Category: Daily Market Update

Daily Market Update – December 1, 2014 (8:45 AM)

Weak oil begins the week that begins the month that is often the best of the year.

For now it doesn’t look as if the month will get off to a good start, but the drop in oil seen late last night, that was a continuation of the real plunge on Friday, had already started greatly moderating before the market opened, so there’s always hope.

This week we have an Employment Situation Report, and while it has been a non-event the past couple of months, the market could use its boost this time around.

Like last week, this week has lots of ex-dividend positions, so there is already a revenue stream in hand. With a reasonable number of positions set to expire in each of the next three weeks when the December 2014 option comes to its end, any purchases this week could fit in well into any of those three choices. However, I would like to be able to recycle some cash through assignments, so I may look a little bit more at those contracts expiring this week.

With energy trading so low it would seem like a good buying opportunity, but so far those who said oil would go below $75 have been right and many continue to talk about $50 being the next stop. Given that the crowd was right on that one, it’s not likely a good time to go against the crowd at the moment.

While low oil prices seem to logically be a good thing for stock markets that hasn’t necessarily been borne out in reality, although low oil prices are usually driven by low demand which is rarely good for stock markets.

This time around it’s being driven by high supply and middling demand. What remains to be seen is whether that mediocre demand will be increased after having been enticed by what may be a rare opportunity to lock into low prices.

Other than oil being the big story now, retail is on everyone’s radar, as it is every Thanksgiving until the end of the year.

For at least the past 10 years it has seemed as if the same story has unfolded.

Sales are always reported to be weak after the frenzy surrounding Thanksgiving and dour projections are made for the holiday season. When it’s all done and the numbers are finally tallied after Christmas, it always seems to turn out to be better than expected.

This year, so far, it is all going according to script, as in-store numbers have been reported as being weak. Given how the “Black Friday” phenomenon has been very much downplayed this year, maybe the decrease shouldn’t come as too much of a surprise and may also be offset by on-line shopping, which we’re now being told may be more safe, as far as credit card identity theft goes, than actually shopping in a store.

In all likelihood, unless something unforeseen breaks on the international news front the two stories in front of us this morning are going to be the key two stories for the final trading month of the year.< /span>

Neither of those would appear to offer the kind of fuel that would send the market to even more highs.

However, as the US keeps looking comparatively better than most anyone else in the world our markets may become a magnet for more and more international funds to come to our shores and that could be the source of growth. Given efforts taken by the Bank of Japan and the ECB the expectation would have been that those stock markets would have benefitted just as ours had done during Quantitative Easing. However, with the real strength of the dollar, the reality may end up being very different.

I won’t be on a shopping spree this week and would like to see some reason to believe that the market can get beyond the heavy burden placed at the moment by the representation of the energy sector in the indexes.

Hopefully the direction will be higher this week if only anyone could figure out what will take us there, or anywhere.

Daily Market Update – November 28, 2014 (9:15 AM)

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

Today’s possible outcomes include:

Assignments: none

Rollovers:  DOW

Expirations:  BP, JOY

The following were ex-dividend this past week: ANF (11/28 $0.20), HFC (11/26 $0.50 Special Dividend), K (11/26 $0.49), LXK (11/25 $0.36), MAT (11/24 $0.28), SBGI (11/26 $0.16)

The following will be ex-dividend next week: COH (12/3 $0.34), HAL (12/3 $0.18), HFC (12/2 $0.32), JOY (12/2 $0.20), MOS (12/2 $0.25), NEM (12/3 $0.025)

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

Daily Market Update – November 26, 2014 (Close)

The weather is miserable on the east coast, including over the New York Stock Exchange and it is the day before Thanksgiving.

That has the makings for another really quiet day, even though some key economic reports are being released today. While there may not be many around to react to those reports these kind of low volume day can become aberrations in terms of the moves seen.

The futures, though, give no indication of anything other than another in a series of very quiet trading days and when it was all over, the futures got it just right.

Although I don’t usually mind if the market stays in a narrow range over an extended trading period, I do like to see days when there are either strong moves higher or plunges lower, as long as they don’t come in a single direction in any kind of sustained period.  

While a series of flat days can leave you with the same net result as a series of flat days with equally sized intervening surges and plunges, the latter is much more preferable, as it increases the volatility and offers some trading opportunities.

For now, the only real opportunity that I would like is to have a chance to take advantage of any surge higher and sell some calls on uncovered positions.

Today was just another day when that kind of hope had no chance of becoming reality.

Lately, it has simply been one flat trading day after another. While there have been a couple of days of rallies in the making, none of them had staying power. That has been especially true for the energy sector, that has had a number of days when it appeared as if there might be some kind of a breakout higher, only to see relatively sudden reversals  across  the board.

