Category: Daily Market Update

Daily Market Update – May 20, 2015  (8:30 AM)

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 may come as FOMC Minutes are released later today.

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.

Yesterday’s market flatness looks as if it is extending into another day. 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.

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.

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Daily Market Update – May 19, 2015  (Close)

With markets all around the world up strongly overnight and with our own markets hitting all time highs to start the week, the expectation has to be for a strong day today as trading begins in US markets.

While the pre-opening futures are higher, they are only modestly up, though, so that enthusiasm heard around the world isn’t necessarily making a big splash on our shores. Still, enthusiasm has a way of getting magnified or waning as you move further from the source, so it was only a case of waiting to see what may add to or detract to the mood felt everywhere else heading into this morning.

As it would turn out, it was a day for yet another new closing record in the DJIA, but not for the S&P 500, nor the NASDAQ.

That alone should tell you that whatever gain may have been see in the DJIA that it wasn’t very impressive.

And it wasn’t.

Early morning disappointing retail sales from Wal-Mart didn’t appear to be throwing cold water onto that early party, but maybe it was the beat at Home Depot that was offsetting yet another in a series of retail disappointments.

As the major national retailers are almost done with reporting their earnings the next shoe to drop, literally or figuratively, may be the more specialty retailers. Those earnings reports are now starting to come in and those, too, are looking like disappointments may be in store.

However, before getting too critical about any of that, there’s always the realization that we are sitting at all time highs and markets are setting up for the next earnings season with lowered expectations, but with currency exchange rates not as bad as had been expected and buy backs continuing and even expanded.

If looking for catalysts, those are a powerful one-two punch, but may have to wait for nearly another two months before they come into play.

In the interim it’s still likely to focus on expectations for interest rate increases and their timing.

Tomorrow;s release of FOMC Minutes may give some insights into the thought processes and who is influential in shaping that process. Identifying the key players then puts increasing focus on them and their words as the FOMC Governors make their rounds and give speeches, as they all do on a regular basis.

With just a single purchase yesterday, I would love to see it get assigned early after today’s close and would happily give up the dividend in order to see it wind up being a 2 day trade with a nearly 2% ROI. Normally, I would expect a high degree of likelihood of that being the case, even with nearly a full month of time remaining on the contract, since it is so deep in the money. However, with an upcoming shareholder’s meeting it is possible that some option buyers are expecting something of substance to occur, although there are no substantive items on the agenda.

Otherwise, I think I’d like to hold onto and preserve my cash reserves.

I might feel otherwise if believing that those pos
itions set to expire this week had a greater chance of themselves being assigned.

Right now, however, the more reasonable hope is that most get a chance to get rolled over, so I’m not counting on too much money getting recycled from new assignments.

Still, there’s rarely a day when there’s not some opportunity to stray from the script. Sometimes it’s just a question of controlling those impulses and thinking about consequences or just thinking about a couple of steps ahead.

Sitting at all time highs the bulls would much rather have seen an explosive or decisive move higher above what had been resistance. So far, that’s not happening. Other bulls would take comfort in some kind of base being built at this level.

I’m agnostic on both of those and just want to be shown what is going on and not what may be going on. before thinking about straying from the script.

Today did nothing to demonstrate where the path was leading. Maybe that will have to wait until at least tomorrow.

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Daily Market Update – May 19, 2015  (8:30 AM)

With markets all around the world up strongly overnight and with our own markets hitting all time highs to start the week, the expectation has to be for a strong day today as trading begins in US markets.

While the pre-opening futures are higher, they are only modestly up, though, so that enthusiasm heard around the world isn’t necessarily making a big splash on our shores. Still, enthusiasm has a way of getting magnified or waning as you move further from the source, so we’ll see what may add to or detract to the mood felt everywhere else heading into this morning.

Disappointing retail sales from Wal-Mart don’t appear to be throwing cold water onto that early party, but maybe the beat at Home Depot is offsetting yet another in a series of retail disappointments.

As the major national retailers are almost done with reporting their earnings the next shoe to drop, literally or figuratively, may be the more specialty retailers. Those earnings reports are now starting to come in and those, too, are looking like disappointments may be in store.

