Dashboard – November 21 – 25, 2016

 

 

 

 

 

SELECTIONS

MONDAY:   Anything goes during a holiday shortened trading week, but this one looks like it will get off to a slow start.

TUESDAY:    More record closing highs and the futures look like they want even more. I’m happy watching for now.

WEDNESDAY

THURSDAY:  

FRIDAY:


 

 



 

                                                                                                                                           

Today's TradesCash-o-Meter

 

 

 





 “SNEAK PEEK AT NEXT WEEK” APPEARS ON FRIDAYS

Sneak PeekPie Chart Distribution

 

 

 

 

 

 

 

Weekly Summary

  

Dashboard – October 31 – November 4, 2016

 

 

 

 

 

SELECTIONS

MONDAY:    A big week ahead. Lots of earnings, another big deal, FOMC and Employment Situation Report.

TUESDAY:    Lots of earnings today and tomorrow as November gets off to its start, with hopes of breaking a 3 month losing streak

WEDNESDAY:  Another big day ahead with earnings and presumably no FOMC surprise.

THURSDAY:  The S&P 500 has gone into a stealth 7 day decline, the longest in 5 years, as next week may bring some really important earnings news to  give traders a reason to do something, other than participating in the attrition of this recent decline

FRIDAY:. Big day possibly, as we await the morning’s Employment Situation Report and see whether the S&P 500 makes in nine consecutive down days.


 

 



 

                                                                                                                                           

Today's TradesCash-o-Meter

 

 

 





 “SNEAK PEEK AT NEXT WEEK” APPEARS ON FRIDAYS

Sneak PeekPie Chart Distribution

 

 

 

 

 

 

 

Weekly Summary

  

Daily Market Update – November 23, 2016 (Close)

 

 

Daily Market Update –  November 23, 2016 (Close)


With these trade shortened holiday weeks anything can happen, but from the view this morning it looked as if the Trump rally would now take a day of rest as much of the nation was in transit.

Futures appeared to be fairly quiet this morning as the day began with more new record closing highs.

When it was all over, there were more record highs.

Nothing huge, but still new highs, even as the S&P 500 was up only 0.08% and the NASDAQ was actually down 0.1%.

People like to talk about those round numbers, so yesterday was a big day as the DJIA closed above 19000 for the first time and the S&P 500 closed over 2200 and today they stayed above those levels.

There is plenty of reason to think that when these kind of new highs are hit it is just a launching board for a sharp move higher.

There is also plenty of evidence to suggest when we hit these kind of new highs there is profit taking ahead.

Then there is plenty of evidence to suggest that when we hit these new highs and there is subsequent profit taking, that becomes a launching pad for new highs.

Although another test of those highs may be in store, with more evidence indicating that the third time is a charm.

Then, there is also plenty of evidence that when we hit these kind of new highs there is a correction ahead.

Take your pick.

I think that we may have more new highs ahead, but I also think that the FOMC enters back into the equation.

Not just with its announcement next month, but also with the frequency and size of interest rate decisions in 2017.

For the rest of 2016, I think we may coast and end up looking at the year as a very positive one for the markets, but more importantly, for ourselves.

Even more importantly, I hope everyone has a happy and healthy Thanksgiving.

.


Daily Market Update – November 23, 2016

 

 

Daily Market Update –  November 23, 2016 (7:30 AM)


With these trade shortened holiday weeks anything can happen, but for now it looks as if the Trump rally may now take a day of rest as much of the nation is in transit.

Futures appear to be fairly quiet this morning as the day begins with more new record closing highs.

People like to talk about those round numbers, so yesterday was a big day as the DJIA closed above 19000 for the first time and the S&P 500 closed over 2200.

There is plenty of reason to think that when these kind of new highs are hit it is just a launching board for a sharp move higher.

There is also plenty of evidence to suggest when we hit these kind of new highs there is profit taking ahead.

Then there is plenty of evidence to suggest that when we hit these new highs and there is subsequent profit taking, that becomes a launching pad for new highs.

Although another test of those highs may be in store, with more evidence indicating that the third time is a charm.

Then, there is also plenty of evidence that when we hit these kind of new highs there is a correction ahead.

Take your pick.

I think that we may have more new highs ahead, but i also think that the FOMC enters back into the equation.

Not just with its announcement next month, but also with the frequency and size of interest rate decisions in 2017.

