Category: Daily Market Update

Daily Market Update – March 3, 2015 (9:15 AM)

It’s probably a good thing that the NASDAQ broke 5000 yesterday.

That at least is giving everyone something to talk about and a chance to reflect over the past 15 years in an effort to explain why 2015 is different from 2000.

All you really need to do to see the difference is to watch the clips from 2000 and compare the neck wrinkles before and after. Trying to compare hair color before and after would lead you to believe that there has been no change.

While NASDAQ 5000 is the big story that gives an opportunity to ignore discussing what happened yesterday everywhere else, as the market went up 155 points for no reason at all.

Along with stocks bonds and energy were big movers yesterday and sometimes it’s just as difficult to understand those moves, either.

This morning interest rates are continuing their move higher, although just edging up at the moment, but still a long, long way from where they were to start 2014 at 3%.

As the interest rate climbs higher, perhaps Stanley Fischer’s comment last Friday will hold more true than the one Janet Yellen offered on Wednesday, as again there’s lots of speculation regarding an interest rate hike by June.

At some point those interest rates become competition for stocks, but it has been so long since that’s been the case.

For now it’s just something that people keep their eye on as the overall sentiment continues to be that the bond traders and the ones who live and breathe interest rates are the ones best positioned to really know the future.

Based on the continuing stream of data, despite more and better paying jobs, there is still very little indication of inflationary pressures, with the exception of what Wal-Mart and now others may be generating at the level of entry wages.

Those relatively large percentage increases in pay should have a greater impact on the consumer economy than all of the trickle down over the past 30 years. I know that if I received a $100 stock dividend each week I would be much less likely to spend it than if the $100 weekly raise I received happened to represent more than 15% of my salary.

So while this morning looks as if it is going to take a little bit of a break from yesterday’s surprisingly big move to the upside there seems to be plenty of reason to just watch. I was glad to be able to add some positions into next week’s expirations and hope that this week’s Employment Situation Report will bring the week to an end that sees its share of assignments and rollovers, just as had been the case throughout February.

Daily Market Update – March 2, 2015 (Close)

After a fairly quiet week last week that had movement higher when it was suggested that interest rate increases might be delayed and then a move lower when it was suggested that interest rate increases may be sooner, there’s not too much to change the dynamic this week.

If that’s the case, it may be the kind of quiet week as much of last week turned out to be until those interest rate projections caught everyone’s attention.

The key thought here is that “it may be.”

As it turned out this week started off with a bang, as interest rates climbed 4% and the NASDAQ 100 closed above 5000 for the first time in about 15 years.

Good luck trying to figure out why, especially since the morning’s “Personal Income and Outlays” data showed another decrease in personal spending over the past month, making it two consecutive months that people have been spending less when we all expected them to be spending more.

The surprise last week was that with all of the retailers who represented a large portion of the consumer market reporting earnings, no one really gave the kind of forward projection that you might have expected with a few months of falling energy prices as a backdrop.

Yet despite expectations for good news, the market didn’t show its disappointment.

Although the past few months have seen people question the validity of the Retail Sales reports the most recent earnings and projections, added to the downwardly revised GDP for the 4th quarter seems to validate the data showing that the consumer isn’t going out and spending those energy savings.

The Personal Income and Outlays data added to the picture.

On the one hand that could serve to delay interest rate increases, but on the other hand most everyone believes that some increases are needed and would be a good sign for an economy that is still very slow in its recovery and having a hard time demonstrating that it’s for real.

Maybe it’s that kind of conflict that left the market in a sort of tug of war stalemate. Sometimes it’s hard to know what you really want.

This week doesn’t have too much to move markets other than Friday’s Employment Situation Report and a number of Federal Reserve Governors looking for audiences. Included in that latter group is Richard Fisher, who is probably the loudest interest rate hawk, but he’s now a non-voting member and will be stepping down soon.

So there’s reason to expect that this week could be quiet, although there still continues to be the issue of the fluctuation and uncertainty in oil prices and the re-emergence of nascent international political and economic issues.