However, before getting too critical about any of that, there’s always the realization that we are sitting at all time highs and markets are setting up for the next earnings season with lowered expectations, but with currency exchange rates not as bad as had been expected and buy backs continuing and even expanded.

If looking for catalysts, those are a powerful one-two punch, but may have to wait for nearly another two months before they come into play.

In the interim it’s still likely to focus on expectations for interest rate increases and their timing.

Tomorrow;s release of FOMC Minutes may give some insights into the thought processes and who is influential in shaping that process. Identifying the key players then puts increasing focus on them and their words as the FOMC Governors make their rounds and give speeches, as they all do on a regular basis.

With just a single purchase yesterday, I would love to see it get assigned early after today’s close and would happily give up the dividend in order to see it wind up being a 2 day trade with a nearly 2% ROI. Normally, I would expect a high degree of likelihood of that being the case, even with nearly a full month of time relmaining on the contract, since it is so deep in the money. However, with an upcoming shareholder’s meeting it is possible that some option buyers are expecting something of substance to occur, although there are no substantive items on the agenda.

Otherwise, I think I’d like to hold onto and preserve my cash reserves.

I might feel otherwise if believing that those positions set to expire this week had a greater chance of themselves being assigned.

Right now, however, the more reasonable hope is that most get a chance to get rolled over, so I’m not counting on too much money getting recycled from new assignments.

Still, there’s rarely a day when there’s not some opportunity to stray from the script. Sometimes it’s just a question of controlling those impulses and thinking about consequences or just thinking about a couple of steps ahead.

Sitting at all time highs the bulls would much rather have seen an explosive or decisive move higher above what had been resistance. So far, that’s not happening. Other bulls would take comfort in some kind of base being built at this level.

I’m agnostic on both of those and just want to be shown what is going on and not what may be going on. before thinking about straying from the script.

.

Daily Market Update – May 18, 2015  (Close)

Closing at another new high and having some more cash to spend following some assignments creates some conflict.

Market technicians have been looking at the 2120 level on the S&P 500 as a “make it or break it” kind of level.

There’s nothing really newsworthy about that as the 2019 level had been the previous closing record high and there’s enough historical basis to realize that when  you get to those kind of levels it represents either a resistance point or a point of support.

Anyone’s guess is as good as anyone else’s as to whether the 2120 level leads us even higher or is a place to consolidate some gains, which is something that is about due right now, even if only on the basis of time.

Time has been the best indicator of where the market is going, as nearly every 2 months there has been a pause and some mini-correction taking place. The last of those was in March and here we are in May.

With much of the important earnings having now been reported, it’s going to be a fairly quiet week in that regard. However, there are some big retailers still to report this week, such as Wal-Mart and Home Depot which can say things about very different portions of the economy and can have an impact beyond their own shares.

Otherwise, there’s not too much going on, although there will be a release of previous FOMC Meeting Minutes, so that people can dissect some of the dynamics going on during those meetings, but that information should be far too dated to have any kind of impact.

What the week does have is a number of FOMC Governors speaking, including Stanley Fischer on Thursday and Janet Yellen on Friday.

While the market is likely to respond more to what Janet Yellen may say, I think the more interesting words may come from Fischer. That’s because he was widely perceived as an influential hawk on interest rates and he’s now looking at a data driven committee that doesn’t seem to have the data to suggest that there’s a reason to start increasing rates.

With more cash on hand after a few assignments last week and already having a number of positions set to expire this week and the market at a new high, I don’t have strong reason to look for spending opportunities.

I would like to be able to see chances to whittle down the number of uncovered positions, even if using some longer term expiration dates. While normally not too fond of those when volatility is so low, at the moment I also look at those longer time frames as offering some additional time to recover in the event of a near term decline in the market.

For some positions that have already been waiting quite a while and haven’t been generating much in the way of income, what’s another few months?

As the pre-opening futures were mildly lower as the week was about to begin, that’s was signal to just sit back and watch whether there are any waves and in what directions they may be going, before deciding to get too wet.

Today turned out to be mostly a day of calm. Somehow the market was able to slowly work its way higher and it began the week exactly the way it ended the previous week, by setting new all time closing highs.

