Daily Market Update – June 30, 2014

 

 

 

Daily Market Update – June 30, 2014 (Close)

A 3 1/2 day trading week that ends with the Employment Situation Report as many of the big boys head out to the Hamptons early to start the summer can make for a quiet trading week.

In volume, but not necessarily in outcome.

Other than some surprise that might be contained in the monthly numbers reported Thursday morning, there really isn’t much that should move markets, but you can never tell what kind of anomalous moves can be found during light volume trading.

While last week seems as if the market was already on vacation this week it definitely becomes reality and my expectation isn’t to be doing too much trading.

For most of today it seemed as if most everyone had gone away as well, even as the market drifted lower in the final hour after having spent the day in a pretty tight trading range.

This was one of those days that I could have done something else or maybe tried multi-tasking, even though there were a few, not terribly exciting trades to be made.

Coming off a forgettable week I would have loved to see a return to the ability to sell calls on existing positions rather than aggressively adding new positions. With only a handful of positions expiring this week and with premiums reflecting a much shorter week it’s a little more challenging to find any opportunities that will expire this week. That may result in adding on to the list of positions set to expire next week, as that same challenge was present last week when looking for rollovers.

With sufficient cash to start the week I didn’t mind bringing the level down to about 20%. That would have meant 5 to 6 trades, but I just don’t believe that will end up being the case. I’m actually stunned that even three opening trades were made, but even those may have simply been done to try and fight off boredom.

One thing that I would like to see, but have now been waiting a while, is any kind of market commitment toward direction. That could be a higher or a lower direction, but at least a short term path. Maybe tomorrow, because today didn’t quite live up to that expectation.

This morning’s pre-open futures didn’t help to give much of an indication of any commitment, as moderation continued to be the theme. As so often has been the case lately, the early indication is for a slightly negative opening and most often that has gotten into the habit of leading to a meandering day.

And that’s exactly what today was.

With weeks as short as this one just about the only way to capture a reasonable premium on a weekly trade is to be able to make it fairly early in the week’s opening session, as the remaining time until expiration ticks away very quickly.

With some nice dividends this week it may simply be a good time to add to some of those positions, such as in JP Morgan and Bristol Myers, particularly as they trade off from their recent highs and their sectors may be in line for the next rotation, as that has continually been the market’s character as it reaches new highs but its component pieces aren’t always following along as you would normally expect.

That might make it a very easy kind of week.

But as usual, it’s not terribly often that a plan really goes as envisioned.

While clarity is always a nice thing to have I don’t think that vision will in any way be advanced this week.

Hopefully, there will at least be opportunity to generate some income, with or without much in the way of new purchases.

 

 

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Daily Market Update – June 30, 2014

 

 

 

Daily Market Update – June 30, 2014 (9:00 AM)

A 3 1/2 day trading week that ends with the Employment Situation Report as many of the big boys head out to the Hamptons early to start the summer can make for a quiet trading week.

In volume, but not necessarily in outcome.

Other than some surprise that might be contained in the monthly numbers reported Thursday morning, there really isn’t much that should move markets, but you can never tell what kind of anomalous moves can be found during light volume trading.

While last week seems as if the market was already on vacation this week it definitely becomes reality and my expectation isn’t to be doing too much trading.

Coming off a forgettable week I would love to see a return to the ability to sell calls on existing positions rather than aggressively adding new positions. With only a handful of positions expiring this week and with premiums reflecting a much shorter week it may be challenging to find any opportunities that will expire this week. That may result in adding on to the list of positions set to expire next week, as that same challenge was present last week when looking for rollovers.

With sufficient cash to start the week I don’t mind bringing the level down to about 20%. That would mean 5 to 6 trades, but I just don’t believe that will end up being the case.

One thing that I would like to see, but have now been waiting a while, is any kind of market commitment toward direction. That could be a higher or a lower direction, but at least a short term path.

This morning’s pre-open futures aren’t helping to give much of an indication as moderation continues to be the theme. As so often has been the case lately, the early indication is for a slightly negative opening and most often that has gotten into the habit of leading to a meandering day.