Today didn’t look like it would lead to very much trading and my wife must have been fully aware of that, as she left me a list of things that I needed to get done by tomorrow, as somehow the guest list keeps expanding.

While difficult and boring, my mind was still on whatever it was that today might bring. Like yesterday, if any opportunities did arise for early rollovers, I would have liked to take them. That opportunity did come for rolling over the $53 lot of JOY in order to still be able to have a chance at next week’s dividend.

Next week, just as this one, there are a number of positions going ex-dividend and I would like to retain as much of that income as possible, sometimes foregoing option premiums, as the premiums are very low and may not warrant the risk of losing the position.

For now, if you’re in the cold rain or in the snow stay warm and safe in enjoyment of Thanksgiving with friends and family. If you’re traveling today, I hope it is an easy and uneventful trip.

But If you’re someplace nice and warm, set another couple of places. I don’t mind abandoning our guests and letting them fend for themselves.

Daily Market Update – November 26, 2014 (8:00 AM)

The weather is miserable on the east coast, including over the New York Stock Exchange and it is the day before Thanksgiving.

That has the makings for another really quiet day, even though some key economic reports are being released today. While there may not be many around to react to those reports these kind of low volume day can become aberrations in terms of the moves seen.

The futures, though, give no indication of anything other than another in a series of very quiet trading days.

Although I don’t usually mind if the market stays in a narrow range over an extended trading period, I do like to see days when there are either strong moves higher or plunges lower, as long as they don’t come in a single direction in any kind of sustained period.  

While a series of flat days can leave you with the same net result as a series of flat days with equally sized intervening surges and plunges, the latter is much more preferable, as it increases the volatility and offers some trading opportunities.

For now, the only real opportunity that I would like is to have a chance to take advantage of any surge higher and sell some calls on uncovered positions.

Lately, however, it has simply been one flat trading day after another. While there have been a couple of days of rallies in the making, none of them had staying power. That has been especially true for the energy sector, that has had a number of days when it appeared as if there might be some kind of a breakout higher, only to see relatively sudden reversals  across  the board.

Today doesn’t look like it will lead to very much trading and my wife must be fully aware of that, as she’s left me a list of things that I need to get done by tomorrow, as somehow the guest list keeps expanding.

For now, though, my mind is still on whatever it is that today may bring. Like yesterday, if any opportunities do arise for early rollovers, I would like to take them. That may include rolling over the $53 lot of JOY in order to still be able to have a chance at next week’s dividend.

Next week, just as this one, there are a number of positions going ex-dividend and I would like to retain as much of that income as possible, sometimes foregoing option premiums, as the premiums are very low and may not warrant the risk of losing the position.

For now, if you’re in the cold rain or in the snow stay warm and safe in enjoyment of Thanksgiving with friends and family. If you’re traveling today, I hope it is an easy and uneventful trip.

But If you’re someplace nice and warm, set another couple of places. I don’t mind abandoning our guests and letting them fend for themselves.

Daily Market Update – November 25, 2014 (Close)

This was expected to be a quiet week, at least in terms of economic news.

The only real bit of important information was going to be this morning’s 3rd quarter GDP report, as well as any revisions to the previous quarter.

For the previous two quarters those revisions were fairly significant and took the markets by surprise, although in different directions. There are both good surprises and bad surprises.

The first of those revisions was a little stunning and probably reflected the really horrible weather of last winter. This time around, just like the last time, the revisions are of the good kind, but not so much that people are starting to whisper about inflation.

At some point, that will become a topic of discussion and concern, but for now, any economic growth, even if via revisions, is welcome.

This time, however, the good GDP news doesn’t appear to be translating into any market euphoria, so another potential catalyst to take markets higher may have gone by the wayside, although you never do know how the market will react once the bell rings for real. The opening futures rarely foretell what’s going to happen in the actual trading session unless the futures are very strongly higher or lower.

This morning the futures were virtually unchanged as a result of the GDP report and were pointing mildly higher to begin the session. The day’s trading eventually was a good reflection of the futures and ended the day perfectly flat.

Didn’t even set a new record today. What are the chances of that?

After a few opening trades yesterday there may still be some opportunity to do something in this shortened week, but now with only 1 1/2 days of premium remaining there’s not likely too much incentive to do anything with an expiration this Friday. Even the sale of calls on uncovered positions, if those opportunities arise, are more likely to now start looking at subsequent week expirations.

As the week approaches the erosion of time value there may be some opportunity to also look for rollovers a little earlier than usual and that’s exactly what happened today on a couple of positions.