For the rest of 2016, I think we may coast and end up looking at the year as a very positive one for the markets, but more importantly, for ourselves.

.


Daily Market Update – November 22, 2016

 

 

Daily Market Update –  November 22, 2016 (Close)


With these trade shortened holiday weeks anything can happen, but for now it looks as if the Trump rally may continue after taking a week off.

Markets hit all time highs yesterday on all indexes and they looked like they were getting ready to do the same again today and they ended up staying true to that theme all day long.

That still leaves me in a frame of mind to simply go along for the ride and then, wherever may be possible, sell some calls on existing uncovered positions.

I tried doing that today and also tried some early rollovers, but without any luck.

Maybe tomorrow.

Now, I would simply like to close the books on 2016 although it won’t be a year in which I closed lots of trades.

Instead, it will, hopefully, finish as a year with just a nice increase in net asset value, but without realizing a lot of those gains.

I hope that 2017 has more trades closing and more new trades getting made.

Those all represent realized gains and they can’t evaporate overnight like the paper ones can do at any moment in time.

I’m still not against spending any cash to generate some income this week, but at this point, I’m not thrilled about buying into strength at a time when premiums are so low from their already depressed volatility and the trade shortened week.

Or, I could just do like yesterday and sit around doing nothing.

Sounds like a good plan for tomorrow and the rest of the week.

.


Daily Market Update – November 22, 2016

 

 

Daily Market Update –  November 22, 2016 (9:30 AM)


With these trade shortened holiday weeks anything can happen, but for now it looks as if the Trump rally may continue after taking a week off.

Markets hit all time highs yesterday on all indexes and they look like they’re getting ready to do the same again today.

That still leaves me in a frame of mind to simply go along for the ride and then, wherever may be possible, sell some calls on existing uncovered positions.

I would simply like to close the books on 2016 although it won’t be a year in which i closed lots of trades.

Instead, it will, hopefully, finish as a year with just a nice increase in net asset value, but without realizing a lot of those gains.

I hope that 2017 has more trades closing and more new trades getting made.

Those all represent realized gains and they can’t evaporate overnight like the paper ones can do at any moment in time.

I’m still not against spending any cash to generate some income this week, but at this point, I’m not thrilled about buying into strength at a time when premiums are so low from their already depressed volatility and the trade shortened week.

Or, I could just do like yesterday and sit around doing nothing.

.


Daily Market Update – November 21, 2016 (Close)

 

 

Daily Market Update –  November 21, 2016 (Close)


This is an odd week.

That’s because I have more money to spend than in quite a while, thanks to 2 assignments and the expiration of some short puts.

It’s also a holiday shortened trading week with no positions set to expire and only one ex-dividend position.

Ordinarily, that would see me wanting to create some income opportunities for the week.

But my inclination at the moment is not to dip into cash reserves.

Part of that is because I don’t want to dip into those hard earned cash reserves, but the other half is that the premiums just aren’t very good.

Early this morning I already had my sights on the price of oil hoping that there might be an opportunity to re-open another new position in that old 2016 favorite, Marathon Oil.

But it didn’t look as if the move was going to be in the right direction, so that was off the map, too and stayed that way throughout the day.

Last week was a quiet one from a market movement perspective, even as I was happy with the amount of trading that I was able to do and the ability to create some income flow while also adding to cash reserves.

This week could very easily also be a quiet market week, especially from my trading perspective, but it could also be a volatile one due to the anticipated low trading volume.

At times like that I would rather not flip a coin if considering committing new cash, so I may just stay on the sidelines.

If so, I don’t mind any outcome.

A move higher takes me for a ride and a move lower may open up some buying opportunities for the cash.

That cash doesn’t burn the same hole in my pockets as it used to, anyway.

Today it was just a ride higher and with energy and commodities again out-performing, as they’ve done through all of 2016.

That’s why I have had a smile for most of the year, but it’s also why I didn’t have one for much of 2015.

We’ll see what awaits in 2017, but whatever it is, at some point markets are going to come to the realization that there wasn’t too much sense in following energy higher, nor in following it lower, until the real tenets of supply and demand kick in.

.


Daily Market Update – November 21, 2016

 

 

Daily Market Update –  November 21, 2016 (7:30 AM)


This is an odd week.

That’s because I have more money to spend than in quite a while, thanks to 2 assignments and the expiration of some short puts.