With weeks as short as this one just about the only way to capture a reasonable premium on a weekly trade is to be able to make it fairly early in the week’s opening session, as the remaining time until expiration ticks away very quickly.

With some nice dividends this week it may simply be a good time to add to some of those positions, such as in JP Morgan and Bristol Myers, particularly as they tradeoff from their recent highs and their sectors may be in line for the next rotation, as that has continually been the market’s character as it reaches new highs but its component pieces aren’t always following along as you would normally expect.

That might make it a very easy kind of week.

But as usual, it’s not terribly often that a plan really goes as envisioned.

While clarity is always a nice thing to have I don’t think that vision will in any way be advanced this week.

Hopefully, there will at least be opportunity to generate some income, with or without much in the way of new purchases.

 

 

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Dashboard – June 30 – July 3, 2014

 

 

 

 

 

Selections

MONDAY:  A very shortened trading week finishing off with the Employment Sitiuation Report. With low volume likely there could be some exaggerated moves ahead

TUESDAY:     A little early morning strength would be nice if spilling over to and then growing in the regular session, in what still should be a quiet day.

WEDNESDAY:  This morning’s ADP Report leads to tomorrow’s Employment Situation Report which leads to a long, long wekend. Yesterday’s low volume rally awaiting some reason to continue, although not as if it needed any reason to start

THURSDAY:    Important statistics due, shortened trading day and low volume. What’s not to like? All bets off until Employment SItuation Report is released and then whoever hasn’t already left for the holiday will rule the day.

FRIDAY



 



                                                                                                                                           

Today's TradesCash-o-Meter

 

 

 





 “SNEAK PEEK AT NEXT WEEK” APPEARS ON FRIDAYS

Sneak PeekPie Chart Distribution

 

 

 

 

 

 

 

Weekly Summary

  

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Weekend Update – June 29, 2014

There wasn’t much going on last week, but for what there was, you can be certain that there was a role played by some branch of government.

By no means I am a libertarian and I certainly understand the need for a beneficent government to protect those things that we hold dear, from assets to zoning, but this past week government seemed to be the singular driver of news during a week that was otherwise devoid of news.

For starters, we received yet another revision to the first quarter GDP, indicating a 2.9% decrease. That’s not the sort of growth that engenders much confidence in the economy, but it’s also the sort of report that doesn’t engender much confidence in the reporter.

Certainly for a market that is said to discount the future, learning that what you believed to have been true was patently false has to also shake confidence, particularly when you begin to wonder whether your own government’s reporting of economic data is any better than that from the nation we so readily disparage for the veracity of its reporting – China.

With the economic calendar so important each week, this coming week’s early Employment Situation Report, which has been fairly inconsequential for the past 6 months, may prove otherwise if either it offers data consistent with the  abysmal GDP statistic or is qualified by large downward revisions of previous months.

But with objective data reporting out of the way, the early part of the week was focused on Supreme Court rulings that were scheduled to be released as the current session comes to its end. The decision regarding the novel technology behind the Aereo product that delivers broadcast transmission to any internet enabled device was ruled unconstitutional and any company with local broadcasting interests soared on the decision. Essentially, the Supreme Court said that an antennae that is leased and captures broadcasts is illegal, while an antennae that is purchased and captures broadcast television is not.

Then the Internal Revenue Service came into focus as it ruled favorably on Iron Mountain’s (IRM) request to convert to a REIT, which was especially surprising since it had tentatively given an adverse opinion last year. The result was a surge in share price confounding those who believed that the price already fully discounted the opinion. This ruling could open the way for others to consider separating that portion of their business that generates revenues in corporate owned facilities into a REIT and enjoy those tax benefits.

Then there was the matter of the refiners that awoke Thursday morning to the shocking news that the US Department of Commerce was going to allow essentially unrefined oil to be exported, even without a license, thereby likely reducing margins at the refiners. That sector saw some brutalized victims and some clear victors from the decision.

