Category: Daily Market Update

Daily Market Update – August 6,  2015  (Close)

After attending last night’s Gordon Lightfoot concert I felt like a young man, again.

Not that the music was invigorating, but because the average age in the crowd must have been in the 70s and instead of smartphone charging stations, there were hearing aid and oxygen tank refill stations spread throughout the venue.

It was all a question of comparables.

By comparison I felt pretty young.

The concert, as expected, was about as invigorating as this market has been, which is to say, not all all.

It was disappointing to see yesterday’s early gains evaporate so quickly as it followed oil and energy prices down the drain.

It’s hard to understand why this market is taking a different path from other markets that have been the beneficiaries of lower energy prices. But, by the same token, it’s hard to understand why this economy hasn’t gotten a kick start from those same lower energy prices, so maybe the market is only reflecting what it sees and what it foresees.

Tomorrow brings the Employment SItuation Report and following yesterday’s early reaction to the ADP Report, which delivered some minor disappointment, as the loss of jobs in the energy sector lowered numbers, it’s probable that a similar disappointment tomorrow may also bring market gains.

Otherwise, it continues to be a typical summer where there is less news than is usually the case, especially once August rolls around and most of Europe closes down. While the data will continue coming in, there will either have to be a significant shift in the direction of the economy demonstrating some real growth, or the FOMC has to abandon its claim to being data dependent.

They may just have to say we know what’s best for the economy and we’re not going to wait for things to happen.

That might just be the best thing.

There’s not necessarily anything wrong with a beneficent dictator and at least a rise in interest rates would get us temporarily to stop playing mind games and instead focus on metrics that matter.

With now just one day of trading left to go and today’s sell-off, there’s still some reason to be hopeful that the week may see either assignment or rollover of what few positions are set to expire. Who knows, maybe even another call sale on an uncovered position, as well. But I don’t want to get too greedy, now having been able to get 2 of those uncovered positions back into making some money while sitting and waiting.

Seeing those hopes all come true would be nice, but certainly not something worth predicting, because the market has been beyond predictable of late, other than it hasn’t been very forgiving.

Add today into the growing amount of confusing data making you wonder just what kind of a market could be so close to its highs yet feel so bad.

Daily Market Update – August 6,  2015  (9:15 AM)

After attending last night’s Gordon Lightfoot concert I feel like a young man, again.

Not that the music was invigorating, but because the average age in the crowd must have been in the 70s and instead of smartphone charging stations, there were hearing aid and oxygen tank refill stations spread throughout the venue.

It was all a question of comparables.

By comparison I felt pretty young.

The concert, as expected, was about as invigorating as this market has been, which is to say, not all all.

It was disappointing to see yesterday’s early gains evaporate so quickly as it followed oil and energy prices down the drain.

It’s hard to understand why this market is taking a different path from other markets that have been the beneficiaries of lower energy prices. But, by the same token, it’s hard to understand why this economy hasn’t gotten a kick start from those same lower energy prices, so maybe the market is only reflecting what it sees and what it foresees.

Tomorrow brings the Employment SItuation Report and following yesterday’s early reaction to the ADP Report, which delivered some minor disappointment, as the loss of jobs in the energy sector lowered numbers, it’s probable that a similar disappointment tomorrow may also bring market gains.

Otherwise, it continues to be a typical summer where there is less news than is usually the case, especially once August rolls around and most of Europe closes down. While the data will continue coming in, there will either have to be a significant shift in the direction of the economy demonstrating some real growth, or the FOMC has to abandon its claim to being data dependent.

They may just have to say we know what’s best for the economy and we’re not going to wait for things to happen.

That might just be the best thing.

There’s not necessarily anything wrong with a beneficent dictator and at least a rise in interest rates would get us temporarily to stop playing mind games and instead focus on metrics that matter.

With two days of trading left to go there’s still some reason to be hopeful that the week may see either assignment or rollover of what few positions are set to expire. Who knows, maybe even another call sale on an uncovered position, as well.

That would be nice, but certainly not something worth predicting, because the market has been beyond predictable of late, other than it hasn’t been very forgiving.

Daily Market Update – August 5,  2015  (Close)

It was nice to wake up this morning and to see the futures heading nicely higher. They were nearly 100 points higher on the DJIA and those kinds of moves tend to have some staying power.

The word “tend” has some leeway built into it and today all of that leeway was necessary, as that triple digit advance disappeared at 10:30 AM, immediately after the Oil and Gas reports were released.