It’s also a holiday shortened trading week with no positions set to expire and only one ex-dividend position.

Ordinarily, that would see me wanting to create some income opportunities for the week.

But my inclination at the moment is not to dip into cash reserves.

Part of that is because I don’t want to dip into those hard earned cash reserves, but the other half is that the premiums just aren’t very good.

Early this morning I already had my sights on the price of oil hoping that there might be an opportunity to re-open another new position in that old 2016 favorite, Marathon Oil.

But it doesn’t look as if the move is in the right direction, so that may be off the map, too.

Last week was a quiet one from a market movement perspective, even as I was happy with the amount of trading that I was able to do and the ability to create some income flow while also adding to cash reserves.

This week could very easily also be a quiet market week, especially from my trading perspective, but it could also be a volatile one due to the anticipated low trading volume.

At times like that I would rather not flip a coin if considering committing new cash, so I may just stay on the sidelines.

If so, I don’t mind any outcome.

A move higher takes me for a ride and a move lower may open up some buying opportunities for the cash.

That cash doesn’t burn the same hole in my pockets as it used to, anyway.

.


Weekend Update – November 20, 2016

You might be able to easily understand any reluctance that the FOMC has had in the past year or maybe even in the year ahead to raise interest rates.

To understand why those decision makers could be scarred, all you have to do is glance back to nearly a year ago.

At that time, after a 9 year period of not having had a single increase in interest rates, the FOMC did increase interest rates.

The data compelled them to do so, as the FOMC has professed to be data driven.

Presumably, they did more than just look in the rear view mirror, casting forward projections and interpreting what are sometimes conflicting pieces of the puzzle.

At the time, the conventional wisdom, no doubt guided somewhat by the FOMC’s own suggestions, was that the small increase was going to be the first and that we were likely to see a series of such increases in 2016.

Funny thing about that, though.

Data is not the same as a crystal ball. Data is backward looking and trends can stop on a dime, or if I were to factor in the future value of money based upon the increase in the 10 Year Treasury note ever since Election Day, considerably more than a dime.

With the gift of hindsight, 2016 didn’t work out quite the way we all thought it might, but here we are, nearly a year later and with interest rates right where they were when they were last raised and the near certainty that they will be raised once again in just a few weeks.

Looking at the chart above and recalling the subsequent nose dive that the stock market took in the aftermath of the FOMC decision, you can begin to understand why there might be a sense of “once burned,” even as the FOMC should not include the stock market’s health in its own mandate.

But while there may still be a sense of doubt by those spending every waking moment in a darkened study pouring over economic data, when not participating in a speaking engagement, a quick look outside the window would have shown that the FOMC’s work was being done for it.

That’s because natural economic forces have now done the heavy lifting.

Just look at the nearly 28% increase in the interest rate on that 10 Year Treasury Note since its close on Election Day. That had to be music to the ears of even the doves on the FOMC, regardless of their political inclinations.

Who wants to be the bad guy or who wants to be the one responsible and have fingers pointed in their direction when things don’t work out as planned?

“The dog did it” is always a convenient excuse, but the resurgence of the consumer is now taking a dog of an economy and translating into the kind of economic growth that even a backward looking FOMC can embrace as being the handwriting on the wall.

While specialty retailers may not be feeling the glow, the larger national retailers are reporting good top and bottom lines and, more importantly, see a better near term future.

The consumer may be doing more heavy lifting at the check out line and energy prices remain low as more people are going to work and getting better wages to do so.

Check, check and check.

So while those natural forces have already driven up interest rates making it so easy for the FOMC to do so for only the first time in 2017, a small piece of me believes that the FOMC doesn’t want anyone to do its heavy lifting, but they may appreciate a little bit of a hand.

Especially, if they are of the mind to continue to present themselves as relevant in the face of an unexpected Presidential election.

That leaves me wondering whether the FOMC may still have a surprise in store for all of us and come in with a pre-emptory 0.50% interest rate hike instead of what we have been expecting.

Too much good news and too large of an increase in interest rates secondary to market forces may awaken those with memories of inflation past and the role of interest rates as a brake.

I don’t expect that to be the case, but when has predictability of the economy or the FOMC ever been assured?

Tradition would have you believe that the FOMC would not do such a thing before the start of a new administration, even as they are supposed to be blind as to the political scene, but there is not likely to be too much love lost after the moving trucks pull into the White House.

