Monthly Archives: February 2014

 

Daily Market Update – February 14, 2014 (9:00 AM)

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

Today’s possible trades include:

Assignments: COH, HAL, IP, MOS, TXN

Rollovers: ANF, APC

Expirations:  AIG, COP, WFM

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

 

Daily Market Update – February 13, 2014 (Close)

The morning started with the realization that there was much more snow than anticipated.

That usually makes for a slower trading day when New York City is part of the blanket, despite the decreasing reliance on floor traders.

For some reason, the pre-opening futures were weak this morning and didn’t get better as Jobless Claims and Retail Sales information was eventually released.

The release was slightly delayed and without the usual lifting of the embargo fanfare, as the snow slowed down the way things work in Washington, DC.

While the jobless news was benign, except to those contained in the report, the Retail Sales should have come as no surprise, as there have been few rejoicing over the plight of retail shares. With everyone blaming the weather, the past week isn’t going to help.

As someone mentioned on Twitter this morning in weather like this it’s obvious that Yuppies would rather stay home and eat gluten than go out and stock up on quinoa.

Although there are still those talking about how good the earnings numbers have been it appears that the comparisons conveniently disregard the impact of share buy backs that only serve to inflate the earnings per share ratio. But beyond that, you don’t have to understand basic math and fundamental metrics. All you need to do is hear about retail weakness to know that in a consumer nation the lack of consumption isn’t a good thing.

As far as share price, even Amazon hasn’t been immune of late as its razor thin margins, when there are any, isn’t what sustains business models.

With what is likely to be a slow trading day, with or without a sizable move, there’s plenty of time for traders to wonder whether this morning’s trade lower is just a rest in the bounce back or a reconsideration of that bounce back. When you have nothing else to do your mind gets to ask those kind of questions, despite the fact that there’s no way in which to arrive at an answer that should instill confidence.

Last week broke the pattern of very weak Fridays. Hopefully today’s trading will not set the stage for a return to that pattern, as I was looking forward to some assignments and setting the stage for a busy end to the monthly cycle.

I suspected that today would just be another in a recent slow day of trading. The real challenge may just be in staying awake. Luckily I have the dog to see to it that boredom doesn’t overtake me as watching the monitors do nothing to fight off the sleep and there’s no way that I’ll be shoveling as a means to escape the tedium that may ensue once the news of the Comcast buyout of Time Warner Cable has been fully beaten to death.

Hopefully this morning’s snow won’t do anything to knock out power, although this may be the day in which there’s little to be missed

When the final bell rang it still wasn’t clear where the eventual optimism came from. I even surprised myself by making a purchase of MasterCard, a company I haven’t owned since long before the pre-split days when it traded at below $400.

For some reason, despite understanding that the actual price of shares means little, as far as value goes, sometimes it’s just difficult to pick up shares that cost $800. The 10 to 1 split was welcome, especially since the finance sector is under-represented in my portfolio.

While this week has been another in a series of slow ones, once again, I didn’t mind, as long as it meant watching assets grow.

As much as I like to trade I don’t like getting to a point where it is clearly an addiction. Sometimes you just have to resist the need to feed that beast, but it isn’t easy.

Today, I simply walked outside with a shovel in hand, having wired my computer to some powerful speakers and set the price alarms to alert me if anything was going on that needed my attention as I dealt with snow.

My wife, who apparently is “essential” personnel was picked up at home by the hospital security 4 wheel drive and as a result of her getting into work. I received a call from one of the Emergency Room physicians telling me that all he had done today was confirming patient deaths.

Guess what? From shoveling. Not only can snow be bad for earnings, but it can kill you, too.

So I won’t be doing that tomorrow, no matter how boring it may get, although I do like my speaker set up. I may keep that going.

 

Daily Market Update – February 13, 2014 (9:30 AM)

The morning started with the realization that there was much more snow than anticipated.

That usually makes for a slower trading day when New York City is part of the blanket, despite the decreasing reliance on floor traders.

For some reason, the pre-opening futures were weak this morning and didn’t get better as Jobless Claims and Retail Sales information was eventually released.

The release was slightly delayed and without the usual lifting of the embargo fanfare, as the snow slowed down the way things work in Washington, DC.

