Category: Daily Market Update

Daily Market Update – May 28, 2015  (Close)

It was hard to understand what happened on Tuesday, just as it was hard to understand exactly what happened yesterday.

Yesterday’s market wasn’t exactly an equal and opposite reaction, but at least it was noticeable in the correction to the previous day.

It still, however, doesn’t leave us anywhere other than continuing to be on that big piece of plywood delicately balanced on the head of a nail.

The pre-open futures was again poised to offer virtually nothing in the form of direction as I was getting ready to scan positions this morning. Today looked as if it would be bringing me one more step closer to a week with no trades, other than the early assignment of one position.

But somehow that market vectors Gold Miners ETF got yet another rollover. That as its 20 trade overall in the past 6 months.

While I do like the additional cash, it has been a frustrating week. Although I wasn’t expecting to make many trades and already aware that there was little to be rolled over this holiday shortened week, the very few trades that I’ve tried to make haven’t materialized. Even the one rollover couldn’t get executed yesterday.

With now just one day left in this week my expectations are low, but it will be very interesting to see how tomorrow’s GDP figure will look, as well as how the markets will react to it.

Any suggestion that the economy is heating up, or is on a stronger path than had been earlier indicated, is likely to be met with a bad market reaction. Following Tuesday’s sell off, it may not take much to tip over that perfectly balanced sheet of plywood.

With this week being a virtual wasteland and no activity, my eyes are on next week and hoping to be able to do something with the cash on hand as well as something with the few positions already set to expire next Friday.

Hopefully the next couple of days will show some more consistency and allow some more strategic planning. The back and forth that we’ve seen over the past few weeks, while occasionally setting some new record highs, isn’t the kind that creates confidence, nor does it create a strong support level for the market to climb even higher.

Still, as unhealthy as it seems, you do have to admire the way the market has been able to stick in and respond to every challenge with a new effort to recover.

I’m willing to do that, but I’d be much more willing if I could be a much more active participant.

That doesn’t look to be the case today or maybe not even tomorrow, but there’s always next week. At least then we have an Employment Situation Report and some FOMC Governors speaking to liven things up a little and maybe even get the futures back into the game.

,

Daily Market Update – May 28, 2015  (8:00 AM)

It was hard to understand wat happened on Tuesday, just as it was hard to understand exactly what happened yesterday.

Yesterday’s market wasn’t exactly an equal and opposite reaction, but at least it was noticeable in the correction to the previous day.

It still, however, doesn’t leave us anywhere other than continuing to be on that big piece of plywood delicately balanced on the head of a nail.

The pre-open futures is again poised to offer virtually nothing in the form of direction as getting ready to scan positions this morning. Today brings me one more step closer to a week with no trades, other than the early assignment of one position.

While I do like the additional cash, it has been a frustrating week. Although I wasn’t expecting to make many trades and already aware that there was little to be rolled over this holiday shortened week, the very few trades that I’ve tried to make haven’t materialized. Even the one rollover couldn’t get executed yesterday.

With just two days left in this week my expectations are low, but it will be very interesting to see how tomorrow’s GDP figure will look, as well as how the markets will react to it.

Any suggestion that the economy is heating up, or is on a stronger path than had been earlier indicated, is likely to be met with a bad market reaction. Following Tuesday’s sell off, it may not take much to tip over that perfectly balanced sheet of plywood.

With this week being a virtual wasteland and no activity, my eyes are on next week and hoping to be able to do something with the cash on hand as well as something with the few positions already set to expire next Friday.

Hopefully the next couple of days will show some more consistency and allow some more strategic planning. The back and forth that we’ve seen over the past few weeks, while occasionally setting some new record highs, isn’t the kind that creates confidence, nor does it create a strong support level for the market to climb even higher.

Still, as unhealthy as it seems, you do have to admire the way the market has been able to stick in and respond to every challenge with a new effort to recover.

I’m willing to do that, but I’d be much more willing if I could be a much more active participant.

That doesn’t look to be the case today or maybe not even tomorrow, but there’s always next week. At least then we have an Employment Situation Report and some FOMC Governors speaking to liven things up a little and maybe even get the futures back into the game.

,

Daily Market Update – May 27, 2015  (Close)

It’s still hard to understand what exactly happened yesterday.

Sometimes on the first day back after a holiday weekend of the kind that’s not celebrated elsewhere in the world, our markets can have a gap up or gap down if there was some kind of large move in European or Asian markets.