As usual, the week’s potential stock selections are classified as being in the Traditional, Double Dip Dividend, Momentum or “PEE” categories.

I don’t expect to be doing too much trading in this coming week, but that has been pretty much my story for 216, anyway.

The Thanksgiving holiday shortened week makes already low volatility induced option premiums even lower and we may be in a holding pattern until December’s FOMC meeting.

While there’s always concern about exaggerated market moves during periods of low trading volume, such as the coming week is expected to be, the possibility of a holding pattern can be a covered option writer’s best friend.

Dow Chemical (DOW) has been in a holding pattern for a while as we await some regulatory decision regarding its deal with DuPont (DD). It’s stock price has also been in a holding pattern, but the premiums may be bolstered a little bit by the uncertainty that still hangs over that deal.

Most best guesses would be that under a Trump Administration there could be a more wide embrace of such mergers and buyouts, but as I have long believed, there isn’t too much downside in the event the deal comes apart.

Maybe upside, actually.

What I do see is that there is a nice dividend coming up as 2016 comes to its end. However, I would likely try to take this on a week by week basis, also being mindful of the FOMC and its potential impact on markets.

Even with some adverse market news, I think that Dow Chemical’s downside is restrained and it may offer an attractive serial rollover opportunity allowing premiums and return to accumulate.

Although in an ear of electronic gaming, no one really rolls the dice anymore, but if you like rolling the dice, GameStop (GME) reports earnings this week. It has been everyone’s favorite short position for years and has been the least favorite of many as it has
consistently refused to fade away.

The fact that the short sellers have also been on the line for a very generous dividend hasn’t helped to endear the company to them, although there is no doubt that if you had timed this stock properly, there have also been many short term shorting opportunities over the years.

The options market is implying only a 7.1% move this week, which is relatively small by past standards and GameStop has certainly shown that it can surprise stock investors and option speculators on both sides of the proposition.

I generally consider the sale of puts at a strike price that is outside of the range implied by the options market, if it can deliver a 1% ROI for the week.

It looks as if GameStop will be able to meet my criteria, but my concern in doing so is that its shares are right near an almost 4 year low and the trend in the past year hasn’t been very good.

As a specialty retailer, I don’t know if GameStop will follow the pattern of some others having recently reported earnings, but if it does, those lows are in danger of being wiped out.

For that reason, I would likely wait until after earnings are announced and would consider the purchase of shares and sale of calls if shares do anything other than moving sharply higher.

I would also want to hear some words that soothe fears regarding the dividend.

Finally, while broken records can really be annoying for those who actually remember what a record is, I’m going to look at 2016 fondly for the Marathon Oil (MRO) broken record it has given me.

With the expiration of short puts and the assignment of long calls, my self-imposed rule of never having more than 3 lots of any position is no longer a hindrance in considering a new Marathon Oil position this week.

With those two closed positions this past week, 2016 has now seen 11 Marathon Oil lots closed and it remains in a price range that I find appealing.

It is, however, at the top of that range, so I don’t expect to run head first into ownership of either shares or the sale of puts, but would absolutely consider doing so on the first downdraft in shares that again brings it near the $15 level.

Marathon Oil in 2016 has been the poster child for serial buy/writes or short put sales and then rollovers of those short option positions, sometimes even when in the money.

Of course, just like all trends, there can be a departure at any time, just as was the case for Morgan Stanley (MS), whose final lot of shares was assigned from me this past week, as it was my serial darling of 2015, until it wasn’t.

 

Traditional Stocks: Dow Chemical

Momentum Stocks: Marathon Oil

Double-Dip Dividend: none

Premiums Enhanced by Earnings: GameStop (11/22 PM)

Remember, these are just guidelines for the coming week. The above selections may become actionable – most often coupling a share purchase with call option sales or the sale of covered put contracts – in adjustment to and consideration of market movements. The overriding objective is to create a healthy income stream for the week, with reduction of trading risk.

Week In Review – November 14 – 18, 2016

 

Option to Profit

Week in Review


NOVEMBER 14 – 18, 2016


NEW POSITIONS/STO NEW STO ROLLOVERS CALLS ASSIGNED/PUTS EXPIRED CALLS EXPIRED/PUTS ASSIGNED CLOSED EX-DIVIDEND
0  /   0  2 2 2   /   1 3   /   0 0 1

 

Weekly Up to Date Performance

November 14 – 18, 2016

Well this week was pretty much the antithesis to last week.