Note: For
those purchasing shares of Cablevision, I decided to try and sell, what I hope will be deep in the money calls as shares are set to go ex-dividend on Wednesday. I’d like to see those shares get assigned early in order for the option buyer to capture the dividend.

In exchange, the trade, which would then only be of 2 day’s duration would have an ROI of about 1.9% and with little associated risk.

If it works out that way the only question remaining would be “why can’t there be more of those?”

Daily Market Update – May 18, 2015  (7:30 AM)

Closing at another new high and having some more cash to spend following some assignments creates some conflict.

Market technicians have been looking at the 2120 level on the S&P 500 as a “make it or break it” kind of level.

There’s nothing really newsworthy about that as the 2019 level had been the previous closing record high and there’s enough historical basis to realize that when  you get to those kind of levels it represents either a resistance point or a point of support.

Anyone’s guess is as good as anyone else’s as to whether the 2120 level leads us even higher or is a place to consolidate some gains, which is something that is about due right now, even if only on the basis of time.

Time has been the best indicator of where the market is going, as nearly every 2 months there has been a pause and some mini-correction taking place. The last of those was in March and here we are in May.

With much of the important earnings having now been reported, it’s going to be a fairly quiet week in that regard. However, there are some big retailers still to report this week, such as Wal-Mart and Home Depot which can say things about very different portions of the economy and can have an impact beyond their own shares.

Otherwise, there’s not too much going on, although there will be a release of previous FOMC Meeting Minutes, so that people can dissect some of the dynamics going on during those meetings, but that information should be far too dated to have any kind of impact.

What the week does have is a number of FOMC Governors speaking, including Stanley Fischer on Thursday and Janet Yellen on Friday.

While the market is likely to respond more to what Janet Yellen may say, I think the more interesting words may come from Fischer. That’s because he was widely perceived as an influential hawk on interest rates and he’s now looking at a data driven committee that doesn’t seem to have the data to suggest that there’s a reason to start increasing rates.

With more cash on hand after a few assignments last week and already having a number of positions set to expire this week and the market at a new high, I don’t have strong reason to look for spending opportunities.

I would like to be able to see chances to whittle down the number of uncovered positions, even if using some longer term expiration dates. While normally not too fond of those when volatility is so low, at the moment I also look at those longer time frames as offering some additional time to recover in the event of a near term decline in the market.

For some positions that have already been waiting quite a while and haven’t been generating much in the way of income, what’s another few months?

As the pre-opening futures is mildly lower as the week is about to begin, that’s a signal to just sit back and watch whether there are any waves and in what directions they may be going, before deciding to get too wet.

Daily Market Update – May 15, 2015  (8:00 AM)

The Week in Review will be posted by 6:00 PM and the Weekend Update will be posted by Noon on Sunday.

The following trade outcomes are possible today:

Assignments:   BAC

Rollovers:   CY, SBGI

Expirations:  ANF, DOW, GPS, GPS

There were no ex-dividend positions this week

The following will be ex-dividend next week: MR) (5/18 $0.21), MAT (5/20 $0.38)

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

Daily Market Update – May 14, 2015  (Close)

More retail sales reports are coming and they continue to be disappointing.

The news is basically all the same and what it all has been saying, so far, as that if there is any evidence that people are getting more money, they’re not spending it on discretionary items.

We don’t exactly know where it is going, but it’s not going to the major national retailers that have reported their earnings. Also, if the last quarter is any guide, then the more upscale retailers won’t be where the money is going either, as those had dome fairly well even while more mainstream retailers were flagging.

This morning the pre-open futures seemed to like the news that retailers aren’t doing that well.

To those who believed that there would be increasing consumer led strength in the economy and that strength would then lead to the Federal Reserve raising interest rates, the earnings data is disappointing.

After some early earnings news came some PPI data, which looks at pricing.

Again, there’s absolutely no evidence that inflation is creeping in. If the FOMC is truly going to be data driven, then there’s not much reason to suspect that they will be acting in a way that the data doesn’t support.

So in this case, bad news is interpreted as being something good.

In today’s market it was interpreted as being really, really good.

The reality, though, is that these incredibly low interest rates that we’ve now had for years, haven’t really done what they normally do. They haven’t spurred business expansion and they haven’t spurred home sales. The argument may be, however, that those would have been far worse than where they currently stand following 2008’s financial meltdown.