Then there was the case of Verizon (VZ) that had a contract in Germany canceled for fears that the NSA could use the devices as an easy conduit for surreptitiously gathering intelligence. 

Finally, Barclays (BCS) drew attention from local government as the New York State Attorney General’s office filed suit against Barclays claiming “fraud and deceit” in the manner their dark pool trading was executed. Of course, when there’s one cockroach you can be certain that there are more to be found, so the financial sector becomes more widely suspect as Barclays is scrutinized.

But to be clear, I was certainly on the side of government when Janet Yellen, just the previous week gave reason to believe that interest rates would remain low, thereby suggesting that equities would be a more advantageous investment vehicle than bonds. Unfortunately, as soon as this past week started, that news was old and long forgotten, as the message had no carry over to this week’s trading.

While some of last week’s events were scheduled, others came as a surprise in more than their content. Hopefully this week will be one when the hand of government will remain invisible and allow the market to trade on something that hasn’t been seen in a long while – fundamentals.

However, now isn’t the time to hold one’s breath and it’s not necessarily likely that next week’s beginning of another earnings season will be the time to do so, either.

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

Holly Frontier (HFC) was one of those brutalized refiners whose shares plummeted upon the news that certain unrefined products could now be exported. The share drop has brought Holly Frontier to the lower end of the range in which it had been trading and in which I currently own shares. I’ve done so on five occasions this year and have watched shares go up and down in alternating quantum stages during that time. While I believe the reaction to the news may have been overdone and would like to add shares, as Holly Frontier has an appealing option premium, regular dividend and routinely pays a special dividend, as well, I would likely await to see some stability in its price as the week opens before making the decision.

I’ve been waiting a while to re-purchase shares of DuPont (DD) and after its surprise announcement of a lower earnings forecast on reduced seed sales that time may have arrived. At one time DuPont was a very frequent holding, but it’s been nearly two years since that last purchase. Since that time DuPont has started offering weekly options and much more recently expanded weekly options, greatly increasing its appeal. Like many other stocks that I consider for purchase, DuPont has that nice troika of option premium, dividend and price stability that can serve to minimize some market tremors.

Another major decliner this week was Dollar General (DG), which plunged upon news that its CEO was planning to retire sometime in 2015. Presumably, the rational for that plunge was that the company was therefore, less likely to be involved in a buyout or merger with Family Dollar Stores (FDO) as has been rumored, in the near term.

That doesn’t really seem to make very much sense to me. If the union of those two companies makes sense, as many believe that it does for both companies, it’s not terribly likely that a company would giv
e up on the idea and simply go on hiatus. They would most certainly get the process moving at an appropriate time, while ensuring that CEO succession was closely aligned with the objectives defined by the board, which will continue to be chaired by its current CEO who has indicated he would stay on during the transition period.

I actually purchased some shares in the final couple of hours on Friday in the belief that I could get a quick assignment while shares recovered and anticipated doing another purchase this coming week.

Instead, shares stumbled while trading in a wide range in the final hour and I eventually rolled over shares. However, I think that the reaction was very much not only an over-reaction, but also the wrong reaction to what was really benign news. That leaves me in a position to consider further adding shares this week.

Verizon seems to be paying a price for the US government’s alleged spying on German Prime Minister Angela Merkel and is reportedly losing government contracts in Germany to Deutsche Telecom (DT) over concerns that Verizon cell phones may be eminently capable of doing the NSA’s bidding overseas. A late day recovery restored shares above $49, but I would be anxious to purchase shares if approaching that level again, mindful of its ex-dividend date the following week.

The potential dividend payers for the week are Bristol Myers Squibb (BMY), Medtronic (MDT) and Sysco (SYY).

Bristol Myers is a frequent holding and I currently own two lots, having saved one from assignment specifically because I wanted to retain the dividend this week. It has traded in a range recently as some good news about a drug used in the treatment of melanoma has lifted shares from the low end of that range that I believe may carry shares back toward the $52 range if the overall market doesn’t fade. 

Medtronic has been much in the news lately due to its proposed $43 billion buyout of Covidien (COV), an Ireland based company. While inversions are increasingly in our lexicon these days, this merger makes sense on more than just a tax basis.