Despite today’s really nice gain, there’s still not much reason to think that there’s anything to spark a further climb, especially as that spark was missing today.

With a little bit of cash injected into the reserve and a decent number of positions already set to expire this week, but none for next week, I’m probably not as motivated to add too many new positions and would likely consider using extended weekly options. The problem, though,  is that those premiums are so low now that volatility has resettled itself following January’s ups and downs.

With lots of ex-dividend positions again this week. even more so than the previous week, some of the need to generate income is diminished, but I don’t think I’m in a position to turn down any opportunities if they were to appear.

This morning’s pre-open futures didn’t t look as if they were going to offer too many of those opportunities as the market was wavering around the flat line and oil  ws ready to open the week considerably weaker, but still far above where it was just a few weeks ago.

By the end of the day the market was anything but flat, but at least oil stayed true to form for the day.

With little indication of where the market will be as the week progresses and with not as much to spend as I might like, it’s not too likely that I’ll be jumping in very much more, especially after already taking advantage of today’s drop in energy and climb in interest rates, but there’s still 4 more days to change my mind and attitude.

Daily Market Update – March 2, 2015 (8:45 AM)

After a fairly quiet week last week that had movement higher when it was suggested that interest rate increases might be delayed and then a move lower when it was suggested that interest rate increases may be sooner, there’s not too much to change the dynamic this week.

If that’s the case, it may be the kind of quiet week as much of last week turned out to be until those interest rate projections caught everyone’s attention.

The surprise last week was that with all of the retailers who represented a large portion of the consumer market reporting earnings, no one really gave the kind of forward projection that you might have expected with a few months of falling energy prices as a backdrop.

Yet despite expectations for good news, the market didn’t show its disappointment.

Although the past few months have seen people question the validity of the Retail Sales reports the most recent earnings and projections, added to the downwardly revised GDP for the 4th quarter seems to validate the data showing that the consumer isn’t going out and spending those energy savings.

On the one hand that could serve to delay interest rate increases, but on the other hand most everyone believes that some increases are needed and would be a good sign for an economy that is still very slow in its recovery and having a hard time demonstrating that it’s for real.

Maybe it’s that kind of conflict that left the market in a sort of tug of war stalemate. Sometimes it’s hard to know what you really want.

This week doesn‘t have too much to move markets other than Friday’s Employment Situation Report and a number of Federal Reserve Governors looking for audiences. Included in that latter group is Richard Fisher, who is probably the loudest interest rate hawk, but he’s now a non-voting member and will be stepping down soon.

So there’s reason to expect that this week could be quiet, although there still continues to be the issue of the fluctuation and uncertainty in oil prices and the re-emergence of nascent international political and economic issues.

With a little bit of cash injected into the reserve and a decent number of positions already set to expire this week, but none for next week, I’m probably not as motivated to add too many new positions and would likely consider using extended weekly options. The problem, though,  is that those premiums are so low now that volatility has resettled itself following January’s ups and downs.

With lots of ex-dividend positions again this week. even more so than the previous week, some of the need to generate income is diminished, but I don’t think I’m in a position to turn down any opportunities if they were to appear.

This morning’s pre-open futures don’t look as if they’re going to offer too many of those opportunities as the market is wavering around the flat line and oil  is ready to open the week considerably weaker, but still far above where it was just a few weeks ago.

With little indication of where the market will be starting the week and with not as much to spend as I might like, it’s not too likely that I’ll be jumping in very quickly, although the drop in energy prices may offer some opportunity in a sector that is already overloaded in my portfolio, but that may offer the greatest rewards moving forward.

Daily Market Update – February 27, 2015 (9:00 AM)

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

The following trade outcomes are possible today:

Assignments: American Express

Rollovers:  Marathon Oil, United Continental

Expirations: Las Vegas Sands

The following were ex-dividend this week:   SBGI (2/25 $0.16), LXK (2/26 $0.36), SNDK (2/26 $0.30), ANF (2/27 $0.20)

The following will be ex-dividend next week: HAL (3/2 $0.18), JOY (3/2 $0.20), MOS (3/3 $0.25), BAC (3/4 $0.05), COH (3/4 $0.34), HFC (3/6 $0.32)

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

Daily Market Update – February 26, 2015 (Close)

Yesterday set another new closing record high for the DJIA but not in the same way as it had the day before.

