Monthly Archives: June 2014

Daily Market Update – June 12, 2014 (Close)

After a rare triple digit loss and no new record being set, the morning’s market doesn’t appear to be quite ready to follow through with more of the same. It doesn’t really appear to be ready to do much of anything, actually.

There still remains no identifiable catalyst to move the market in either direction and if yesterday’s thesis was correct, that Eric Cantor’s primary election loss was the culprit for the market decline, there’s no real reason for continuing pessimism. Those kind of stories don’t usually have much in the way of lasting power, even if they were accurate in the first place.

On the other hand, it’s the unforeseen that really shake things up and today, the most likely culprit for the market ringing up another triple digit loss is the rapidity of the deterioration in Iraq.

When oil and precious metals start to look appealing that’s not the best of environments of stocks.

While the market has been by and large unexciting and moving in smallish kind of steps, the same can’t be said for individual stocks, especially when earnings are in focus.

Today it’s LuLuLemon.

It started yesterday when its founder, who arguably started a slide in shares months ago when he made comments that were very disparaging of potential and actual customers, decided to pull his support of the current Chairman of the Board, saying that his interests weren’t aligned with the “core values” of the company.

Every time Chip Wilson, the founder, seems to open his mouth, if you’re a shareholder you feel as if your core values were violated.

Yesterday was no different, and came one day before earnings were to be released.

The Board expressed their disagreement with the founder and stemmed yesterday’s loss, but this morning’s diminished guidance is punishing shares and adding to their already depressed levels.

This, without the added drama of an errant founder, has been the story of many stocks the past few earnings seasons.

Despite a market that has been climbing higher many stocks are left behind or sent into tailspins and are taking longer to recover than ever before. as the market moves higher it does so on the backs of stocks rotating in and out of favor rather than pulling most along higher to varying degrees.

While there may be something unhealthy at LuLuLemon a market not trickling down to its component members is also something that may not be as robust as it seem
s.

While the volatility continues to be interpreted as reflecting investor “complacency,” I think that it’s hard to accept that interpretation. Very few are taking anything for granted which is unlike other periods when markets were making new highs. There is much more nervousness than is being acknowledged and that has to include the professional investor community which is reportedly under-performing the broad market.

In the case of hedge fund managers they are lifting some of their traditional hedging techniques in efforts to catch up to the market, while at the same time increasing their exposure to adverse events by having done so.

That should give them plenty of reason to be nervous.

While those make me wary, it doesn’t make me overly nervous.

The lack of enthusiasm for this market has to be taken as some sort of positive sign, but it is still very difficult to justify committing all to the prospect of the crowd being wrong. The way today worked out it may be even more difficult making that commitment, but as is usually the case suddenly some positions start to look more appealing.

Does the situation in Iraq really make Lowes and MasterCard less desirable?

For now, there’s little reason to make a directional bet and little basis for the belief that there will be any kind of clear directional path.

At the moment I’m not willing to bet much new money and may even want to recycle less than the already low levels as assignments occur.

The next two days will be ones looking for the opportunities to rollover stocks, although there aren’t too many for this week and perhaps realize some assignments in preparation for next week’s monthly option cycle end.

Hopefully next Wednesday FOMC statement and ensuing press conference by Janet Yellen won’t disrupt prices too much and leave us in a good position to make some decisions for July 2014.

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

After a rare triple digit loss and no new record being set, the morning’s market doesn’t appear to be quite ready to follow through with more of the same. It doesn’t really appear to be ready to do much of anything, actually.

There still remains no identifible catalyst to move the market in either direction and if yesterday’s thesis was correct, that Eric Cantor’s primary election loss was the culprit for the market decline, there’s no real reason for continuing pessimism. Those kind of stories don’t usually have much in the way of lasting power, even if they were accurate in the first place.

While the market has been by and large unexciting and moving in smallish kind of steps, the same can’t be said for individual stocks, especially when earnings are in focus.

Today it’s LuLuLemon.

It started yesterday when its founder, who arguably started a slide in shares months ago when he made comments that were very disparaging of potential and actual customers, decided to pull his support of the current Chairman of the Board, saying that his interests weren’t aligned with the “core values” of the company.

Every time Chip WIlson, the founder, seems to open his mouth, if you’re a shareholder you feel as if your core values were violated.

Yesterday was no different, and came one day before earnings were to be released.