Trading near its yearly highs isn’t generally a place I want to be when opening a position, but I don’t foresee any near term threat to Medtronic’s share price and it does offer a decent dividend, made more appealing if shares are assigned relatively quickly. 

Sysco is just one of those companies that is everywhere you probably don’t always want to be. It’s non-flashy, utilitarian and below the radar, yet it is fairly indispensable and reliable in terms of what if offers to a broad range of customers. Shares have only recently begun trading weekly and expanded weekly options and while offering a nice dividend and option premium, also offers some opportunity for share appreciation, as well.

Finally, Whole Foods (WFM) also goes ex-dividend on July 1, but purchasing for the purposes of capturing the paltry dividend may be as bad of an idea as it has been for me to have purchased shares in the past. I currently own shares and have watched them tumble as the company faced increasing competition, bad weather and significant expansion efforts. In addition, an occasional comment too many and too controversial by one of its co-CEOs does nothing to help it recover its former glory.

Whole Foods is one of those rare companies that has previously recovered its lost glory, although it did take nearly 7 years to return to its 2005 price peak. I don’t really have the kind of patience, but the extent of the climb isn’t as steep as in the past.

I think that it’s bad news is behind it and it has shown some stability at its current price. While I often like to purchase shares after a price drop, especially if I already own shares, I haven’t found the reason to do so with Whole Foods while watching its value erode.

Unless there’s a report coming from government agencies next week citing health hazards of organic food, I’m finally ready to add to my Whole Food holdings and may as well take that puny dividend for my troubles.

Traditional Stocks: DuPont, Holly Frontier, Verizon, Whole Foods

Momentum: Dollar General

Double Dip Dividend: Bristol Myers Squibb (7/1), Medtronic (7/1), Sysco (7/1)

Premiums Enhanced by Earnings: none

 

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.

 

 

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Week in Review – June 23 – 27, 2014

 

Option to Profit Week in Review
June 23 – 27,  2014
 
NEW POSITIONS/STO NEW STO ROLLOVERS CALLS ASSIGNED/PUTS EXPIRED CALLS EXPIRED/PUTS ASSIGNED CLOSED
3 / 4 0 7 1  / 0 4  / 0 0

    

Weekly Up to Date Performance

June 23 – 27, 2014 

New purchases for the week beat the unadjusted S&P 500 by 0.4% and surpassed the adjusted index by 0.3%

The market did absolutely nothing for the week and may as well have extended its July 4th vacation and just stayed in the Hamptons all week long.

Another week of a minimal number of new positions saw them go 0.3% higher while the overall market was down 0.1 % on an unadjusted basis and 0.1% higher on an adjusted basis.

With only one assignment this week performance of positions closed in 2014 didn’t change very much and continue to out-perform the S&P 500 performance by 1.4%. They were up 3.4% out-performing the market by 69.8%. 

This was one of those weeks that the entire market should have just taken a vacation.

It was about as mediocre as you can get and so far the expression “Sell in May and go away” may turn out to be accurate for the first time in years.

The week was primed to start on an up note coming off of a week that had been buoyed by the Federal Reserve and that really had no forward looking headwinds other than its lofty height.

Maybe it’s the gravity that was the restraining force this week but the trading was more directionless than anything else, not really reflecting any inherent weakness or being shackled by any particular economic weakness or external threat.

Other than a series of government interventions that resulted in some significant sector movements there was absolutely nothing else of any importance this past week and given that next week is just a 3 1/2 day trading week, it’s not too likely that anything on the schedule will have much of an impact.

That may include the Emplotyment SItuation Report which is being released on a Thursday due to the Friday holiday. However, any indication that the revised GDP numbers may have more than just a relationship to bad weather could make the payroll report highly significant for the first time in a very long time, but I don’t think that will turn out to be the case.

Despite another incredible revision in the GDP, the employment numbers have been reasonably accurate and they ahve been fairly consistent, although you do have to wonder when that growth in the work force will translate into something readily observable in the retail marketplace.