But that wasn’t the case. It was a quiet 3 days all over the world and our own futures market was predicting more of the same.

With most major companies having already reported earnings, the price of oil stabilizing and the US Dollar getting a little less precious in foreign exchanges there really wasn’t much threatening in the air, other than the fact that we were right near all time highs and haven’t had a real correction in 3 years.

Maybe that’s enough.

Within minutes of the opening bell the market began telling a very different story from what the futures had portended. While those muted futures performances don’t necessarily have great predictive value, it is unusual to see the market diverge so strongly and so quickly from the futures.

The real emphasis on that last line goes on just how quickly the market turned negative and turned its back on the futures.

With most of my new position trades typically occurring on Mondays and Tuesdays and most rollovers usually on Thursdays and Fridays, this really has the makings for being a very unusual week.

While there have been two or three weeks over the past 3 years that have not had any new positions opened, there has never been a week without either a new position being opened or some position being rolled over.

This could be that week.

The only positive thing about yesterday was that volatility, which has been plummeting lately, at least got a little bit of a boost. Even so, it still has a long way to go to make things interesting again.

This morning’s futures were again looking as if it would be a quiet day, this time with a little bias to the upside.

Today simply proved to be another example of how those futures, especially when they’re muted in their expression, are pretty meaningless.

All they show is that the professional money, the kind that’s supposed to be smarter than the other kind of money, doesn’t really know what it’s doing on certain days.

For me, the relative calm before the market opened didn’t feel very inviting. As with previous weeks I would still like to see the cash reserve pile being bigger than it is at the moment, especially if there are some more days like yesterday ahead.

With the early assignment of Lexmark this morning to capture its dividend, I do feel a little better about having some more cash available, though, especially since it meant keeping the entire month’s option premium and still having another 3 weeks to put that money to work. But even then, I’d like to see some more cash in that pile.

Unless there’s an unexpected purchase opportunity with an expiration for this week, that’s not too likely, so without much to focus on for this week, as there’s only one position possibly up for assignment or rollover, the focus shifts to next week. Even with that in mind, I kept looking for anything that could be justified, but had a hard time talking myself into any trades.

At least there are already some positions set to expire next week and maybe between now and then there may be a little more clarity ahead and some more clear signal as to whether it makes sense to dip into cash.

Not to mix metaphors too much, but while that cash does burn a hole in my pocket, I’d rather feel that heat than see it go down the drain.

Daily Market Update – May 27, 2015  (8:00 AM)

It’s still hard to understand what exactly happened yesterday.

Sometimes on the first day back after a holiday weekend of the kind that’s not celebrated elsewhere in the world, our markets can have a gap up or gap down if there was some kind of large move in European or Asian markets.

But that wasn’t the case. It was a quiet 3 days all over the world and our own futures market was predicting more of the same.

With most major companies having already reported earnings, the price of oil stabilizing and the US Dollar getting a little less precious in foreign exchanges there really wasn’t much threatening in the air, other than the fact that we were right near all time highs and haven’t had a real correction in 3 years.

Maybe that’s enough.

Within minutes of the opening bell the market began telling a very different story from what the futures had portended. While those muted futures performances don’t necessarily have great predictive value, it is unusual to see the market diverge so strongly and so quickly from the futures.

The real emphasis on that last line goes on just how quickly the market turned negative and turned its back on the futures.

With most of my new position trades typically occurring on Mondays and Tuesdays and most rollovers usually on Thursdays and Fridays, this really has the makings for being a very unusual week.

While there have been two or three weeks over the past 3 years that have not had any new positions opened, there has never been a week without either a new position being opened or some position being rolled over.

This could be that week.

The only positive thing about yesterday was that volatility, which has been plummeting lately, at least got a little bit of a boost. Even so, it still has a long way to go to make things interesting again.

This morning’s futures were again looking as if it would be a quiet day, this time with a little bias to the upside, but the relative calm doesn’t feel very inviting. As with previous weeks I would still like to see the cash reserve pile being bigger than it is at the moment, especially if there are some more days like yesterday ahead.

With the early assignment of Lexmark this morning to capture its dividend, I do feel a little better about having some more cash available, though, especially since it meant keeping the entire month’s option premium and still having another 3 weeks to put that money to work. But even then, I’d like to see some more cash in that pile.

Unless there’s an unexpected purchase opportunity with an expiration for this week, that’s not too likely, so without much to focus on for this week, as there’s only one position possibly up for assignment or rollover, the focus shifts to next week.