This morning it was the ADP Employment Report that added to the already impressive gains seen in the futures trading. It did so by putting forward disappointing numbers reflecting job decreases in the energy sector.

So what did the futures market do? It simply added about 50% to those earlier gains.

With that somewhat bad news the market reverted back to its “bad news is good news” mentality, as the initial thought must now be that those kinds of employment statistics would likely mean a further delay in an interest rate increase, even when Federal Reserve Governors are increasingly saying that it’s time for that increase.

It’s too bad that is still the way of interpreting news. At some point the market has to get to the more healthy way of accepting news for its real meaning and simply discounting the first order of events 6 months down the road.

Instead, the market is discounting second order events 6 months into the future. That’s a good way to discover disappointment and to realize that crystal balls get cloudy when you expect too much of them.

It is predicting that the bad news will delay an interest rate increase and then it is further predicting that such a delay in interest rates will be good for the stock market that’s just a bit too much of a stretch.

That’s just too much to try and predict.

It also forgets that there’s lots of data that is still going to be released between now and the September FOMC meeting and those scales can easily be tipped, especially if those FOMC members are getting anxious to finally do something after 9 years of not having had a rate increase.

Maybe the morning’s energy report brought the market back to a more normal way of thinking, although historically anything that drives down the price of oil and gas has been good for the stock market. It’s only been during this recent slide over the past 9 months that the market has reacted in such a strange sort of way.

That still leaves Friday’s Employment Situation Report and an expectation that if the numbers are light that the market may again exhibit some inappropriate rejoicing.

While the flurry of futures buying didn’t continue into the actual trading session today, it came within the context of DJIA component Disney down nearly 5%, which alone took away about 60 points from the DJIA. It also came with a continuing weak Apple, which is now officially in correction mode, despite having recovered from its additional 1% loss in the futures trading.

I’d would have l;ked to have seen those gains continue and hopefully leave expiring positions this week in better shape for either assignment or rollover, so I still can’t complain about the disappointment of losing the day’s gains. There was also an all too rare opportunity to sell some calls on an uncovered position, but it’s going to take some sustained gains to see more of those happen and the staying power of advances hasn’t been very good of late.

We’ll see if bad news can end up being the new good news and take us to the new highs that we’ve started believing is our destiny, even if the masses are left behind.

Daily Market Update – August 5,  2015  (9:00 AM)

It was nice to wake up this morning and to see the futures heading nicely higher. They were nearly 100 points higher on the DJIA and those kinds of moves tend to have some staying power.

Then came the ADP Employment Report and it was a disappointing release as it reflected job decreases in the energy sector.

So what did the futures market do? It simply added about 50% to those earlier gains.

With that somewhat bad news the market reverted back to its “bad news is good news” mentality, as the initial thought must now be that those kinds of employment statistics would likely mean a further delay in an interest rate increase, even when Federal Reserve Governors are increasingly saying that it’s time for that increase.

It’s too bad that is still the way of interpreting news. At some point the market has to get to the more healthy way of accepting news for its real meaning and simply discounting the first order of events 6 months down the road.

Instead, the market is discounting second order events 6 months into the future. That’s a good way to discover disappointment and to realize that crystal balls get cloudy when you expect too much of them.

It is predicting that the bad news will delay an interest rate increase and then it is further predicting that such a delay in interest rates will be good for the stock market that’s just a bit too much of a stretch.

That’s just too much to try and predict.

It also forgets that there’s lots of data that is still going to be released between now and the September FOMC meeting and those scales can easily be tipped, especially if those FOMC members are getting anxious to finally do something after 9 years of not having had a rate increase.

That still leaves Friday’s Employment Situation Report and an expectation that if the numbers are light that the market may again exhibit some inappropriate rejoicing.

We’ll see if the futures buying will continue into the actual trading session today, but it comes within the context of DJIA component Disney down nearly 5%, which alone is taking away about 60 points from the DJIA. It also comes with a continuing weak Apple, which is now officially in correction mode, although it is only down about an additional 1% in the futures trading.

I’d like to see these gains continue and hopefully leave expiring positions this week in better shape for either assignment or rollover. In a perfect world it would also allow for the sale of some call options on uncovered positions. That would be nice, but it might take some sustained gains to see those happen and the staying power of advances hasn’t been very good of late.

