightly higher, it was clear that it wasn’t done following the path of oil, which has had nothing to make anyone think that it was going to head higher anytime soon.

With Iranian oil now coming on line and no one looking as if they’re going to cut back on production, there is really going to be a glut of the stuff and no one’s economy is stepping in to use the cheap stuff as an excuse to ramp up anything.

This morning, as oil is again down sharply, it’s not too surprising that the market is continuing in the same path.

This morning, the futures are down nearly 300 points and just adding more misery to what 2016 has already been for most everyone.

Yesterday’s turnaround was pretty stunning. It’s getting hard to envision what, besides a sustained increase in the price of oil could lead to an equally sustained move higher in US stock markets.

With China still continuing to be a mess and with no one really knowing what the depth of that mess really is and with some of the belief that our own market could have another 10% downside ahead of it and could be a harbinger for some layoffs, you really have to wonder what the FOMC is thinking and what they will do, if anything.

While most came to the realization that having an interest rate increase would be a good thing, as it would have reflected the need to gently tap the brakes on a growing economy, now comes the realization that maybe the FOMC should have waited for some real tangible evidence of that growth.

With market psyches so fragile, it’s not to certain that they could then see an FOMC action to again reduce rates as anything but really bad news for the economy and therefore for company earnings and stock valuations.

Most people, even those who may be value hunters haven’t been biting at stocks at these lower price levels.

Yesterday was another good example of why it has been a mistake to do so as the market was headed higher. Those climbs have been very transitory for the past 2 months and have only led to more disappointment except for those who may have been very, very short term oriented,

The moves have been on a dime, as yesterday showed and even when thinking that a new position was in the clear, all it has taken is to turn away from the screen for a few minutes and to see that optimism get replaced by gloom.

That’s not a very healthy market and it seems so bizarre to want to see the price of oil climb higher and to want to see interest rates do the same.

When was the last time you lived in a world like that?

Daily Market Update -January 19, 2016 (Close)

A holiday shortened trading week was incredibly welcome this week after how the first two weeks of 2016 treated most everybody very shabbily..

As the third week gets set to begin trading we were greeted with another Chinese economic report that was met with lots of skepticism, as despite the obvious growth having had taken place in China, there may be figurative smoke to go along with all of the real smoke choking off the major cities.

But the real story was the sharply higher price of crude oil this morning. Then, the real story became the sharply lower price of crude later in the day.

Along with those bits of news were stocks going much higher in the morning and then losing it all by the close, as the strange alliance with oil continued.

Oil goes down and stocks go down. Oil goes higher and stocks go higher as people are left scratching their heads wondering why no one pays homage to the historical relationship.

S&P 500 futures were up very sharply this morning, but taken in context, the 250 or so point gain being seen in the DJIA is just about enough, if coupled with one of last week’s 250 point gains, to offset only one of the losses seen last week.

Of course, after today’s mere 28 points higher on the DJIA, we’re reminded that the S&P 500 futures had been trading up by more than that amount just hours earlier.

With the S&P 500 down about 8% in 11 trading days to start the week, it’s going to take quite a bit to begin to offset those losses and the promise of today’s early start was a broken one, at best.

With so many expirations last week that couldn’t get rolled over, I’m not terribly interested in looking for more places to park what little is sitting in the cash reserve. I would much rather look for any opportunity to find a call sale that could be made to generate the income that I want and need for the week..

In looking for those opportunities I would look to try and take advantage of any bump in volatility that we’ve had over the past 2 weeks and maybe even look at some longer term expirations.

The other factor that may get woven into the decision process is just where earnings are going to be reported. The earnings will also give a bump to premiums.

There isn’t too much in the way of economic reports this week nor in Federal Reserve Governors speaking, so it may again be a week dictated by oil and the occasional international surprise, such as has been the case for 2016, to date.

While some prices looked very appealing when the market closed on Friday, this morning’s attempt at a strong gain took away some of that appeal, but staying power hasn’t necessarily been a characteristic of the market over the past 2 months whenever it has put together a nice day, so it’s very unlikely that I would find myself biting at anything today. 

Turns out that was a good thing and even with the give back later in the day, there’s still not too much reason to think that bottom fishing is in order.

I otherwise expect this to be another quiet week of trading, but I’d be happy to see some of the reversal of fortunes, even at the expense of giving up on some of the volatility induced premiums.

Those premiums aren’t very helpful if the trades can’t be made.

Daily Market Update -January 19, 2016 (7:30 AM)

A holiday shortened trading week was incredibly welcome this week after how the first two weeks of 2016 treated most everybody very shabbily..

As the third week gets set to begin trading we were greeted with another Chinese economic report that was met with lots of skepticism, as despite the obvious growth having had taken place in China, there may be figurative smoke to go along with all of the real smoke choking off the major cities.

But the real story was the sharply higher price of crude oil this morning.

Along with it are going stocks in the early futures trading as they continue the strange alliance with oil.

Oil goes down and stocks go down. Oil goes higher and stocks go higher as people are left scratching their heads wondering why no one pays homage to the historical relationship.

S&P 500 futures were up very sharply this morning, but taken in context, the 250 or so point gain being seen in the DJIA is just about enough, if coupled with one of last week’s 250 point gains, to offset only one of the losses seen last week.

With the S&P 500 down about 8% in 10 trading days to start the week, it’s going to take quite a bit to begin to offset those losses.

With so many expirations last week that couldn’t get rolled over, I’m not terribly interested in looking for more places to park what little is sitting in the cash reserve. I would much rather look for any opportunity to find a call sale that could be made to generate the income that I want and need for the week..

In looking for those opportunities I would look to try and take advantage of any bump in volatility that we’ve had over the past 2 weeks and maybe even look at some longer term expirations.

The other factor that may get woven into the decision process is just where earnings are going to be reported. The earnings will also give a bump to premiums.

There isn’t too much in the way of economic reports this week nor in Federal Reserve Governors speaking, so it may again be a week dictated by oil and the occasional international surprise, such as has been the case for 2016, to date.

While some prices looked very appealing when the market closed on Friday, this morning’s attempt at a strong gain takes away some of that appeal, but staying power hasn’t necessarily been a characteristic of the market over the past 2 months whenever it has put together a nice day, so it’s very unlikely that I would find myself biting at anything today.

I otherwise expect this to be another quiet week of trading, but I’d be happy to see some of the reversal of fortunes, even at the expense of giving up on some of the volatility induced premiums.

Those premiums aren’t very helpful if the trades can’t be made.