While the second day of questioning of Janet Yellen, this time by the House of Representatives side of the 2 bodied chamber was more contentious than on the first day, Yellen didn’t slip or say anything to spook or delight markets.

Instead of a strong showing as when the more genteel legislative body did its questioning, yesterday the market barely eked out a gain, as the S&P 500 actually fell a little.

This morning, ahead of the opening bell, all appearances were for another listless day of trading as the real impetus for any kind of move may be in store tomorrow as the GDP statistics are released.

And that was exactly how the entire day unfolded, as the trading range was again a narrow one and there was very little of interest going on anywhere.

As we get set for tomorrow’s GDP release, with a few months of lower energy prices having been reality the expectation would be that some increase in GDP would become evident, even though GDP also includes gasoline sales, which itself would be expected to put a damper on the total growth in GDP.

In the meantime, as retail sales reports and earnings are now nearly complete, the picture is mixed and guidance that has been provided seems to be less optimistic than has been expected.

You really do have to wonder about that altered guidance that Macys gave about two weeks ago and ask what happened between then and yesterday when they released their earnings and didn’t seem as optimistic about what the near term future was holding for them.

Maybe it was the weather, as it was last year, but so far no one is really pointing a finger in that direction, as everyone instead is blaming currency headwinds, although that shouldn’t be too much of an issue for Macys.

Any boost to markets that could have come from strong earnings reports and enthusiastic guidance hasn’t materialized and may have to wait until next quarter, or until someone steps forward with altered guidance between now and late May.

With only a handful of positions in play for tomorrow’s contract expirations there’s not likely to be much trading action as most appear to be in position to be assigned. Of course, that could change fairly abruptly with a disappointing GDP number or a surprisingly strong number that would re-instill fears of interest rate hikes, despite Yellen’s dovish tones over the past two days.

Equally possible and as was the case as the afternoon wore on, a sudden drop in oil prices could do something to upset the cart, as well.

At the same time, the world appears to be fairly quiet, despite any number of items that could pop up to upset things. Hopefully, during a perio
d of prolonged quiet the market won’t do what people sometimes do and become overly introspective.

For the most part I like my markets in a state of denial or aimlessly moving ahead.

With the exception of a couple of strong moves higher over the past few weeks that’s exactly what it has been doing. Doing so in a slow and methodical way makes it less likely that a trap door will be suddenly sprung open and undo all of the good that’s been done this February.

Hopefully tomorrow’s GDP will be another in a series of reports that are right in line with expectations and the market will continue its calm climb while those other markets, bonds, oil and precious metals, continue their uncertain paths, but actually go nowhere too distant.

Daily Market Update – February 26, 2015 (7:45 AM)

Yesterday set another new closing record high for the DJIA but not in the same way as it had the day before.

While the second day of questioning of Janet Yellen, this time by the House of Representatives side of the 2 bodied chamber was more contentious than on the first day, Yellen didn’t slip or say anything to spook or delight markets.

Instead of a strong showing as when the more genteel legislative body did its questioning, yesterday the market barely eked out a gain, as the S&P 500 actually fell a little.

This morning, ahead of the opening bell, all appearances are for another listless day of trading as the real impetus for any kind of move may be in store tomorrow as the GDP statistics are released.

With now a few months of lower energy prices having been reality the expectation would be that some increase in GDP would become evident, even though GDP also includes gasoline sales, which itself would be expected to put a damper on the total growth in GDP.

In the meantime, as retail sales reports and earnings are now nearly complete, the picture is mixed and guidance that has been provided seems to be less optimistic than has been expected. Any boost to markets that could have come from strong earnings reports and enthusiastic guidance hasn’t materialized and may have to wait until next quarter, or until someone steps forward with altered guidance between now and late May.