AT least there are already some positions set to expire next week and maybe between now and then there may be a little more clarity ahead and some more clear signal as to whether it makes sense to dip into cash.

Not to mix metaphors too much, but while that cash does burn a hole in my pocket, I’d rather feel that heat than see it go down the drain.

Daily Market Update – May 26, 2015  (Close)

Well, today was certainly a surprise.

Looking at the pre-open futures every indication was that this holiday shortened week was going to get off on the same foot that reflected all of last week.

If that was going to be the case it was destined to be another very listless trading session.

But it didn’t take long for things to deteriorate. Within about 10 minutes the market was already down 100 points and with no real reason to account neither for it nor for the additional 100 points that was tacked on.

The question, at some point, and maybe that point started this morning, was just how long the market can essentially do nothing as it sits right at all time highs. That’s basically like trying to balance an 8 foot length piece of plywood on the head of a pin. For a split second there may be an equilibrium, but you just know that it can’t last.

The only difference is that the plywood can only drop and the market doesn’t necessarily need a reason, such as the suspension of gravity and the laws of nature, to go higher.

There’s not too much economic news this week, although there are a few that can give the FOMC some reason to begin the interest rate hiking process.

This week there are Durable Goods, New Home Sales, Jobless Claims and perhaps, most importantly, Friday’s GDP.

This morning none of those were really on anyone’s mind. Maybe only the weight of the precarious piece of plywood was dangling over investor’s heads enough to stir some nerves.

With today finally out of the way, there is still some things to consider as the week progresses, most notably as it comes to its close.

With all of the controversy surrounding the accuracy of the previous winter months GDP reports, this Friday’s release may cause a re-set in thinking. That’s because the rate of change may now take on a very different character as the results of those winter months are more closely re-scrutinized.

The FOMC probably doesn’t care where the economy has been, but they do care about where it’s going and how fast it’s getting there. With what may have been faulty Q1 data, it’s really difficult to then assess the velocity or acceleration rate of change.

But that’s their problem and I’m sure that they’ll deal with it in a measured and rational way.

Not too many people are still thinking that a rate hike might be announced at the June meeting, but all it may take is a couple of corroborating reports to suggest that things are heating up after the winter and there could still easily be room for a small interest rate increase in the coming month.

That would cast a near term pall on markets, as the debate had shifted to whether the rate hike would be coming in September or maybe even waiting until 2016.

But that leaves the rest of us to wonder whether much of the foundation of the market’s recent strengt
h, that is the expectation that higher interest rates weren’t coming too soon, may prove to have been a misguided expectation.

As the market does started the morning right below all time closing highs and with cash still lower than I would like, I’m probably not going on a spending spree this week. However, if I’m going to meet the weekly goal of generating an income stream, that’s going to require some new purchases.

I’m not a big fan of having competing interests in life, but this is one of those time when the desire to conserve cash is in conflict with the need to generate cash.

That’s because what I mentioned a few weeks ago as a possibility has become the reality. As I mentioned a few weeks ago this Friday’s expiration could have ended up being one with no expiring positions and that’s almost the case, with only the Market Vectors Gold Miners ETF set to expire this week.

With virtually no positions to rollover there are no income producing positions unless new ones are added.

With only 4 days of time reflected in this week’s option premiums there may be reason to look at extended weekly expirations for any new positions that may be opened and simply adding to the small handful that are already set to expire next week.

Daily Market Update – May 26, 2015  (8:45 AM)

Looking at the pre-open futures every indication is that this holiday shortened week is going to get off on the same foot that reflected all of last week.

If that’s going to be the case it’s going to be another very listless trading session.

The question, at some point, becomes just how long the market can essentially do nothing as it sits right at all time highs. That’s basically like trying to balance an 8 foot length piece of plywood on the head of a pin. For a split second there may be an equilibrium, but you just know that it can’t last.

The only difference is that the plywood can only drop and the market doesn’t necessarily need a reason, such as the suspension of gravity and the laws of nature, to go higher.

There’s not too much economic news this week, although there are a few that can give the FOMC some reason to begin the interest rate hiking process.

This week there are Durable Goods, New Home Sales, Jobless Claims and perhaps, most importantly, Friday’s GDP.

With all of the controversy surrounding the accuracy of the previous winter months GDP reports, this Friday’s release may cause a re-set in thinking. That’s because the rate of change may now take on a very different character as the results of those winter months are more closely re-scrutinized.