Typically the rollover process begins on Thursday, although the ideal is most often on Fridays and the closer to the end of trading, the better. However, sometimes when erosion begins sooner or when there is already not much premium remaining, there may be reason to act sooner, especially if there is a prospect, otherwise, of not being able to make the trades.

Lately, the rollovers have been more difficult to execute as the volume and price expectations have been aberrant. A little volatility would go a long way toward getting both the volume and the bid-ask spreads to become more reasonable.

Today I expected relatively little market action and got exactly that, but was very happy to get some rollovers done. I think, though, that I would have been happier to get some uncovered positions finally find cover and contribute something to the bottom line to help pay for this week’s Thanksgiving Dinner.

Daily Market Update – November 25, 2014 (9:00 AM)

This was expected to be a quiet week, at least in terms of economic news.

The only real bit of important information was going to be this morning’s 3rd quarter GDP report, as well as any revisions to the previous quarter.

For the previous two quarters those revisions were fairly significant and took the markets by surprise, although in different directions. There are both good surprises and bad surprises.

The first of those revisions was a little stunning and probably reflected the really horrible weather of last winter. This time around, just like the last time, the revisions are of the good kind, but not so much that people are starting to whisper about inflation.

At some point, that will become a topic of discussion and concern, but for now, any economic growth,m even if via revisions, is welcome.

This time, however, the good GDP news doesn’t appear to be translating into any market euphoria, so another potential catalyst to take markets higher may have gone by the wayside, although you never do know how the market will react once the bell rings for real. The opening futures rarely foretell what’s going to happen in the actual trading session unless the futures are very strongly higher or lower.

This morning the futures were virtually unchanged as a result of the GDP report and were pointing mildly higher to begin the session.

After a few opening trades yesterday there may still be some opportunity to do something in this shortened week, but now with only 2 1/2 days of premium remaining there’s not likely too much incentive to do anything with an expiration this Friday. Even the sale of calls on uncovered positions, if those opportunities arise, are more likely to now start looking at subsequent week expirations.

As the week approaches the erosion of time value there may be some opportunity to also look for rollovers a little earlier than usual. Typically that process begins on Thursday, although the ideal is most often on Fridays and the closer to the end of trading, the better. However, sometimes when erosion begins sooner or when there is already not much premium remaining, there may be reason to act sooner, especially if there is a prospect, otherwise, of not being able to make the trades.

Lately, the rollovers have been more difficult to execute as the volume and price expectations have been aberrant. A little volatility would go a long way toward getting both the volume and the bid-ask spreads to become more reasonable.

Today I expect relatively little action, though, but would be very happy to get some uncovered positions finally find cover and contribute something to the bottom line to help pay for this week’s Thanksgiving Dinner.

Daily Market Update – November 24, 2014 (Close)

There’s not a single Federal Reserve Governor scheduled to speak this week as it will be a very quiet and short trading week.

While there will be a GDP release and some Jobless number statistics, unless there is another big revision to GDP, as we have already had twice this year, I don’t expect too much impact from the abbreviated schedule of economic announcements for the week, particularly as reports will be crammed into a shorter reporting period and may simply cancel one another out if offering conflicting views or interpretations over what is going on.

While many will begin the Thanksgiving holiday early and trading will be very light, the Thanksgiving Week sometimes starts off the final 5 weeks of a traditional rally for the year, as the November – December period usually out-performs the rest of the year.

Most of the focus shifts to retail and the script is usually the same. After the first couple of days of mega-sales, which are now being disclosed as perhaps not the great shopping bargains that everyone has been led to believe, the initial reports are usually of disappointing early sales.

The concerns about slow sales generally continues as people are led to believe that desperate retailers will lower prices even more.

Then, when it’s all said and done it’s revealed that sales for the holiday season were better than expected.

For the next five weeks prepare for an onslaught of these retail centric stories and constant talk about sales levels.

With consumer optimism rising and the holidays finally here, anything less than a really robust holiday sales season would have to be very disappointing, but we may have to prepare ourselves for the same weather related calamities lots of retailers faced last year, if the early indications are any predictor of what’s to follow.

This week with more cash in hand than has been the case for a while and with already some reasonable distribution of expirations for the December 2014 option cycle, I’m approaching this week with a very open mind.

While I’m not too likely to go wild with all of that cash, I’m not at all adverse to adding new positions. However, after 5 consecutive weeks of gains a low volume trading week can result in any kind of exaggerated movement. Also, plowing too much back in as the market is again at new highs should probably be questioned.

This week already has a number of ex-dividend positions so some income is already there for the week. Given that premiums will not only be light due to the extremely low volatility but also due to only having 3 1/2 days of time value, there may be some reason to look beyond this week’s expiration and perhaps to the December 12, 2014 expiration, which currently has no positions set to expire on that date.