We’ll see if bad news can end up being the new good news and take us to the new highs that we’ve started believing is our destiny, even if the masses are left behind.

Daily Market Update – August 4,  2015  (Close)

No matter what the appearances were yesterday as the pre-opening futures were trading, there was no indication that the day would deteriorate so quickly and decisively.

There wasn’t too much reason seen during the course of the day to account for the very broad negative tone, although some pointed to Chinese economic news.

That seemed plausible, except that Chinese economic news is released well before our own markets begin trading and typically, if they are going to have any impact at all, begin to have that impact on our futures market the evening before.

That definitely wasn’t the case on Sunday evening, nor was it the case at 9:29 AM on Monday.

Sometimes, we just have to realize that there aren’t necessarily easy answers to explain reality.

There weren’t any obvious technical triggers, although individual hedge funds, banks or other institutions may have their own internal sell and buy signals, but there was no real sudden drop on a relatively large volume spike. Instead, it was a slow grind lower over the course of 90 minutes. If there was anything representing a spike in volume it came on an uptick at the close that pulled the DJIA almost 30 points higher in the final 5 minutes.

This morning’s futures are again relatively quiet, although there is a negative bias. Earnings are continuing to come in, although other than Retail, which begins with JW Nordstrom next week and then goes into high gear the following week, most of the important companies have now reported their earnings.

What we’ve seen thus far has already been designated with the acronym “BEMR.”

Beat earnings, missed revenues.

So if you were wondering what the impact of all of those share buybacks have been, it has been to create an illusion of earnings and to make management look good.

They have done so by spending lots and lots of shareholder money and they very often do so when shares are not priced very attractively.

I’m not a huge fan of dividends, but if a company has a need to spend its cash, I’d much rather see either an increase in the regular dividend or a special dividend. The former, though, is far better at supporting or encouraging an increase in share price than is the latter.

The problem is that increasing the dividend does nothing for the metrics that analysts like to follow, such as EPS growth, but share buybacks do make it look as if all is well and improving.

With a couple of new positions opened yesterday, I’m hopeful that they will have a chance of being assigned at the end of the week in order to generate a little cash for the following week. Next week, although only having 2 expiring positions at least has 2 more than starting this week and gives some hope for either generating some additional revenue or raising cash. That’s more than can be said for the way this week started.

The nice bounce I had been hoping for yesterday, in order to have a chance of selling some calls on existing positions never did come, so today the holes were a little deeper and they ended the day today, still a little bit more deep. My minimal hope for today was that the market can at least maintain itself and create some sort of a base as we head into Friday’s Employment Situation Report.

At least that happened.

I’m hopeful that Friday’s report will show strong job growth and that the market will respond in an appropriate way, recognizing that to be good news.

At the moment, the only real impetus for a march higher is good economic news and maybe the same coming from China, for a change.

Daily Market Update – August 4,  2015  (8:45 AM)

No matter what the appearances were yesterday as the pre-opening futures were trading, there was no indication that the day would deteriorate so quickly and decisively.

There wasn’t too much reason seen during the course of the day to account for the very broad negative tone, although some pointed to Chinese economic news.

That seemed plausible, except that Chinese economic news is released well before our own markets begin trading and typically, if they are going to have any impact at all, begin to have that impact on our futures market the evening before.

That definitely wasn’t the case on Sunday evening, nor was it the case at 9:29 AM on Monday.

Sometimes, we just have to realize that there aren’t necessarily easy answers to explain reality.

There weren’t any obvious technical triggers, although individual hedge funds, banks or other institutions may have their own internal sell and buy signals, but there was no real sudden drop on a relatively large volume spike. Instead, it was a slow grind lower over the course of 90 minutes. If there was anything representing a spike in volume it came on an uptick at the close that pulled the DJIA almost 30 points higher in the final 5 minutes.

This morning’s futures are again relatively quiet, although there is a negative bias. Earnings are continuing to come in, although other than Retail, which begins with JW Nordstrom next week and then goes into high gear the following week, most of the important companies have now reported their earnings.

What we’ve seen thus far has already been designated with the acronym “BEMR.”

Beat earnings, missed revenues.

So if you were wondering what the impact of all of those share buybacks have been, it has been to create an illusion of earnings and to make management look good.

They have done so by spending lots and lots of shareholder money and they very often do so when shares are not priced very attractively.

