Daily Market Update – April 30, 2014 (Close)

 

 

Daily Market Update – April 30, 2014 (Close)

A bad first quarter GDP and mediocre earnings were the news  items to open the morning that would  have its crescendo a few hours later when the FOMC announcement was to be made.

As it would turn out , that crescendo was pretty muted.

While the announcement itself wasn’t too likely to have much in the way of new news it was likely to be interpreted by traders through the lens of this morning’s GDP statistic, with those wondering whether a slowing GDP will be a reason for the Federal Reserve to slow down its tapering, battling with those who believed the GDP number simply reflected awful weather and nothing systemic.

Those are usually the battles that are best watched from the sidelines, but since today is a Wednesday that’s already the default position. There has been very little rational basis behind the reactions following these FOMC releases lately, so default isn’t a bad way to go, otherwise you can’t expect anything other than even odds.

Instead, the battle itself came to a complete draw as there was barely a peep from anyone, not even much in the way of the usual knee jerk reaction that has become so common and laughable.

With new weekly options appearing tomorrow, based on the experience of the past couple of weeks I may again look for opportunity to execute rollovers on Thursday, rather than waiting until Friday. Hopefully today will be a positive kind of day although the pre-open is looking very non-committal, as that’s usually the case in advance of the afternoon announcement.

In last week’s case rolling over positions on Thursday was really serendipitous, as it avoided the impact of the market plunge on Friday, that I never would have otherwise expected. No matter how you dissect things, it never hurts to have luck on your side.

With lots of positions set to expire this week and a fair number looking as if they are in a position to be assigned, I would love to see that be the case, but not only is the challenge of the FOMC ahead, but also Friday’s Employment Situation Report. I would very much like to see cash reserves increased after a few weeks of drawing down reserves, although this week was one of conservation.

Having cash makes it unnecessary to be defensive.

While the Employment Situation Report tends to be a positive trading day, last month served as an exception to that rule, as the day snatched defeat from victory, with a mid-day sell-off after a nice opening gain. That might alert people to the possibility that a defensive position may not be altogether ridiculous, given some of the challenged faced this week and the remaining potential for international chaos.

In the meantime there continues to be an unraveling of the more speculative corner of the market and any rational person would have to be wondering whether that’s just an early warning signal, as it has been just that in the past. With more earnings yet to go there could easily be
more of that kind of negative news coming to discourage people and create selling pressure.

Still, you can’t overlook the fact that the market is within striking distance of its all time highs.and as the day was winding to its close all eyes were on the DJIA which was just a few points away from that high point.

Again. The market just keeps doing that, despite all of the times that most everyone believed that it was finally ready to take a break.

Talk about mixed messages.

  

 

 

  

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Daily Market Update – April 30, 2014

 

 

Daily Market Update – April 30, 2014 (9:15 AM)

A bad first quarter GDP and mediocre earnings are the news to open the morning that will have its crescendo a few hours later when the FOMC announcement is made.

While the announcement itself isn’t too likely to have much in the way of new news it will probably be interpreted by traders through the lens of this morning’s GDP statistic, with those wondering whether a slowing GDP will be a reason for the Federal Reserve to slow down its tapering, battling with those who believe the GDP number simply reflected awful weather and nothing systemic.

Those are usually the battles that are best watched from the sidelines, but since today is a Wednesday that’s already the default position. There has been very little rational basis behind the reactions following these FOMC releases lately, so default isn’t a bad way to go, otherwise you can’t expect anything other than even odds.

With new weekly options appearing tomorrow, based on the experience of the past couple of weeks I may again look for opportunity to execute rollovers on Thursday, rather than waiting until Friday. Hopefully today will be a positive kind of day although the pre-open is looking very non-committal, as that’s usually the case in advance of the afternoon announcement.

In last week’s case rolling over positions on Thursday was really serendipitous, as it avoided the impact of the market plunge on Friday, that I never would have otherwise expected. No matter how you dissect things, it never hurts to have luck on your side.