We’ll never know if that’s the real way it is, but even if that’s the case, it would be hard to identify and real acceleration phase of expansion, as you would normally see. Instead, we’ve had the kind of expansion that may be similar to what a frog doesn’t really get to experience when he’s in a pot that very slowly gets bought to a boil.

This morning the futures were heading toward a triple digit gain and by the end of the trading session they had nearly doubled that gain, never having wavered during the session.. Normally those kind of large moves have some staying power once trading begins, but we saw that not to be the case earlier this week when the market was poised to open with a large loss.

So who was to know as the market got ready to begin, but as the day wore on, there could be no doubt.

With these last 2 days of the week I was just hopeful that this morning’s gains would have some staying power and make it easier to either get rollovers accomplished or see some of those positions assigned. I would much rather see the assignments, but would definitely not scoff at the rollovers.

With today’s record close, yet another one, we’re one important step closer to getting out of the week in decent position, except for those retailers.

With the negative retail news likely to continue as the week comes to an end, it’s understandable how the equity markets could look at the bad news as being good. But as earnings season is coming to its end, you do have to wonder “what’s next?”

For the most part companies have been giving less than optimistic guidance to prepare us for the revenue and earnings shocks of the next quarter. However, as Euro-USD parity is becoming less of a certainty, those guidance projections may end up being too pessimistic and there may be some mid-stream corrections reported as the next earnings season approaches.

Until then and if that happens, it’s still not too clear where the next boost comes from, although interest rate are still likely to be the next reason for weakness, as soon as any life is discovered in the economy.

Daily Market Update – May 14, 2015  (9:00 AM)

More retail sales reports are coming and they continue to be disappointing.

The news is basically all the same and what it all has been saying, so far, as that if there is any evidence that people are getting more money, they’re not spending it on discretionary items.

We don’t exactly know where it is going, but it’s not going to the major national retailers that have reported their earnings. Also, if the last quarter is any guide, then the more upscale retailers won’t be where the money is going either, as those had dome fairly well even while more mainstream retailers were flagging.

This morning the pre-open futures seem to like the news that retailers aren’t doing that well.

To those who believed that there would be increasing consumer led strength in the economy and that strength would then lead to the Federal Reserve raising interest rates, the earnings data is disappointing.

After some early earnings news came some PPI data, which looks at pricing.

Again, there’s absolutely no evidence that inflation is creeping in. If the FOMC is truly going to be data driven, then there’s not much reason to suspect that they will be acting in a way that the data doesn’t support.

So in this case, bad news is interpreted as being something good.

The reality, though, is that these incredibly low interest rates that we’ve now had for years, haven’t really done what they normally do. They haven’t spurred business expansion and they haven’t spurred home sales. The argument may be, however, that those would have been far worse than where they currently stand following 2008’s financial meltdown.

We’ll never know if that’s the real way it is, but even if that’s the case, it would be hard to identify and real acceleration phase of expansion, as you would normally see. Instead, we’ve had the kind of expansion that may be similar to what a frog doesn’t really get to experience when he’s in a pot that very slowly gets bought to a boil.

This morning the futures are heading toward a triple digit gain. Normally those kind of large moves have some staying power once trading begins, but we saw that not to be the case earlier this week when the market was poised to open with a large loss.

So who knows?

With these last 2 days of the week I’m just hopeful that this morning’s gains do have some staying power and make it easier to either get rollovers accomplished or see some of those positions assigned. I would much rather see the assignments, but would definitely not scoff at the rollovers.

With the negative retail news likely to continue as the week comes to an end, it’s understandable how the equity markets could look at the bad news as being good. But as earnings season is coming to its end, you do have to wonder “what’s next?”

For the most part companies have been giving less than optimistic guidance to prepare us for the revenue and earnings shocks of the next quarter. However, as Euro-USD parity is becoming less of a certainty, those guidance projections
may end up being too pessimistic and there may be some mid-stream corrections reported as the next earnings season approaches.

Until then and if that happens, it’s still not too clear where the next boost comes from, although interest rate are still likely to be the next reason for weakness, as soon as any life is discovered in the economy.