I’m not a huge fan of dividends, but if a company has a need to spend its cash, I’d much rather see either an increase in the regular dividend or a special dividend. The former, though, is far better at supporting or encouraging an increase in share price than is the latter.

The problem is that increasing the dividend does nothing for the metrics that analysts like to follow, such as EPS growth, but share buybacks do make it look as if all is well and improving.

With a couple of new positions opened yesterday, I’m hopeful that they will have a chance of being assigned at the end of the week in order to generate a little cash for the following week. Next week, although only having 2 expiring positions at least has 2 more than starting this week and gives some hope for either generating some additional revenue or raising cash. That’s more than can be said for the way this week started.

The nice bounce I had been hoping for yesterday, in order to have a chance of selling some calls on existing positions never did come, so today the holes are a little deeper. Hopefully today the market can at least maintain itself and create some sort of a base as we head into Friday’s Employment Situation Report.

I’m hopeful that the report will show strong job growth and that the market will respond in an appropriate way, recognizing that to be good news.

At the moment, the only real impetus for a march higher is good economic news and maybe the same coming from China, for a change.

Daily Market Update – August 3,  2015  (Close)

With last week being another in a direction higher, the market has continued its back and forth character for a while, with occasional minimally sustained moves lower or higher.

Lately, we haven’t even been able to get a real mini-correction going, although we came close on an intra-day basis. Otherwise, it’s been 5 months since there has been a 5% drop on a closing basis. We used to talk in terms of a 10% drop, but for that you really have to go back in time.

What has been missing for a while has been any kind of sustained move and as we sit getting ready to begin the eighth month of the year, the market is essentially unchanged, owing most of whatever gains it has for the year on the past week.

This late in the year it’s somewhat unusual to keep hearing the phrase “and with today’s loss, the market has given up all of its gains for the year.”

That’s been very commonly uttered the past few months, yet somehow the market has resisted staying down or getting up.

Looking at this morning’s futures, it seemed to be a perfect reflection of that kind of indecision, as the futures were perfectly flat for the morning. It would turn out to be anything but a flat kind of trading day, as the market was decidedly lower, but without any obvious reason for taking the sharp downturn.

If China stays calm for the week, there’s very little international news that should have an impact on markets this week, but today was an example of how news isn’t necessary.

For the rest of the week there are still earnings to come, but the next important wave of earnings begins sometime next week as Retail begins to report and will continue in the week following.

There is an Employment Situation Report this week, but with no Federal Reserve meeting for nearly 2 months, any incoming data today can be old and stale by the time the FOMC gets together to make an interest rate decision, which is increasingly not looking as if it will result in a September rate increase.

So it’s not too likely that Friday’s report would have any impact, but the guess is that if it is outside of the expected range, a bad number would move markets down, while a really good number might send the market higher. That’s the way economic news is supposed to work when people aren’t trying to over-analyze everything.

The one thing that should be noted by now is that for the past year, markets, pundits and analysts have all been wrong about when that first rate increase would come and fears of that increase have perennially depressed the market, as the fears simply got stretched out over time.

This may still end up being a quiet week for the market, despite today’s dour trading. While I was expecting it to be a very quiet week for me, I surprised myself with 2 new positions and have exhausted cash. With limited cash and no positions set to expire this week, the best bet for activity would now be if the market could somehow find a way to add some real gains and perhaps create an opportunity to sell some calls on uncovered positions. WIth having spent the day digging a hole, it’s going to take more to climb out.

I won’t hold my breath for that, but as we’ve been seeing over and over again, the morning’s futures trading doesn’t necessarily mean anything for the trading day to come.

I had hoped that would have been the case this morning. We’ll see what tomorrow will bring.

Daily Market Update – August 3,  2015  (8:30 AM)

With last week being another in a direction higher, the market has continued its back and forth character for a while, with occasional minimally sustained moves lower or higher.

Lately, we havent even been able to get a real mini-correction going, although we came close on an intra-day basis. Otherwise, it’s been 5 months since there has been a 5% drop on a closing basis. We used to talk in terms of a 10% drop, but for that you really have to go back in time.

What has been missing for a while has been any kind of sustained move and as we sit getting ready to begin the eighth month of the year, the market is essentially unchanged, owing most of whatever gains it has for the year on the past week.

This late in the year it’s somewhat unusual to keep hearing the phrase “and with today’s loss, the market has given up all of its gains for the year.”

That’s been very commonly uttered the past few months, yet somehow the market has resisted staying down or getting up.