But that’s next week.

This week was another in a string of disappointing weeks. With very little trading activity opening new positions, the back and forth of the market, with no real conviction left no opportunity to find new cover for uncovered positions.

The only positive that I can find from the week is the ability to rollover as many positions as we did, but even with that there were 4 new postions added to the uncovered list, as they expired today.

Lately, with the volatility so low there have been times that I would rather see the expiration thatnto take on the cost of closing out a position in the rollover process, because the forward week’s premiums are just so low compared to the expiring week’s premiums.

One such example was Pfizer. Despite some significant moves during the course of the week, up and down, its forward premium for next week and the week after were so low that the cost of rolling over became highly signicant, even if trading in volume.

The same was the case with Dow Chemical that fell in sympathy with DuPont, who surprised everyone with their reduced guidance at the market’s close on Thursday.

What you may have noticed is that most of the rollovers this week by passed the July 3rd expiration and we
nt to the July 11th. That means that with next week there is opportunity to still populate the July 3rd list of expirations, the following week or the monthly. However, even though next week is a very shortened week, there may be greater advantage to looking at July 3 expirations because they may have comparable premiums to those with longer time frames.

Bring back volatility and that will stop being the case.

Hopefully next week will be more definitive. Ultimately, when it comes to assessing a given week I don’t particularly care whether it is up or down, as long as it helps to drive lots of activity, because it’s all about milking the market and existing and new positions to generate as much additional money as possible. With weeks like this past one, even if the bottom line increases, there’s no particular glee if money can’t be skimmed from the assets without reducing them.

While I’m lazy, I want my stocks to work hard. This week they didn’t work very hard.

I may spend this weekend trying to think of an equivalent action to the ones taken by the guards in “Cool Hand Luke,” when one of the inmates didn’t give him a good day’s work.





 

     

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:  DOW, JPM, KSS

Puts Closed in order to take profits:  none

Calls Rolled over, taking profits, into the next weekly cycle:  KSS

Calls Rolled over, taking profits, into extended weekly cycle:  BMY (7/11), EBAY (7/11), EBAY (7/11), GM (7/11), MA (7/11)

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:  none

Put contracts expired: none

Put contract rolled over: BBBY (7/11)

Long term call contracts sold:  none

Calls Assigned:  LVS

Calls Expired:   C, EBAY, HFC, PFE

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: DOW (6/26 $0.37)

Ex-dividend Positions Next Week:  BMY (7/1 $0.36), JPM (7/1 $0.40), WFM (7/1 $0.12)

 

 

For the coming week the existing positions have lots that still require the sale of contracts:   AGQ, BMY, C, CLF, COH, EBAY, FCX, HFC, JCP, LULU, MCP, MOS,  NEM, PFE, PBR , RIG, TGT, WFM, WLT (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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Daily Market Update – June 27, 2014

Daily Market Update – June 27, 2014 (8:30 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:

Assignment:  LVS

RolloverBBBY (puts),  DOW, MA

Expiration:   C, EBAY, HFC, PFE

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

 

 

 

 

 

 

 

 

 

 

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Daily Market Update – June 26, 2014 (Close)

 

 

 

Daily Market Update – June 26, 2014 (Close)

Yesterday was really a day that had government imprints on just about everything from before the opening bell until after the closing bell.

It started with a government decision regarding oil exports that significantly hurt the refiners across the board.

Then came the Supreme Court decision that may have killed off Aereo and its technology while boosting the networks and local broadcasters.

Finally, there came an IRS ruling in favor of Iron Mountains quest to be considered a REIT. That battle and open question had been going on for at least three years and the sudden spike in its option premiums suggested that some kind of decision was forthcoming.

It would otherwise likely have been a very quiet day if not for those stories that continue this morning with allegations by the New York State Attorney General against Barclays and its “dark pools,” Most people would believe that whether a violation of the law or not, Barclays wouldn’t be the only one involved.

Like they say, there’s usually more than one cockroach, so that may explain some weakness to all of the others that wouldn’t be likely to let a good scheme go unused. They certainly wouldn’t let Barclays be the only one to prosper from doing something of questionable ethics or legality.