While the jobless news was benign, except to those contained in the report, the Retail Sales should have come as no surprise, as there have been few rejoicing over the plight of retail shares. With everyone blaming the weather, the past week isn’t going to help.

As someone mentioned on Twitter this morning in weather like this it’s obvious that Yuppies would rather stay home and eat gluten than go out and stock up on quinoa.

Although there are still those talking about how good the earnings numbers have been it appears that the comparisons conveniently disregard the impact of share buy backs that only serve to inflate the earnings per share ratio. But beyond that, you don’t have to understand basic math and fundamental metrics. All you need to do is hear about retail weakness to know that in a consumer nation the lack of consumption isn’t a good thing.

As far as share price, even Amazon hasn’t been immune of late as its razor thin margins, when there are any, isn’t what sustains business models.

With what is likely to be a slow trading day, with or without a sizable move, there’s plenty of time for traders to wonder whether this morning’s trade lower is just a rest in the bounce back or a reconsideration of that bounce back. When you have nothing else to do your mind gets to ask those kind of questions, despite the fact that there’s no way in which to arrive at an answer that should instill confidence.

Last week broke the pattern of very weak Fridays. Hopefully today’s trading will not set the stage for a return to that pattern, as I was looking forward to some assignments and setting the stage for a busy end to the monthly cycle.

I suspect that today will just be another in a recent slow day of trading. The real challenge may just be in staying awake. Luckily I have the dog to see to it that boredom doesn’t overtake me as watching the monitors do nothing to fight off the sleep and there’s no way that I’ll be shoveling as a means to escape the tedium that may ensue once the news of the Comcast buyout of Time Warner Cable has been fully beaten to death.

Hopefully this morning’s snow won’t do anything to knock out power, although this may be the day in which there’s little to be missed

Daily Market Update – February 12, 2014 (Close)

Despite doing almost nothing meaningful the past couple of days, I did enjoy yesterday.

I got over the frustration of another day of seeing trades not get executed as prices refused to give ground and instead simply watched the bottom line start returning to where it ended 2013, while doing so faster than the market seems to be doing it.

There are different paths to happiness, it seems.

Ultimately, having more is probably more meaningful than simply trading, but if you like to see that stream of income or especially if you rely on that stream, trading is important, as are the flow of dividends.

After yesterday’s initial Humphrey-Hawkins testimony by new Federal Reserve Chairman Janet Yellen in which she failed to deliver any surprises, today seems as if there will be a respite from celebration, as Part 2 still remains, although late in the day it was announced that due to weather concerns the final stage of testimony was being postponed.

In the meantime two Federal Reserve Governors gave their opinions yesterday, with one blaming  “feckless” politicians for the current state of the economy and fiscal policy and the other calling for legislation to prevent “too big to fail.”

Neither of those received too much attention, nor has the passing of a clean bill to lift the debt ceiling for another year, although prospects of the latter may have contributed to yesterday’s gain.

There are still more such appearances scheduled this week, weather pending.

I remember watching Alan Greenspan deliver his Humphrey-Hawkings testimony and watch the markets react wildly in response only to reverse the action when he concluded his testimony on the final day. I think he took delight in being able to do such things and I think he ratcheted up his obfuscation when sensing he was in control.

It’s not too likely Yellen will be in that mold and it appears as if she takes the dual mandate of the Federal Reserve into the real world and to heart, seeing the real impact on employment of people with names and faces.

With less than a 1.5% decline from the market’s recent highs there’s every reason to believe that the same pattern exhibited in nearly the past two years will come to play. That is an attempt at a correction and then a quick rebound that overshoots the original high.

With little reason to believe that the Federal Reserve will change its course, despite the likelihood that there will be greater dissension going forward as the composition of voting Governors has changed, there should continue to be accommodation even in the systematic reduction of the Federal Reserve in the Treasury market.

The problem is that when everything seems so rational and everything seems to point in a single direction is when strange things seem to happen and that somehow catch us off guard.

Neither too much optimism nor too much pessimism is really a good thing.