With lots of positions set to expire this week and a fair number looking as if they are in a position to be assigned, I would love to see that be the case, but not only is the challenge of the FOMC ahead, but also Friday’s Employment Situation Report. I would very much like to see cash reserves increased after a few weeks of drawing down reserves, although this week was one of conservation.

Having cash makes it unnecessary to be defensive.

While the Employment Situation Report tends to be a positive trading day, last month served as an exception to that rule, as the day snatched defeat from victory, with a mid-day sell-off after a nice opening gain. That might alert people to the possibility that a defensive position may not be altogether ridiculous, given some of the challenged faced this week and the remaining potential for international chaos.

In the meantime there continues to be an unraveling of the more speculative corner of the market and any rational person would have to be wondering whether that’s just an early warning signal, as it has been just that in the past. With more earnings yet to go there could easily be more of that kind of negative news coming to discourage people and create selling pressure.

Still, you can’t overlook the fact that the market is within striking distance of its all time highs.

Again. The market just keeps doing that, despite all of the times that most everyone
believes that it is finally ready to take a break.

Talk about mixed messages.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

  

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Daily Market Update – April 29, 2014 (Close)

 

 

Daily Market Update – April 29, 2014 (Close)

Investing should be easy this week.

After all it’s an Employment Situation Report Week that also happens to have a Tuesday in it.When the morning started I thought this week may be an interesting one.

While the recent string of Tuesdays looks as if it will be getting off on a positive note, the Employment Situation Report string was broken last month by a mid-day strong reversal, but the trend still remains, as for nearly the past 2 years both the week of the report and the actual day have been significantly more likely to end up on the positive side.

What more can you ask?

Well, you could have asked for a triple digit gain or at least something close.

While this morning was looking to continue some of the very impressive rebound from yesterday’s final hour I’m not fully ready to follow those odds of history repeating itself. On the other hand, when I see a company like Coach, which has been a prisoner of history and pattern, once again take a sharp dive when reporting earnings, I am prone to wanting to follow that pattern again. That pattern has been a fairly good formula to follow, although it has required some patience before jumping in, so even that trade isn’t too likely today.

Of course, those were my thought in the morning before being adequately caffeinated. Staring at the Coach 2 year chart made it difficult to resist waiting, although sometimes it’s just best to ignore those urges.

Yesterday’s rebound really was impressive, although it’s not the first such to have occurred over the past couple of weeks. Normally, those kind of rebounds carry with them a very bullish kind of message, but those messages have become obscured and haven’t really found themselves to be accurate predictors of the market’s direction.

That direction has been equally obscure of late and market health has really been called into question as the NASDAQ, and especially the greatest of the “Momentum” stocks have come under attack.

Just as those had been sure things during their climbs higher, most every sure thing sees its time come to an end. In the case of these kind of high fliers it gets a little unnerving when the word “bubble” starts being tossed around with such great frequency.

Generally, the more that climb onto the bandwagon the more sense it makes to just walk, the bubble thing is often very prescient, because it’s just not talk, but it’s also recognition of a pattern. That is the sudden reversal of fortunes in stock moves among the faddiest of stocks and the size of those movements.

As with many stocks that see reversals, such as Coach, there’s enough of a history to suggest that shares will recover in some short time frame, or at least trade in a stable fashion at a new lower level. It’s usually not correct to refer to such stocks as value traps, because their value tends to return or be re-established.

But in the case of these high fliers, there is no such individual history. Yet people believe that when they experience large drops it’s a chance to get in at a reasonable price.

History shows that many of these don’t recover and when taken in their totality, they may be a harbinger for things to come in the broader market.

As I mentioned yesterday, this will be an interesting week.

Yesterday was an appropriate start for that kind of a week and there’s more to come as earnings start coming our way.