The Board expressed their disagreement with the founder and stemmed yesterday’s loss, but this morning’s diminished guidance is punishing shares and adding to their already depressed levels.

This, without the added drama of an errant founder, has been the story of many stocks the past few earnings seasons.

Despite a market that has been climbing higher many stocks are left behind or sent into tailspins and are taking longer to recover than ever before. as the market moves higher it does so on the backs of stocks rotating in and out of favor rather than pulling most along higher to varying degrees.

While there may be something unhealthy at LuLuLemon a market not trickling down to its component members is also something that may not be as robust as it seems.

While the volatility continues to be interpreted as reflecting investor “complacency,” I think that it’s hard to accept that interpretation. Very few are taking anything for granted which is unlike other periods when markets were making new highs. There is much more nervousness than is being acknowledged and that has to include the professional investor community which is reportedly under-performing the broad market.

In the case of hedge fund managers they are lifting some of their traditional hedging techniques in efforts to catch up to the market, while at the same time increasing their exposure to adverse events by having done so.

That should give them plenty of reason to be nervous.

While those make me wary, it doesn’t make me overly nervous.

The lack of enthusiasm for this market has to be taken as some sort of positive sign, but it is still very difficult to justify committing all to the prospect of the crowd being wrong.

For now, there’s little reason to make a directional bet and little basis for the belief that there will be any kind of clear directional path.

At the moment I’m not willing to bet much new money and may even want to recycle less than the already low levels as assignments occur.

The next two days will be ones looking for the opportunities to rollover stocks, although there aren’t too many for this week and perhaps realize some assignments in preparation for next week’s monthly option cycle end.

Hopefully next Wednesday FOMC statement and ensuing press conference by Janet Yellen won’t disrupt prices too much and leave us in a good position to make some decisions for July 2014.

.

Daily Market Update – June 11, 2014 (Close)

This morning’s pre-open trading brings something rarely seen lately.

The morning appeared to be ready to open with some moderate losses and as a result the volatility is actually creeping up just a bit from its all time low levels. It actually lasted that way, essentially unchanged from its initial near triple digit drop all throughout the day.

Always needing a reason to explain even that which has no need for explanation, this is so far being blamed on the anticipated legislative gridlock that would ensue as a result of the unexpected loss of Eric Cantor in yesterday’s Virginia 7th District Congressional primary.

That’s a stretch.

Besides, it’s not as if things would get noticeably more grid locked, as legislation didn’t exactly flow smoothly with Eric Cantor in a position of leadership. But as far as predicting the future impact of this event, it may be useful to realize that those who predicted an easy and runaway Cantor victory are now predicting the aftermath of the loss.

That sounds reasonable. I’d follow their forecasting to the end of the world.

If indeed that primary upset is to blame for some mild nervousness this morning, it shouldn’t last very long, particularly since no really large unresolved items remain on the legislative agenda that would be expected to adversely impact the markets or even individual stocks.

For all of the talk and controversy around immigration legislation there’s little reason to believe its passage, defeat or delay would in any way move the markets.

As far as those issues that would possibly impact markets, such as budgets, debt ceilings and government shutdowns the loss of Cantor and his replacement by a Tea Party member may simply be the stimulus to bring the traditional arms of both parties to the realization that they have to work together and actually show accomplishments rather than throw tantrums.

While this morning has seen a tiny increase in volatility, you now increasingly hear discussion of volatility and how its low level is making it difficult to find and execute trades, which is an especially big deal for those whose livelihood is based upon trading volume.

Ordinarily you would think that the market reaching new highs day in and day out would attract all sorts of money and drive volume higher and higher, but that just hasn’t been the case and unless there’s some sort of break-out higher, it doesn’t appear as if that’s going to change.

Being a Wednesday, my expectation is usually for a slow personal trading day. However, market weakness, if it continues into the session may have potentially offered some reason to  add new positions, but today it didn’t offer that many reasons.

I wasn‘t really counting on it, so I’m not too disappointed that nothing much happened today.

I don’t know if  Eric Cantor can say the same.

Daily Market Update – June 11, 2014 (9:00 AM)

This morning’s pre-open trading brings something rarely seen lately.

The morning appears to be ready to open with some moderate losses and as a result the volatility is actually creeping up just a bit from its all time low levels.

Always needing a reason to explain even that which has no need for explanation, this is so far being blamed on the anticipated legislative gridlock that would ensue as a result of the unexpected loss of Eric Cantor in yesterday’s Virginia 7th District Congressional primary.