The latter two of yesterday’s decisions were known to be coming, it just wasn’t exactly clear when they would be announced, nor what the decisions would be. The oil exporting rules came as a complete surprise, not just in timing, but in content, as well.

Ultimately, whether you’re on the right side of the wrong side of a government decision it’s an unsettling way to go about things. You really can’t get any closer to pure gambling as you’re fully dependent on a decision that is going to move markets in one direction or another, with very little chance of leaving the stock unchanged.

Even worse, there are no leaks or well placed rumors to give any ideas of what is to come. Watching SBGI in the days before the decision was released was pretty laughable as the shares alternated between going higher and going lower on multiple occasions on an intraday basis. People were simply guessing and rushing to place their bets.

While that may have been the case for IRM and SBGI, it wasn’t really part of the equation for those with positions in the oil refiners. Doing a quick glance at four of the major refiners there was a market capitalization d
ecline of more than $10 billion on yesterday’s unanticipated news and then its unexpected content.

Today doesn’t seem as if yesterday’s theme will have legs, as it’s a new day and one beginning to appear as if it will have no catalysts nor any new big stories, save what may further develop from the Attorney General’s office.

Unfortunately, lately bad news and the over the top reactions are much slower in rebounding than I can remember during any upward moving market.

While government intervention is certainly needed it can raise havoc with markets whether through direct intervention or indirect. It’s much easier to navigate the markets when the intervention is below the radar and more geared toward creating a liquid and credible environment for trading.

Yesterday was a bit heavy handed. In the case of Aereo, it’s not even very clear that the Justices understand technology nor considered the history of the development of television, its transmission and reception. Their decision, as reflected in Justice Breyer’s eyes, was as much about definitions and drawing parallels to existing models as through an interpretation of the law.

For those old enough to remember “rabbit ears.” the Aereo is essentially a  new iteration of rabbit ears that allows transmission through public airwaves to be delivered through an internet connection. They charge a monthly fee for that service. The broadcasters claim that they are pirating protected content and charging for that content.

Go back 60 years as television was being introduced and those broadcasts over the public airwaves were worthless without antennae. The only difference between Aereo and those antennae makers of days past is that the latter didn’t lease out their products. They sold them. Had they chosen to follow a leasing model today Aereo would be nothing more than a mobile version of an old product and sales model. You paid for the product that captured protected content back then and Aereo was just evolving the relationship to a new device, unforeseen 60 years ago.

But because the past was as it was the future will likely be deprived of a new technology and some businesses suffer and others prosper, as a result.

And investors, too.

Today, though, turned out to be one of those days that wasn’t any where near as bad as it could have been, as the market showed a nice recovery from early losses. Maybe that will have some legs and take us out for the week on a positive note.

At least today there was some opportunity to rollover some positions and get into decent position to maybe get some more accomplished tomorrow if there’s any residual strength left over to end the week.

 

 

 

 

 

 

 

 

 

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Daily Market Update – June 26, 2014

 

 

 

Daily Market Update – June 26, 2014 (9:00 AM)

Yesterday was really a day that had government imprints on just about everything from before the opening bell until after the closing bell.

It started with a government decision regarding oil exports that significantly hurt the refiners across the board.

Then came the Supreme Court decision that may have killed off Aereo and its technology while boosting the networks and local broadcasters.

Finally, there came an IRS ruling in favor of Iron Mountains quest to be considered a REIT. That battle and open question had been going on for at least three years and the sudden spike in its option premiums suggested that some kind of decision was forthcoming.

It would otherwise likely have been a very quiet day if not for those stories that continue this morning with allegations by the New York State Attorney General against Barclays and its “dark pools,” Most people would believe that whether a violation of the law or not, Barclays wouldn’t be the only one involved.

The latter two of yesterday’s decisions were known to be coming, it just wasn’t exactly clear when they would be announced, nor what the decisions would be. The oil exporting rules came as a complete surprise, not just in timing, but in content, as well.