Looking at this morning’s futures, it seems to be a perfect reflection of that kind of indecision, as the futures are perfectly flat for the morning.

If China stays calm for the week, there’s very little international news that should have an impact on markets this week. There are still earnings to come, but the next important wave of earnings begins sometime next week as Retail begins to report and will continue in the week following.

There is an Employment Situation Report this week, but with no Federal Reserve meeting for nearly 2 months, any incoming data today can be old and stale by the time the FOMC gets together to make an interest rate decision, which is increasingly not looking as if it will result in a September rate increase.

So it’s not too likely that Friday’s report would have any impact, but the guess is that if it is outside of the expected range, a bad number would move markets down, while a really good number might send the market higher. That’s the way economic news is supposed to work when people aren’t trying to over-analyze everything.

The one thing that should be noted by now is that for the past year, markets, pundits and analysts have all been wrong about when that first rate increase would come and fears of that increase have perenially depressed the market, as the fears simply got stretched out over time.

This may end up being a quiet week for the market and will definitely be a quiet week for me. With limited cash and no positions set to expirte this week, the best bet for activity would be if the market could somehow find a way to add some real gains and perhaps create an opportunity to sell some calls on uncovered positions.

I won’t hold my breath, but as we’ve been seeing over and over again, the morning’s futures trading doesn’t necesseraily mean anything for the trading day to come.

I hope that’s going to be the case this morning.

Daily Market Update – July 31,  2015  (8:45 AM)

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

The possible trade outcomes today are:

Assignments:   none

Rollovers:   BBY

Expirations:   DOW

The following were ex-dividend this week: KMI (7/29 $0.49), TXN (7/29 $0.34)

The following will be ex-dividend next week: INTC (8/5 $0.24)

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

Daily Market Update – July 30,  2015  (Close)

With no news coming from the FOMC yesterday, the market correctly anticipated that to be the case and tacked on another nice gain to the one seen on Tuesday.

Suddenly, the move to re-test the support level at the 2045 level of the S&P 500 was halted and the market is now within about 1.5% of its all time highs and in a position to re-test resistance.

Technicians like to think that as the lows get higher and the highs get lower, that kind of convergence of lines indicates that there will be some sort of break out, but they can’t say in which direction that breakout will be.

The catalyst to the upside could be earnings, but we’re now about at the mid-way point and many of the significant companies have now already reported. However, what may hold some potential for more moves could be retail earnings, which have yet to be released.

Other than that, the relative quiet on the world front, especially some calm now coming from the Chinese stock markets, after a rough start to the week, could remove a barrier from moving higher.

This morning was another GDP release, including revisions to previous data. In 2015 some of those revisions have been fairly significant and have caused an entire shift in sentiment about where we were and where we were going.

Today’s GDP data, even though showing growth of 2.3% was disappointing, but the market was basically a yawner all day, other than for the first 30 minutes when the DJIA was down triple digits.

A stronger than expected GDP and any upward revisions would have gotten tongues wagging again about a September rate hike, but that has been expected for so long at this point, that you would have to believe it has already been discounted and wouldn’t be considered as bad news. We might actually be at a point that good economic news would be seen as good economic news for a change.

Instead, the GDP was on the low side and was seen as bad news, the way you would expect normal people to react.

But eventually came the thought that if the FOMC is still swearing that it is going to be data driven and if growth isn’t heating up enough, then where’s the reason to raise rates, even in September?

This morning the futures were flat and after the past two days you couldn’t blame the market for taking a little break. But as we’ve been seeing lately, there’s very little predictive value in the futures. We’ve even seen some reversals on those days when the futures were making large moves, so it was really anyone’s guess how today would go. 

At this point, having already rolled over half of the positions set to expire this week, there’s not too much more to do other than to hope that the march higher continues.

With no expirations scheduled for next week and with cash at very low levels, I’d like to see some assignments, but that appears unlikely, although there’s still some glimmer of hope for Best Buy with two days of trading left in the week.

It, along with so many others, though, has had a rough time putting consecutive winning sessions together, just as the market has had a tough time doing so.

While it would have been nice if today could have added another day onto that modest market winning streak, there’s always the chance to start anew tomorrow and maybe see gains trickle down to members of the indexes in a more broad way than the market’s advance has been to date.

While most investors aren’t socialists at heart, they might agree that this one be an acceptable instance of sharing the wealth.