That’s a stretch.

Besides, it’s not as if things would get noticeably more grid locked, as legislation didn’t exactly flow smoothly with Eric Cantor in a position of leadership. But as far as predicting the future impact of this event, it may be useful to realize that those who predicted an easy and runaway Cantor victory are now predicting the aftermath of the loss.

That sounds reasonable. I’d follow their forecasting to the end of the world.

If indeed that primary upset is to blame for some mild nervousness this morning, it shouldn’t last very long, particularly since no really large unresolved items remain on the legislative agenda that would be expected to adversely impact the markets or even individual stocks.

For all of the talk and controversy around immigration legislation there’s little reason to believe its passage, defeat or delay would in any way move the markets.

As far as those issues that would possibly impact markets, such as budgets, debt ceilings and government shutdowns the loss of Cantor and his replacement by a Tea Party member may simply be the stimulus to bring the traditional arms of both parties to the realization that they have to work together and actually show accomplishments rather than throw tantrums.

While this morning has seen a tiny increase in volatility, you now increasingly hear discussion of volatility and how its low level is making it difficult to find and execute trades, which is an especially big deal for those whose livelihood is based upon trading volume.

Ordinarily you would think that the market reaching new highs day in and day out would attract all sorts of money and drive volume higher and higher, but that just hasn’t been the case and unless there’s some sort of break-out higher, it doesn’t appear as if that’s going to change.

Being a Wednesday, my expectation is usually for a slow personal trading day. However, market weakness, if it continues into the session may offer some reason to  add new positions.

I’m not counting on it, but of Eric Cantor can lose, then anything may be possible.

Daily Market Update – June 10, 2014 (Close)

It’s a Tuesday, so the market is supposed to be going higher, except for the fact that as soon as anyone realizes that such a pattern seems to exist, it begins to break down.

So for the past couple of Tuesdays you wouldn’t have been well served by following that pattern, that like so many doesn’t really have much of a basis in anything logical or rational.

The problem, however, is that while we’ve been talking about that pattern as having been in place for the past couple of months, it actually has many, many years of data behind it lending support to the notion that Tuesdays are far better market days than logic would dictate.

Yesterday was the kind of day that you would have thought would be the logical outcome in a week that really has very little planned news releases or scheduled events. It started quietly in the pre-opening trading and continued that way throughout the session.

Other than the three Federal Reserve Governors that gave talks yesterday and who aren’t generally among the most influential of the various voices, there aren’t even any more such scheduled events the rest of the week to move markets.

To its credit the market did almost set another new high and almost stayed true to its Tuesday self, but probably was more influenced by the nothingness that is supposed to characterize this week.

While I’m always wary of weeks that have lots of scheduled events I think that I get more concerned with these kind of quiet weeks that almost seem to be a sort of vacuum. While scheduled events can and certainly do move markets, they’re usually not the catalysts for anything that’s really sustained.

The reason for that is that the market reacts to data, although sometimes the reaction itself is irrational, but the flow of new data immediately changes the mindset. So often you see conflicting data one day after a market mover and the market responds in a completely different direction, as if the previous data had never existed.

However, in a vacuum there is no data, You’re left with your own insecurities and fears and if anything sets off a reaction it can simply feed on itself with nothing of factual basis coming along the way to counteract the fear.

Not that I expect that to be the case this week, because if I did I would have really been stockpiling cash.

Instead, it’s just another reason to be wary of a market that continues to set new highs but does so in a very tentative manner and with very low volume.

I’m still willing to bring cash reserves down a bit but there aren’t too many positions beckoning. With nearly 100 that I follow it is difficult to make a compelling case as frequently as I would like, but it is getting easier and easier to resist the lure of having money in the bank that wants to go out and have a good time.

Someone has to pay the price when that happens on an indiscriminate basis. It’s often hard enough to have to pay the price when everything seems to be well thought out, but add to that giving in to primal needs and you have some major headaches in the making.

Today, my headache was dealing with a crashing server that started acting up yesterday.

Finally by about 3 PM, after intermittent outages that usually lasted for a minute or so it looks as if the replacement was installed, so hopefully I won’t find myself ranting to myself or incessantly clicking the refresh button tomorrow, although a Wednesday, given its own pattern of slow trading would have been the perfect day to have gotten bogged down.