With only a handful of positions in play for tomorrow’s contract expirations there’s not likely to be much trading action as most appear to be in position to be assigned. Of course, that could change fairly abruptly with a disappointing GDP number or a surprisingly strong number that would re-instill fears of interest rate hikes, despite Yellen’s dovish tones over the past two days.

At the same time, the world appears to be fairly quiet, despite any number of items that could pop up to upset things. Hopefully, during a period of prolonged quiet the market won’t do what people sometimes do and become overly introspective.

For the most part I like my markets in a state of denial or aimlessly moving ahead.

With the exception of a couple of strong moves higher over the past few weeks that’s exactly what it has been doing. Doing so in a slow and methodical way makes it less likely that a trap door will be suddenly sprung open and undo all of the good that’s been done this February.

Hopefully tomorrow’s GDP will be another in a series of reports that are right in line with expectations and the market will continue its calm climb while those other markets, bonds, oil and precious metals, continue their uncertain paths, but actually go nowhere too distant.

Daily Market Update – February 25, 2015 (Close)

Yesterday was a very quiet day in the market until Janet Yellen got going in front of her congressional questioners as part of her mandated bi-annual report to them.

Once she got started the overall impression she gave was that her more dovish side had re-taken center stage.after a few months of seemingly being somewhat coy about the timing of any interest rate increases that we all know have to come.

The most recent FOMC report even went to lengths to explain the adverse impact of prolonged low rates.

It doesn’t take a genius to figure out that when you hear that sort of thing you’re being set up to come to some sort of reluctant acceptance of something that you’re being told is good for you, even though it doesn’t feel very good.

But yesterday there was a sense that there was no real rush to get those rates moving higher which is something that typically makes stock people happy and bond people doing whatever they do to send rates lower.

Today was Day 2 of the testimony and we didn’t see her bring a repeat to yesterday’s new closing highs to both the DJIA and S&P 500. Those were the first since Monday or last Friday. I forget, as it’s been so long since that has happened. Today we just had to make do with a new closing high on the DJIA.

With now 2 days of trading still left for the week there’s plenty that can happen, especially with Friday being the release of the latest GDP data.

With yesterday’s 3 rollover trades, a little surprising having come so early in the week, that leaves only 4 positions that could potentially be rolled over or assigned this week and now the same number expiring next week.

That may result in looking at potential rollovers to the March 13, 2015 contract in an effort to get some more time diversification, as long as it doesn’t give up too much in premiums, as volatility is again very low for most positions, with the continuing notable exceptions in energy related stocks.

I made an after-hours trade yesterday, which is something that I very infrequently do, having purchased shares of Hewlett Packard after they tumbled once earnings were released and the conference call was near its conclusion.

Depending on its price behavior this morning and how the option premiums would begin to look I thought that I might make it an OTP trade as well, with its ex-dividend date conveniently and maybe coincidentally enough being on the Monday of the week of the March 13 contracts.

But that didn’t happen as shares traded down even further, which was surprising as shares had closed the previous evening’s after hours session well off the lows following the confere
nce call. However, Meg Whitman’s appearance on CNBC did nothing to inspire confidence, as her responses to questions really seemed muddled and she put far too much empasis on currency issues and future cists associted with the planned breakuo of HP near the end of the year.

Instead, Lexmark, which goes ex-dividend and which was assigned just a week and a half ago at $43 was now on sale, having plunged along with HP, even though Lexmark is no longer in the oprinter business. Somehow smart investors have forgotten that Lexmark has followed in the strategy of its one time parent, IBM, and gone the consulting route.

Other than that additional new position I don’t think there will be too much reason to consider any more new positions for the week, but then again, you never know what the day will hold once the bell rings and people start making believe that they are rational players with perfect vision of what the future will hold.

Daily Market Update – February 25, 2015 (8:30 AM)

Yesterday was a very quiet day in the market until Janet Yellen got going in front of her congressional questioners as part of her mandated bi-annual report to them.

Once she got started the overall impression she gave was that her more dovish side had re-taken center stage.after a few months of seemingly being somewhat coy about the timing of any interest rate increases that we all know have to come.