The FOMC probably doesn’t care where the economy has been, but they do care about where it’s going and how fast it’s getting there. With what may have been faulty Q1 data, it’s really difficult to then assess the velocity or acceleration rate of change.

But that’s their problem and I’m sure that they’ll deal with it in a measured and rational way.

Not too many people are still thinking that a rate hike might be announced at the June meeting, but all it may take is a couple of corroborating reports to suggest that things are heating up after the winter and there could still easily be room for a small interest rate increase in the coming month.

That would cast a near term pall on markets, as the debate had shifted to whether the rate hike would be coming in September or maybe even waiting until 2016.

But that leaves the rest of us to wonder whether much of the foundation of the market’s recent strength, that is the expectation that higher interest rates weren’t coming too soon, may prove to have been a misguided expectation.

As the market does sit right below all time closing highs and with cash still lower than I would like, I’m probably not going on a spending spree this week. However, if I’m going to meet the weekly goal of generating an income stream, that’s going to require some new purchases.

I’m not a big fan of having competing interests in life, but this is one of those time when the desire to conserve cash is in conflict with the need to generate cash.

That’s because what I mentioned a few weeks ago as a
possibility has become the reality. As I mentioned a few weeks ago this Friday’s expiration could have ended up being one with no expiring positions and that’s almost the case, with only the Market Vectors Gold Miners ETF set to expire this week.

With virtually no positions to rollover there are no income producing positions unless new ones are added.

With only 4 days of time reflected in this week’s option premiums there may be reason to look at extended weekly expirations for any new positions that may be opened and simply adding to the small handful that are already set to expire next week.

Daily Market Update – May 22, 2015  (9:30 AM)

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

The following trade outcomes are possible today:

Assignments:   none

Rollovers:  GDX, TWTR (puts)

Expirations:   KMI, UAL

The following were ex-dividend this week: MRO (5/17 $0.21), CVC (5/20 $0.15), MAT (5/20 $0.38)

The following are ex-dividend next week: LXK (5/27 $0.36), RIG (5/27 $0.15)

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

Daily Market Update – May 21, 2015  (Close)

The market seems to be reflecting the fact that the biggest story of the week is that it marked the final episode of the David Letterman era on late night television.

This morning is another in a series of quiet early morning starts in a week that doesn’t have very much news, although there may be some spillover as the concept of official government GDP numbers having been wrong begins to really sink in.

The quiet mornings of the past week have also been reflected in this week’s personal trading activity. The market hasn’t done too much to make tomorrow look as if it will be overly active one on a personal level, as the weakness has made those rollovers and assignments look less and less likely.

Yesterday’s release of the FOMC minutes gave the impression that interest rate hikes were not going to be likely in June, as the members of the FOMC repeatedly emphasized their dependence on data.

This week is likely to continue being a quiet one, unless some more news related to the quality of economic data comes in.

While the reading of those minutes gave stock market bulls some reason to believe that the rally could continue, the reality is that all of those words that were being said were all being said in the context of believing the data that was in front of them.

Any further insight into what the data really is, especially if it does indicate more substantial growth than the disappointing numbers we had been receiving, could easily get the FOMC to take an action that is completely counter to what they had been intending.

You certainly couldn’t blame them for that.

If so, that would certainly put the brakes on any continuing climb beyond 2120 on the S&P 500.

With next week being a holiday shortened week I’m still undecided as to what tactic to take. Much of that indecision is based upon not knowing whether the week’s final 2 days would bring any opportunity to create income or see cash reserves get replenished, as those prospects were seemingly less likely before Thursday’s session got underway.

I would have loved to have seen some nice, albeit totally unexpected advance today to be able to get those expiring positions into better condition for either rollovers or assignments, but it really didn’t require that kind of move to at least get some trades done today.

Although the early pre-open trading wasn’t giving any indication of that being the case, there was at least still some hope for some of the positions to be put into action before Friday’s final bell. Today offered some chance for rolling over a few positions taking some advantage of their price stability today and to close out the single new position opened this week.

That created some income and brought the cash reserves to where the week started. That makes it a little easier to deal with tomorrow’s market, regardless of what direction it takes.

If conventional wisdom holds, there’s not much reason to overl
y commit to the long side ahead of a long weekend, but at least the ability to secure today’s trades makes it less of a hostage situation.

Still, while not committing to long positions over a long weekend is the logical expectation, there hasn’t been too much of that over the past couple of years, as some of the best Friday’s have come either going into long weekends or weekends of great uncertainty.

So I’ll remain hopeful and watchful as the hours tick down to Friday’s closing bell.