Ultimately, whether you’re on the right side of the wrong side of a government decision it’s an unsettling way to go about things. You really can’t get any closer to pure gambling as you’re fully dependent on a decision that is going to move markets in one direction or another, with very little chance of leaving the stock unchanged.

Even worse, there are no leaks or well placed rumors to give any ideas of what is to come. Watching SBGI in the days before the decision was released was pretty laughable as the shares alternated between going higher and going lower on multiple occasions on an intraday basis. People were simply guessing and rushing to place their bets.

While that may have been the case for IRM and SBGI, it wasn’t really part of the equation for those with positions in the oil refiners. Doing a quick glance at four of the major refiners there was a market capitalization decline of more than $10 billion on yesterday’s unanticipated news and then its unexpected content.

Today doesn’t seem as if yesterday’s theme will have legs, as it’s a new day and one beginning to appear as if it will have no catalysts nor any new big stories, save what may further develop from the Attorney General’s office.

While government intervention is certainly needed it can raise havoc with markets whether through direct intervention or indirect. It’s much easier to navigate the markets when the intervention is below the radar and more geared toward creating a liquid and credible environment for trading.

Yesterday was a bit heavy handed. In the case of Aereo, it’s not even very clear that the Justices understand technology nor considered the history of the development of television, its transmission and reception. Their decision, as reflected in Justice Breyer’s eyes, was as much about definitions and drawing parallels to existing models as through an interpretation of the law.

For those old enough to remember “rabbit ears.” the Aereo is essentially a  new iteration of rabbit ears that allows transmission through public airwaves to be delivered through an internet connection. They charge a monthly fee for that service. The broadcasters claim that they are pirating protected content and charging for that content.

Go back 60 years as television was being introduced and those broadcasts over the public airwaves were worthless without antennae. The only difference between Aereo and those antennae makers of days past is that the latter didn’t lease out their products. They sold them. Had they chosen to follow a leasing model today Aereo would be nothing more than a mobile version of an old product and sales model. You paid for the product that captured protected content back then and Aereo was just evolving the relationship to a new device, unforeseen 60 years ago.

But because the past was as it was the future will likely be deprived of a new technology and some businesses suffer and others prosper, as a result.

And investors, too.

 

 

 

 

 

 

 

 

 

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Daily Market Update – June 25, 2014 (Close)

 

 

 

Daily Market Update – June 25, 2014 (Close)

It’s often said that the market discounts the future and reflects the situation six months from now.

With another revision of the first quarter’s GDP now indicating a negative 2.9% GDP if you could go back in time by about 6 months, I would bet you that those investing would be pretty unhappy to discover that they were following a fantasy and plowing their money into that fantasy.

Except that there may now be much consequence for that kind of misrepresentation of the health of the economy. And if you didn’t believe that could possibly have been the case, just look at today’s market, which shook off early concerns about the revisions and closed with a decent gain, despite the lack of anything resembling good news.

With all of the reasons to believe that the economy had been growing, albeit slowly, the market chugged along in anticipation that it would keep going that way. Except it turns out that’s not really the way it had been going.

The real optimists would shrug this off and simply say that six months from now our economy will be even more robust than it is today and that alone makes it reasonable to invest in stocks, as it’s all about the future and not the past.

You do have to wonder whether such large revisions begin to put some seminal metrics into the same league as those provided, and regularly derided by us, by the Chinese government. Those numbers are routinely dismissed despite the fact that they will move the markets on the day of their release and then so frequently those moves are quickly reversed as investors remember that the data often has no basis in fact.

This morning as the revision came out the immediate response was negative, but that fairly quickly corrected itself. Coming off yesterday’s very surprising loss that accelerated into the close you might believe that any negative news would be magnified, but that’s not appearing to be the case.

Approaching mid-week, this is shaping up to be one of the slowest trading weeks that I can recall, especially when having so much to spend.

What I thought were relative bargains yesterday got caught up in the sell-off that characterized the afternoon and that has to be a concern for additional positions that may be considered for purchase. Given the current environment it would be nice to see something tangible to provide confidence that the market can sustain itself at these levels.