The most recent FOMC report even went to lengths to explain the adverse impact of prolonged low rates.

It doesn’t take a genius to figure out that when you hear that sort of thing you’re being set up to come to some sort of reluctant acceptance of something that you’re being told is good for you, even though it doesn’t feel very good.

But yesterday there was a sense that there was no real rush to get those rates moving higher which is something that typically makes stock people happy and bond people doing whatever they do to send rates lower.

Today is Day 2 of the testimony and we’ll see whether she can bring a repeat to yesterday’s new closing highs. Those were the first since Monday or last Friday. I forget, as it’s been so long since that has happened.

With 3 days of trading still left for the week there’s plenty that can happen, especially with more of today’s testimony to go and with Friday being the release of the latest GDP data.

With yesterday’s 3 rollover trades, a little surprising having come so early in the week, that leaves only 4 positions that could potentially be rolled over or assigned this week and now the same number expiring next week.

That may result in looking at potential rollovers to the March 13, 2015 contract in an effort to get some more time diversification, as long as it doesn;t give up too much in premiums, as volatility is again very low for most positions, with the continuing notable exceptions in energy related stocks.

I made an after-hours trade yesterday, which is something that I very infrequently do, having purchased shares of Hewlett Packard after they tumbled once earnings were released and the conference call was near its conclusion.

Depending on its price behavior this morning and how the option premiums will begin to look I may make it an OTP trade as well, with its ex-dividend date conveniently and maybe coincidentally enough being on the Monday of the week of the March 13 contracts.

Other than that I don’t think there will be too much reason to consider any more new positions for the week, but then again, you never know what the day will hold once the bell rings and people start making believe that they are rational players with perfect vision of what the future will hold.

Daily Market Update – February 24, 2015 (Close)

Yesterday was a very quiet day in the market as it traded in a very narrow range. Today looked as if it wouldn’t start much differently, but everyone knew that there could be some surprises along the way, as Janet Yellen began her 2 days of mandated congressional testimony.

Based on the way the markets have reacted lately to anything coming from the Federal Reserve, there wasn’t necessarily a likely response, at least not in the stock markets.

The real action lately has been in the bond markets and then maybe secondarily flowing over to stocks.

Even if you’re a day trader the actual dynamic isn’t very important, it’s just that the stock market hasn’t had any kind of theme for a while and has been trading aimlessly while bond markets are focused on what seems to be the certainty of rate increases, questioning only whether they are coming soon or very soon.

Instead, both markets received a little bit of a surprise today as Janet Yellen sounded a little more dovish than she has sounded for a while, making it seem as if interest rates may not be ready to go higher as soon as many believed. That sent stocks higher and interest rates much lower, with the 10 Year Treasury Bond breaking 2% for the first time in a couple of weeks.

While Greece and oil prices are basically the only external stories of interest outside of any surprises that may be delivered over the next two days of testimony, the basic internal stories are recurring ones. Those are earnings reports and this week marks the end of the final important period of earnings as the major national retailers speak up.

This morning Home Depot gave reasons to be optimistic, not just for their own business but for the consumer’s ability and willingness to spend and for the health of all of those smaller contractors whose spending activity at Home Depot reflects on overall optimism. As far as the economy goes, there are worse problems to have than companies reporting having to battle with currency headwinds.

This morning also came Macys, which just a couple of weeks ago gave some positive forward guidance, but now reported a miss on top line revenue. We’ll just have to see how that gets spun and whether or not the recent extremes in weather in the Northeast corridor change their sunny predictions from just a couple of weeks ago. Later this week come Target, Kohls, JC Penney and Sears. They will have something to say about consumer optimism and willingness, too and won’t be spending too much time on those pesky headwinds.

Otherwise, over the next couple of weeks are some stragglers reporting their earnings with an occasionally important company doing so in the company of much lesser ones, until it starts all over again in about 7 weeks.