With only a handful of new positions this week and last, it seems like an eternity since the days of 10 new positions in a week. Looking back on a few years of pursuing a covered call strategy the decrease in trading is very definitely a hallmark of decreasing or flat markets and is also very much my favorite time to be owning stocks.

The ideal scenario ends up being fewer stock positions, fewer new positions and more and more rollovers, but for longer time periods.

For just a brief moment last week as the market was heading lower and volatility was headed higher it looked as if we might be heading into that kind of environment that really simplifies trading.

Just like everything else when it all looks to be falling into place is precisely when you should begin to believe that it won’t.

While there are still some potential new positions I might like to add this week I don’t expect to be pursuing them very much over the next few days. Instead, if the market is kind enough to continue moving forward my hope would be to continue getting some coverage, even if only the short term “D’oh” trades. Every cent of premium and every additional retained dividend just adds to performance, especially when the market is flat or just tryin
g to decide what direction to take.

I’m not proud. I’ll take the extra pennies when the market is treading water, as long as I can add them to the premiums and growing stream of dividends.

Daily Market Update – February 12, 2014 (9:00 AM)

Depite doing almost nothing meaningful the past couple of days, I did enjoy yesterday.

I got over the frustration of another day of seeing trades not get executed as prices refused to give ground and instead simply watched the bottom line start returning to where it ended 2013, while doing so faster than the market seems to be doing it.

There are different paths to happiness, it seems.

Ultimately, having more is probably more meaningful than simply trading, but if you like to see that stream of income or especially if you rely on that stream, trading is important, as are the flow of dividends.

After yesterday’s initial Humphrey-Hawkins testimony by new Federal Reserve Chairman Janet Yellen in which she failed to deliver any surprises, today seems as if there will be a respite from celebration, as Part 2 still remains.

In the meantime two Federal Reserve Governors gave their opinions yesterday, with one blaming  “feckless” politicians for the current state of the economy and fiscal policy and the other calling for legislation to prevent “too big to fail.”

Neither of those received too much attention, nor has the passing of a clean bill to lift the debt ceiling for another year, although prospects of the latter may have contributed to yesterday’s gain.

I remember watching Alan Greenspan deliver his Humphrey-Hawkings testimony and watch the markets react wildly in response only to reverse the action when he concluded his testimony on the final day. I think he took delight in being able to do such things and I think he ratcheted up his obfuscation when sensing he was in control.

It’s not too likely Yellen will be in that mold and it appears as if she takes the dual mandate of the Federal Reserve into the real world and to heart, seeing the real impact on employment of people with names and faces.

With less than a 1.5% decline from the market’s recent highs there’s every reason to believe that the same pattern exhibited in nearly the past two years will come to play. That is an attempt at a correction and then a quick rebound that overshoots the original high.

With little reason to believe that the Federal Reserve will change its course, despite the likelihood that there will be greater dissension going forward as the composition of voting Governors has changed, there should continue to be accommodation even in the systematic reduction of the Federal Reserve in the Treasury market.

The problem is that when everything seems so rational and everything seems to point in a single direction is when strange things seem to happen and that somehow catch us off guard.

Neither too much optimism nor too much pessimism is really a good thing.

With only a handful of new positions this week and last, it seems like an eternity since the days of 10 new positions in a week. Looking back on a few years of pursuing a covered call strategy the decrease in trading is very definitely a hallmark of decreasing or flat markets and is also very much my favorite time to be owning stocks.

The ideal scenario ends up being fewer stock positions, fewer new positions and more and more rollovers, but for longer time periods.

For just a brief moment last week as the market was heading lower and volatility was headed higher it looked as if we might be heading into that kind of environment that really simplifies trading.

Just like everything else when it all looks to be falling into place is precisely when you should begin to believe that it won’t.

While there are still some potential new positions I might like to add this week I don’t expect to be pursuing them very much over the next few days. Instead, if the market is kind enough to continue moving forward my hope would be to continue getting some coverage, even if only the short term “D’oh” trades. Every cent of premium and every additional retained dividend just adds to performance, especially when the market is flat or just trying to decide what direction to take.

I’m not proud. I’ll take the extra pennies when the market is treading water, as long as I can add them to the premiums and growing stream of dividends.