Probably a good thing, though.

I was pretty happy with this week, even though I didn’t open any new positions.

The S&P 500 finished the week 0.9% higher and existing positions did well.

More importantly, there was again opportunity to put some idle positions to work and there were opportunities to add to the cash reserves thanks to some assignments and the expiration of some short puts.

There were also a couple of rollovers.

The only negative was that there were some expirations, as well, but as has been the case all through 2016, a little patience may pay off.

With 3 new closed positions this week, there are now 27 on the year.

That’s nothing compared to past years, especially when you consider that 11 of those closed positions were a single stock.

The average closed position in 2016 is 7.3% higher, as long as you conveniently omit MolyCorp. That compares to 2.0% for the S&P 500 during the various time periods of holding, representing a 256.6% differential.

There really wasn’t too much going on this week, other than more data to suggest that the FOMC will have an easy decision in a few weeks.

That’s because retail sales have been better than expected, as long as you don’t think too much about specialty retailers.

It’s also because the bond market has been doing the FOMC’s work for it as interest rates continue moving higher since the Presidential election.

I was very happy to have a nice combination of assignments, rollovers and call sales this week.

Mostly, I don’t mind getting more into cash as we look forward a few weeks to the FOMC meeting.

While we all expect action this time around, the expectation continues to be for just a 0.25% increase.

That’s probably what it will be, but in the back of my mind I think about the possibility of a 0.50% increase.

That would probably decimate traders.

Not likely to happen, but I don’t mind having some more cash than has been the case for quite some time.

Next week is a holiday shortened one and while I won’t mind dipping into cash, the premiums aren’t likely to be very enticing for just 4 days of trading.

I’m looking forward to a quiet week, but we all know that these light volume weeks can also bring some surprises, so even if there are few if any trades to be made, there will be reason to watch with some interest.

As earnings are now almost complete, the rest of 2016 will be an FOMC watch and thoughts about strategic selling.

While there haven’t been too many gains in 2016 for the overall market, even as we are at new highs, it has been a very good year, but I’ll still be happy to see it go.

.Happy Thanksgiving to all.

This week’s details may be seen in the Weekly Performance spreadsheet * or in the PDF file, as well as in the summary below

(Note: Duplicate mention of positions reflects different priced lots):



New Positions Opened:  none

Puts Closed in order to take profits:  none

Calls Rolled over, taking profits, into the next weekly cycle:   none

Calls Rolled over, taking profits, into extended weekly cycle:  M

Calls Rolled over, taking profits, into the monthly cycle: IP

Calls Rolled Over, taking profits, into a future monthly cycle:  none

Calls Rolled Up, taking net profits into same cyclenone

New STO: CY, GM

Put contracts expired: MRO

Put contracts rolled over: none

Long term call contracts sold:  none

Calls Assig
ned
:  MRO, MS

Calls Expired:  COH, GME, INTC

Puts Assigned:  none

Stock positions Closed to take profits:  none

Stock positions Closed to take losses: none

Calls Closed to Take Profits: none

Ex-dividend Positions    MRO (11/14 $0.05)

Ex-dividend Positions Next Week: HFC (11/23 $0.33)

For the coming week the existing positions have lots that still require the sale of contracts:   AGQ, ANF, AZN, BBBY, BBY, CHK, CLF, COH, CSCO,  CY, DOW, FAST, FCX, GDX, GM, GPS, HAL, HFC, HPQ, INTC, IP, JCP, JOY, KMI, KSS, LVS, MCPIQ, MOS, NEM, RIG, WFM, WLTGQ, WY (See “Weekly Performance” spreadsheet or PDF file)



* If you don’t have a program to read or modify spreadsheets, you can download the OpenOffice Suite at no cost.



Daily Market Update – November 18, 2016

 

 

Daily Market Update –  November 18, 2016 (7:30 AM)


The Week in Review will be posted by 10 PM and the Weekend Update will be posted by Noon on Sunday.

The following trade outcomes are possible today:

Assignments: MRO, MS

Rollovers: none

Expirations:   COH, GME, INTC, MRO (puts)

The following were ex-dividend this week:    MRO (11/14 $0.05)

The following are ex-dividend next week:  HFC (11/23 $0.33)

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

With IP and M already rolled over earlier in the week, it looks as if it may be a very quiet day of personal trading today.

.