With 3 new purchases yesterday I don’t know how interested I’ll be in adding any more, although there is stil
l enough cash reserves to do so. I would feel better about dipping into those reserves if I had a greater sense of confidence that positions set to expire this week are likely to be assigned, although some are in decent enough position for that to be the case and the others appear to be positioned for rollovers, but those can all change even on the basis of a simple unintentional comment during congressional testimony.

The more likely would be those assignments the more likely I would be inclined to spend the money in anticipation. However, if rollovers appear to be more likely then there isn’t too much reason to deplete cash if existing positions can be used to generate next week’s income stream.

The problem that I’d rather not face, but it does occur, is when there is dwindling cash and decreased likelihood of assignments and rollovers, so there’s some hope that there won’t be any unfortunate slips of the tongue by Yellen over the  two day of testimony.

During today’s first day her performance was admirable..

Other than her very first press conference that hasn’t been an issue and for the most part when she speaks markets react positively. However, when you speak for hours on end, unless there’s something of a blockbuster in those comments the reactions are mixed and often appear as if they’re just biding time until some blockbuster might come along.

I may be biding my time for the rest of the week, as well, hoping that Yellen gives the markets something more to be happy about, as today’s comments helped reach even more record highs.

Daily Market Update – February 24, 2015 (8:15 AM)

Yesterday was a very quiet day in the market as it traded in a very narrow range. Today looks as if it won’t start much differently, but there could be some surprises along the way, as Janet Yellen begins her 2 days of mandated congressional testimony.

Based on the way the markets have reacted lately to anything coming from the Federal Reserve, there may not be too much of a response, at least not in the stock markets.

The real action may be in the bond markets and then maybe secondarily flowing over to stocks.

Even if you’re a day trader the actual dynamic isn’t very important, it’s just that the stock market hasn’t had any kind of theme for a while and has been trading aimlessly while bond markets are focused on what seems to be the certainty of rate increases, questioning only whether they are coming soon or very soon.

While Greece and oil prices are basically the only external stories of interest outside of any surprises that may be delivered over the next two days of testimony, the basic internal stories are recurring ones. Those are earnings reports and this week marks the end of the final important period of earnings as the major national retailers speak up.

This morning Home Depot gave reasons to be optimistic, not just for their own business but for the consumer’s ability and willingness to spend and for the health of all of those smaller contractors whose spending activity at Home Depot reflects on overall optimism. As far as the economy goes, there are worse problems to have than companies reporting having to battle with currency headwinds.

This morning also came Macys, which just a couple of weeks ago gave some positive forward guidance, but now reported a miss on top line revenue. We’ll just have to see how that gets spun and whether or not the recent extremes in weather in the Hortheast corridor change their sunny predictions from just a couple of weeks ago. Later this week come Target, Kohls, JC Penney and Sears. They will have something to say about consumer optimism and willingness, too and won’t be spending too much time on those pesky headwinds.

Otherwise, over the next couple of weeks are some stragglers reporting their earnings with an occasionally important company doing so in the company of much lesser ones, until it starts all over again in about 7 weeks.

With 3 new purchases yesterday I don’t know how interested I’ll be in adding any more, although there is still enough cash reserves to do so. I would feel better about dipping into those reserves if I had a greater sense of confidence that positions set to expire this week are likely to be assigned, although some are in decent enough position for that to be the case and the others appear to be positioned for rollovers, but those can all change even on the basis of a simple unintentional comment during congressional testimony.

The more likely would be those assignments the more likely I would be inclined to spend the money in anticipation. However, if rollovers appear to be more likely then there isn’t too much reason to deplete cash if existing positions can be used to generate next week’s income stream.

The problem that I’d rather not face, but it does occur, is when there is dwindling cash and decreased likelihood of assignments and rollovers, so there’s some hope that there won’t be any unfortunate slips of the tongue by Yellen over the next two days.

Other than her very first press conference that hasn’t been an issue and for the most part when she speaks markets react positively. However, when you speak for hours on end, unless there’s something of a blockbuster in those comments the reactions are mixed and often appear as if they’re just biding time until some blockbuster might come along.

I may be biding my time today, as well, hoping that she gives the markets something to be happy about.