Stay tuned and stay patient.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

  

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Daily Market Update – April 29, 2014

 

Daily Market Update – April 29, 2014 (9:30 AM)

Investing should be easy this week.

After all it’s an Employment Situation Report Week that also happens to have a Tuesday in it.When the morning started I thought this week may be an interesting one.

While the recent string of Tuesdays looks as if it will be getting off on a positive note, the Employment Situation Report string was broken last month by a mid-day strong reversal, but the trend still remains, as for nearly the past 2 years both the week of the report and the actual day have been significantly more likely to end up on the positive side.

What more can you ask?

While this morning is looking to continue some of the very impressive rebound from yesterday’s final hour I’m not fully ready to follow those odds of history repeating itself. On the other hand, when I see a company like Coach, which has been a prisoner of history and pattern, once again take a sharp dive when reporting earnings, I am prone to wanting to follow that pattern again. That pattern has been a fairly good formula to follow, although it has required some patience before jumping in, so even that trade isn‘t too likely today.

Yesterday’s rebound really was impressive, although it’s not the first such to have occurred over the past couple of weeks. Normally, those kind of rebounds carry with them a very bullish kind of message, but those messages have become obscured and haven’t really found themselves to be accurate predictors of the market’s direction.

That direction has been equally obscure of late and market health has really been called into question as the NASDAQ, and especially the greatest of the “Momentum” stocks have come under attack.

Just as those had been sure things during their climbs higher, most every sure thing sees its time come to an end. In the case of these kind of high fliers it gets a little unnerving when the word “bubble” starts being tossed around with such great frequency.

Generally, the more that climb onto the bandwagon the more sense it makes to just walk, the bubble thing is often very prescient, because it’s just not talk, but it’s also recognition of a pattern. That is the sudden reversal of fortunes in stock moves among the faddiest of stocks and the size of those movements.

As with many stocks that see reversals, such as Coach, there’s enough of a history to suggest that shares will recover in some short time frame, or at least trade in a stable fashion at a new lower level. It’s usually not correct to refer to such stocks as value traps, because their value tends to return or be re-established.

But in the case of these high fliers, there is no such individual history. Yet people believe that when they experience large drops it’s a chance to get in at a reasonable price.

History shows that many of these don’t recover and when taken in their totality, they may be a harbinger for things to come in the broader market.

As I mentioned yesterday, this will be an interesting week.

Yesterday was an appropriate start for that kind of a week and there’s more to come as earnings start coming our way.

Stay tuned and patient.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Week in Review – April 21 – 25, 2014

 

Option to Profit Week in Review
April 21 – 25, 2014
 
NEW POSITIONS/STO NEW STO ROLLOVERS CALLS ASSIGNED/PUTS EXPIRED CALLS EXPIRED/PUTS ASSIGNED CLOSED
4 / 5 2 5 3*  / 1 4   / 0 0

    

Weekly Up to Date Performance

April 21 – 25, 2014

New purchases for the week beat the time adjusted S&P 500  by 1.2% and also surpassed the unadjusted S&P 500 index by 0.8% during a week that ended badly on more geo-political concerns.

The market lost all of its moderate gains for the week on its final day of trading and finished with an adjusted loss for the we
ek of 0.4% and an unadjusted loss of 0.1%. On the other hand, new positions gained 0.7%.

As often happens when the overall market is week the existing positions beat the overall market after trailing last week and disrupting a string of weeks in which it had beaten the market. This week it beat the overall market by a relatively large 0.7%

For positions closed in 2014 the performance exceeded that of the S&P 500 by 1.6%. They were up 3.3% out-performing the market by 93.9%.

While it wasn’t a good way to end the week, it was finally one that made sense, given the renewed tension overseas.

What is still surprising is that past periods of heightened tension, that coincidentally perhaps came on Fridays, didn’t really erode the market, other than for one time. That time, however, saw most of the losses recouped in the final 30 minutes of trading, which was really unusual.