Today’s digestion of the bad news should have been one of those signs, but it just didn’t have a really positive feeling about it.

Despite assurances from the Federal Reserve that would favor stocks over bonds, the deluge of IPO offerings leaves a bad taste for many who remember that as being a clarion call for bad things to come. Certainly, for those who look at the need for confirmatory volume for any kind of move, there hasn’t been any of that sort of thing.

While there may be a basis for that belief the rise of the market has been fairly slow, regular and sustained and is
n’t the kind that could be grouped together with past speculative bubbles, it’s hard to escape that feeling.

While the Employment Situation Report hasn’t been very important lately, I think that next week’s report may conceivably become a market mover if it doesn’t significantly advance the thought that there are many more people in a position to spend their money and support economic growth.

Although I think that retail is strengthening and that should reflect increasing consumer ability to make discretionary purchases, the numbers coming along haven’t done much to confirm that belief.

With what remains of this week, I hope that there is some opportunity to rollover positions or get some assignments, but my preference at this point would be to see rollovers as a means of generating income stream, rather than adding to the already ample cash reserve.

To its credit, given the horrible revision of this morning and sell-offs in Asia, the preliminary read on this morning’s market wasn’t terribly bad, so you can never really know what awaits. 

Turning away from the stock ticker may be done only at peril, but by the same token trying to apply a logical frame of mind in understanding what is going on may be equally perilous.

 

 

 

 

 

 

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Daily Market Update – June 25, 2014

 

 

 

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

It’s often said that the market discounts the future and reflects the situation six months from now.

With another revision of the first quarter’s GDP now indicating a negative 2.9% GDP if you could go back in time by about 6 months, I would bet you that those investing would be pretty unhappy to discover that they were following a fantasy and plowing their money into that fantasy.

Except that there may now be much consequence for that kind of misrepresentation of the health of the economy.

With all of the reasons to believe that the economy had been growing, albeit slowly, it was believed to be growing and the market chugged along in anticipation that it would keep going that way.

The real optimists would shrug this off and simply say that six months from now our economy will be even more robust than it is today and that alone makes it reasonable to invest in stocks.

You do have to wonder whether such large revisions begin to put some seminal metrics into the same league as those provided, and regularly derided, by the Chinese government. Those numbers are routinely dismissed despite the fact that they will move the markets on the day of their release and then so frequently those moves are quickly reversed as investors remember that the data often has no basis in fact.

This morning as the revision came out the immediate response was negative, but that fairly quickly corrected itself. Coming off yesterday’s very surprising loss that accelerated into the close you might believe that any negative news would be magnified, but that’s not appearing to be the case.

Approaching mid-week, this is shaping up to be one of the slowest trading weeks that I can recall, especially when having so much to spend.

What I thought were relative bargains yesterday got caught up in the sell-off that characterized the afternoon and that has to be a concern for additional positions that may be considered for purchase. Given the current environment it would be nice to see something tangible to provide confidence that the market can sustain itself at these levels.

Despite assurances from the Federal Reserve that would favor stocks over bonds, the deluge of IPO offerings leaves a bad taste for many who remember that as being a clarion call for bad things to come.

While there may be a basis for that belief the rise of the market has been fairly slow, regular and sustained and isn’t the kind that could be grouped together with past speculative bubbles.

While the Employment Situation Report hasn’t been very important lately, I think that next week’s report may conceivably become a market mover if it doesn’t significantly advance the thought that there are many more people in a position to spend their money and support economic growth.

With wh
at remains of this week, I hope that there is some opportunity to rollover positions or get some assignments, but my preference at this point would be to see rollovers as a means of generating income stream, rather than adding to the already ample cash reserve.

To its credit, given the horrible revision of this morning and sell-offs in Asia, the preliminary read on this morning’s market isn’t terribly bad, so you never really do know what awaits.

Turning away from the stock ticker may be done only at peril.

 

 

 

 

 

 

Click here for reuse options!
Copyright 2014 TheAcsMan