Daily Market Update – May 13, 2015  (Close)

Yesterday was no where near as bad of a day as it could have been.

For some reason the bond market turned around after an early surge in interest rates continued from the previous days and the stock market followed that lead, as it turned around another triple digit loss.

Escaping the day with only about a 40 point loss was a gift, coming off Monday’s nearly triple point decline.

This morning began a flow of retail earnings reports that could have either added fuel to the bond market’s belief that higher interest rates are right around the corner or throw water on it.

The retailers, especially well regarded CEO of Macys, Terry Lundgren, were among the first to tell the world that falling energy prices would be good for their retail fortunes.

This morning Macys got the ball rolling about an hour before the official government Retail Sales Report is released.

About 6 months after all of the optimistic forecasts regarding GDP, which is said to be approximately 70% comprised of consumer spending activity, none of the gains have been realized.

This morning Macys didn’t have any good news to share, although it did as many have recently done and it increased its dividend. That seems to be a fairly common action that is taken even in the face of falling revenues and falling profits that makes you wonder about sustainability and disappointment down the road.

This morning, however, prior to the release of that official government report, markets were nicely higher and poised to offset yesterday’s small loss.

Instead, though, when it was all done and throughout the day, the market was just ambivalent and traded within a fairly narrow range.

The next few days, however, will have lots of those retail sales reports coming along and it may be a question of threading the needle to get those numbers just right. Just right would mean not offering such bad earnings news so as to scare stock markets, but also not offering such good news so as to create fears of rising rates.

Ultimately, a loss in top line revenue, like the kind Macys reported today, may be just the thing to keep markets at current levels or even going higher.

That doesn’t make too much sense, but at the moment the data and the emotions that it can create may be at a precarious balance.

This morning my hope was that the market would  look positively on the weakness that may be reflected by retail sales and push shares higher, so that there’s a better chance of getting some assignments this week or at least some rollovers, as the monthly cycle comes to its end.

The first two days of this week weren’t very helpful in that regard, but there’s still plenty of time to set things right.

Macys’ retail weakness did give the bond market a reason to reverse course and for that period of time the stock market was respectable, but later on the bond market regained some footing and the stock markets faltered.

With more retail earnings coming out this afternoon and tomorrow we should all be in store for more of the same during the last 2 days of this week and monthly option cycle.

Daily Market Update – May 13, 2015  (8:30 AM)

Yesterday was no where near as bad of a day as it could have been.

For some reason the bond market turned around after an early surge in interest rates continued from the previous days and the stock market followed that lead, as it turned around another triple digit loss.

Escaping the day with only about a 40 point loss was a gift, coming off Monday’s nearly triple point decline.

This morning begins a flow of retail earnings reports that could either add fuel to the bond market’s belief that higher interest rates are right around the corner or throw water on it.

The retailers, especially well regarded CEO of Macys, Terry Lundgren, were among the first to tell the world that falling energy prices would be good for their retail fortunes.

This morning Macys got the ball rolling about an hour before the official government Retail Sales Report is released.

About 6 months after all of the optimistic forecasts regarding GDP, which is said to be approximately 70% comprised of consumer spending activity, none of the gains have been realized.

This morning Macys didn’t have any good news to share, although it did as many have recently done and it increased its dividend. That seems to be a fairly common action that is taken even in the face of falling revenues and falling profits that makes you wonder about sustainability and disappointment down the road.

This morning, however, prior to the release of that official government report, markets are nicely higher and poised to offset yesterday’s small loss.

The next few days, however, will have lots of those retail sales reports coming along and it may be a question of threading the needle to get those numbers just right. Just right would mean not offering such bad earnings news so as to scare stock markets, but also not offering such good news so as to create fears of rising rates.

Ultimately, a loss in top line revenue, like the kind Macys reported today, may be just the thing to keep markets at current levels or even going higher.

That doesn’t make too much sense, but at the moment the data and the emotions that it can create may be at a precarious balance.

This morning my hope is that the market looks positively on the weakness that may be reflected by retail sales and pushes shares higher, so that there’s a better chance of getting some assignments this week or at least some rollovers, as the monthly cycle comes to its end.

The first two days of this week weren’t very helpful in that regard, but there’s still plenty of time to set things right.