This time around it was just a dour day from the beginning as the selling was much worse than the pre-open market would have had you believe was in store.

As usual, the real value of a covered option strategy becomes clear when the market is struggling or flat or even mildly to moderately higher. That leaves only truly strong market performance that’s difficult to match. While that was the norm for 2013 it may be time to remember that isn’t the historical norm. Generally stocks go up and down, only occasionally doing so in a sustained manner.

In case you haven’t noticed, this isn’t 2013.

In the past 5 years we’ve seen two of those large sustained moves, one in each direction.

I know which direction I prefer, but I also know which direction wasn’t as bad as it should have been.

I have mixed feelings about this week, especially with Friday’s disappointment.

Although it didn’t snatch any positions from the jaws of assignment, I wasn’t able to get much in the way of new coverage on existing positions this week. While there was some reasonable rollover activity and generating some income for the forward week, I still would have preferred more assignments and having more cash on the sidelines. I also would have liked more in the way of ex-dividend plays, but the past few weeks have been a combination of slim pickings and poor timing in terms of price movements right before those ex-dividend dates.

At least it was fortuitous, maybe serendipitous, that most of the week’s rollovers were able to get done on Thursday, especially since Friday is the much more common time to do so. For those following along on my personal trades the same goes for rolling over some of those puts.

What a difference a day makes. Who knew?

< span style="font-family: arial, helvetica, sans-serif; font-size: medium;">All in all positions faired reasonably well, but it’s really clear that companies are taking it on the chin when earnings aren’t meeting expectations, or even worse, when offering diminished guidance. That speaks to a very wary market and it’s not as if money from one sector is rolling into another one.

My sense is that money that’s fleeing is partially going into traditional safety areas, but also going off to the side. While I don’t generally want to be with the crowd, I have no argument with setting some money aside. I just wish that this week would have allowed me to join them in a more meaningful way.

The optimist sees that sideline cash as money ready to drive the market higher. The pessimist sees everything as a negative, so I won’t even venture a guess as to what degree they read this weakness and wariness.

Next week is already populated with a number of expiring positions so I will likely be looking for opportunities to sell contracts for the following week, as was done this week for all other than the Facebook puts.

What I don’t know is how willing I’ll be to add too many new positions as cash is available, but definitely beginning to run low and beginning to test my comfort level.

Hopefully it will be a quiet weekend and cooler heads prevail in Russia and Ulkraine, but no one can feel very secure when having to rely on the behavior of others.

That’s what I continually told myself when I would leave my kids home alone , telling them not to touch the fireworks and hypodermic syringes I would routinely leave scattered on the kitchen table.

I wonder if they listened?



 

     

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

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



New Positions Opened:  BX, FB (puts), JPM, KSS, TXN, UNH

Puts Closed in order to take profits:  none

Calls Rolled over, taking profits, into the next weekly cycle:  BBY, GPS, LOW, MOS

Calls Rolled over, taking profits, into extended weekly cycle:  EBAY (5/9)

Calls Rolled over, taking profits, into the monthly cycle:  none

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

Calls Rolled Up, taking net profits into same cyclenone

New STO:  BMY, RIG

Put contracts sold and still open: none

Put contracts expired: FB

Put contract rolled over: none

Long term call contracts sold:  none

Calls Assigned:   BMY*, CSCO, HFC (* will query subscribers on Monday to see if BMY assigned, having closed at $50.51)

Calls Expired:   C, LULU, MA, VZ

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:  LOW (4/21 $0.18), BX (4/24 $0.35)

Ex-dividend Positions Next Week:  none

 

 

For the coming week the existing positions have lots t
hat still require the sale of contracts:   AGQ, C, CLF, DRI, FCX, FDO, GM, IP, JCP, LULU, MA, MCP, MOS,  NEM, PBR, PM, RIG, TGT, VZ, WFM, WLT, 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.



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