However, as it worked out, two of the three new positions opened today will be expiring next week and the third will expire at the end of the month.

Another good thought and strategy gone to waste, as nearly every day stands on its own and doesn‘t easily lend itself to prediction or following a carefully planned script.

I would like to add to both the health and technology sectors and had been considering Microsoft this week, following its downgrade on Friday, but didn’t include that in this week’s Weekend Update, but would be happy to add that on any weakness. Instead, the weakness in Microsoft wasn’t really enough to justify doing anything today,but at least Lexmark is still nominally a technology company and it was going ex-dividend tomorrow.

That was good enough.

Otherwise, it’s was just another Monday to sit and see where sentiment would take us to begin the week. The difference was that there wasn’t too much time to make decisions and still get any kind of reasonable premiums as time will be running out very quickly this week.

That resulted in making some opening weekly trades quicker than I’ve done for the past few months, as I do like trading oin the first 30-60 minutes, but for the longest time that first hour has been good for nothing much more than head fakes.

Today that wasn’t the case as the market just traded in a narrow range all day offering little of interest after those first couple of trades.

I hope the rest of the week brings some considerable strength and the opportunity to have another week like last week and see a nice combination of assignments, new covered positions and rollovers.

I could certainly give thanks for that.

Daily Market Update – November 24, 2014 (8:15 AM)

There’s not a single Federal Reserve Governor scheduled to speak this week as it will be a very quiet and short trading week.

While there will be a GDP release and some Jobless number statistics, unless there is another big revision to GDP, as we have already had twice this year, I don’t expect too much impact from the abbreviated schedule of economic announcements for the week, particularly as reports will be crammed into a shorter reporting period and may simply cancel one another out if offering conflicting views or interpretations over what is going on.

While many will begin the Thanksgiving holiday early and trading will be very light, the Thanksgiving Week sometimes starts off the final 5 weeks of a traditional rally for the year, as the November – December period usually out-performs the rest of the year.

Most of the focus shifts to retail and the script is usually the same. After the first couple of days of mega-sales, which are now being disclosed as perhaps not the great shopping bargains that everyone has been led to believe, the initial reports are usually of disappointing early sales.

The concerns about slow sales generally continues as people are led to believe that desperate retailers will lower prices even more.

Then, when it’s all said and done it’s revealed that sales for the holiday season were better than expected.

For the next five weeks prepare for an onslaught of these retail centric stories and constant talk about sales levels.

With consumer optimism rising and the holidays finally here, anything less than a really robust holiday sales season would have to be very disappointing, but we may have to prepare ourselves for the same weather related calamities lots of retailers faced last year, if the early indications are any predictor of what’s to follow.

This week with more cash in hand than has been the case for a while and with already some reasonable distribution of expirations for the December 2014 option cycle, I’m approaching this week with a very open mind.

While I’m not too likely to go wild with all of that cash, I’m not at all adverse to adding new positions. However, after 5 consecutive weeks of gains a low volume trading week can result in any kind of exaggerated movement. Also, plowing too much back in as the market is again at new highs should probably be questioned.

This week already has a number of ex-dividend positions so some income is already there for the week. Given that premiums will not only be light due to the extremely low volatility but also due to only having 3 1/2 days of time value, there may be some reason to look beyond this week’s expiration and perhaps to the December 12, 2014 expiration, which currently has no positions set to expire on that date.

I would like to add to both the health and technology sectors and had been considering Microsoft this week, following its downgrade on Friday, but didn’t include that in this week’s Weekend Update, but would be happy to add that on
any weakness.

Otherwise, it’s just another Monday to sit and see where sentiment take us to begin the week. The difference is that there isn’t too much time to make decisions and still get any kind of reasonable premiums as time will be running out very quickly this week.

Daily Market Update – November 21, 2014 (8:00 AM)

The Week in Review will be posted by 6 PM and the Weekend Update will be posted by 12:00 Noon on Sunday.

The following trade outcomes are possible:

Assignments:  BMY,  CPB, CY, DRI, LO, SBGI

Rollovers:  LVS

Expirations:  BBY (puts), FAST, PBR

Again, with ask prices relatively high when seeking to close out positions as part of rollover trades, there may be reason to allow expiration, rather than rolling contracts over, due to the unnecessary additional expense involved.

This week’s ex-dividend position was TGT (11/17 $0.52)

Next week’s ex-dividend positions are:  MAT (11/24 $0.38), HFC (11/25 $0.50 Special Dividend), K (11/26 $0.49), SBGI (11/26 $0.16), LO (11/26 $0.62)

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