Daily Market Update – May 21, 2015  (9:15 AM)

The market seems to be reflecting the fact that the biggest story of the week is that it marked the final episode of the David Letterman era on late night television.

This morning is another in a series of quiet early morning starts in a week that doesn’t have very much news, although there may be some spillover as the concept of official government GDP numbers having been wrong begins to really sink in.

The quiet mornings of the past week have also been reflected in this week’s personal trading activity. The market hasn’t done too much to make tomorrow look as if it will be overly active one on a personal level, as the weakness has made those rollovers and assignments look less and less likely.

Yesterday’s release of the FOMC minutes gave the impression that interest rate hikes were not going to be likely in June, as the members of the FOMC repeatedly emphasized their dependence on data.

This week is likely to continue being a quiet one, unless some more news related to the quality of economic data comes in.

While the reading of those minutes gave stock market bulls some reason to believe that the rally could continue, the reality is that all of those words that were being said were all being said in the context of believing the data that was in front of them.

Any further insight into what the data really is, especially if it does indicate more substantial growth than the disappointing numbers we had been receiving, could easily get the FOMC to take an action that is completely counter to what they had been intending.

You certainly couldn’t blame them for that.

If so, that would certainly put the brakes on any continuing climb beyond 2120 on the S&P 500.

With next week being a holiday shortened week I’m still undecided as to what tactic to take. Much of that indecision is based upon not knowing whether the next 2 days will bring any opportunity to create income or see cash reserves get replenished, as those prospects are seemingly less likely.

I would love to see some nice, albeit totally unexpected advance today to be able to get those expiring positions into better condition for either rollovers or assignments.

Although the early pre-open trading isn’t giving any indication of that being the case, there is at least still some hope for some of the positions to be put into action before Friday’s final bell.

But if conventional wisdom holds, there’s not much reason to overly commit to the long side ahead of a long weekend.

That’s the logical expectation, but there hasn’t been too much of that over the past couple of years, as some of the best Friday’s have come either going into long weekends or weekends of great uncertainty.

So I’ll remain hopeful and watchful as the hours tick down to Friday’s closing bell.

Daily Market Update – May 20, 2015  (Close)

Yesterday, the US market didn’t match the enthusiasm seen in overseas markets.

We were greeted with the news yesterday morning that Wal-Mart was disappointing on earnings, while Home Depot had turned in a good quarter.

Those bits of information then served to lead people to try and explain what it meant when the lower end on the retail spectrum struggled, yet when the source for home improvement projects and construction was doing well.

Now that all of those analyses have been done and all of those opinions have been delivered, the morning comes the news that Target did better than expected and Lowes did not.

So rather than Tuesday’s results being some reflection of how various segments of the US economy are doing and how various demographic classes are doing, this morning’s results may suggest that it’s just a question of how one company is doing as compared to another company.

Sometimes results don’t necessarily belie anything more deep than the numbers.

If looking for more deep meaning, that might have come as FOMC Minutes were to be released later in today’s session..

While those documents shouldn’t directly move markets, after all, we already know the policy outcomes from those meetings, they can give more insight into the nuanced words used in the various speeches and presentations made by FOMC Governors as they do on a regular basis.

What we ended up learning when the minutes were finally released was that it was unlikely that interest rates would be increased at the next meeting in just a few weeks.

That wasn’t the kind of surprise that anyone was looking for, so the market yawned at the news, but would certainly do otherwise if caught off guard next month.

Yesterday’s market flatness looked as if it was extending into another day and today did nothing at any point in the day to cast doubt. That makes it a little more challenging to reach those assignments or rollovers that I had my heart set on.

However, last week, at this same time, there wasn’t too much reason for optimism, but you just never know where one single day will take you. This morning’s flat futures trading could end up with just about any kind of market opening that can be imagined, so there’s not too much reason to give up hope of anything worthwhile happening today or during the following 2 days.

If not today, then maybe tomorrow has to be the mantra.

As the market still stays around that 2120 level on the S&P 500 that technicians believe is a critical level, there’s not too much reason to get overly committed in one direction or another. While it can be a launching point to go much higher, it can also be the resistance point that leads to some kind of overdue correction, as even the mini-corrections that we had been seeing for the past few years, are now due.

For now the market seems equivocal and so am I.

At this point of the week as the monthly option cycle is just beginning and as we get ready for a holiday shortened week to follow, my sights are set on trying to generate some income this week and having some cash reserves left in order to take advantage of any opportunities that may present next week.