Monthly Archives: July 2014

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

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

The possible outcomes today include:

Assignments:  General Motors

Rollovers: Pfizer

Expirations: Bed Bath and Beyond (puts)

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

Daily Market Update – Jul 10, 2014 (Close)

This morning no one in Europe seemed to like the fact that a Portuguese bank delayed repayment of some short term debt as a result of some auditing problems at its main shareholder’s investment company. That investment company also happens to be owned by the founding family of the bank, so there’s a tangled web.

A few years ago CNBC was looking for their word of the year and selected my suggestion of “Eurosis,” which came at a time when European banks and national economies were in shambles. But that word proved to not really be prescient as the year went on as some good ECB leadership helped to  ease fears amid the strong suggestion that whatever was necessary would be done to support the banking systems of such nations as Spain and Greece.

This morning it’s hard to know whether the Portuguese bank issue is an isolated one or will simply be the first to come to anyone’s attention. For those who like to draw visual kind of parallels someone, maybe me, is bound to say something like “there’s never just one cockroach,” or something like that, to describe the likely situation.

As it turned out a few minutes before the close, Dennis Gartman used that expression during a CNBC interview, so I felt pretty badly about that.

Whenever you wake up in the morning and see precious metals surging and stocks plunging, you know that there’s a big story somewhere. My first thought wasn’t to think about some banking crisis in Portugal, however. My first thought was centered on the Middle East, but I thought it somewhat odd that when tuning into various TV stations this morning there was really no discussion of the weak futures and no discussion of what was its root cause.

If the lessons from 2010 and 2011 are to be heeded, it’s that problems in the European banking system aren’t necessarily the sort of things that support the ability to start a contagion across the Atlantic Ocean.

Back then our own markets would respond in a sympathetic manner and then relatively quickly shrug its shoulders and wonder why we were bothering to slow down.Back then our own markets were on a decidedly upward trajectory and its momentum wasn’t about to be slowed down by much of anything and certainly not for very long. Now the momentum may not be gone, but it is stalled and the only moves higher of late have been related to assuring words from the Federal Reserve rather than from fundamental factors, such as earnings and revenues.

So this morning will be a little bit of a ride with some relief of not having spent too much opening new positions this week and having had some good luck and fortune in rolling over more than the usual number of positions for the week and h
aving done so unusually early in the week.

I should stress the word “luck.”

Had it not been for this week’s release of the FOMC statement there would have been little reason to consider the early rollovers as there was absolutely no reason to suspect a breaking story such as greeted us this morning.

But with the market seeming to slow down, despite all of the new record highs, a little bit of caution probably has made some sense, but as with most everything that caution has to be in balance with the ability to dip a toe in even when it seems chilly.

Today had the potential to offer some opportunity even if taking advantage of any apparent opportunity could also potentially simply be a case of having faith too early. However, if taking advantage of re-purchasing recently assigned positions at lower prices is the outcome, then being too early isn’t the worst thing in the world and simply relieves the burden of some of the intermediate drop in price had shares been part of a buy and hold strategy.

We’ll see. We’ll see.

Daily Market Update – Jul 10, 2014 (9:15 AM)

This morning no one in Europe seemed to like the fact that a Portuguese bank delayed repayment of some short term debt as a result of some auditing problems at its main shareholder’s investment company. That investment company also happens to be owned by the founding family of the bank, so there’s a tangled web.

A few years ago CNBC was looking for their word of the year and selected my suggestion of “Eurosis,” which came at a time when European banks and national economies were in shambles. But that word proved to not really be prescient as the year went on as some good ECB leadership helped to  ease fears amid the strong suggestion that whatever was necessary would be done to support the banking systems of such nations as Spain and Greece.

This morning it’s hard to know whether the Portuguese bank issue is an isolated one or will simply be the first to come to anyone’s attention. For those who like to draw visual kind of parallels someone, maybe me, is bound to say something like “there’s never just one cockroach,” or something like that, to describe the likely situation.

Whenever you wake up in the morning and see precious metals surging and stocks plunging, you know that there’s a big story somewhere. My first thought wasn’t to think about some banking crisis in Portugal, however. My first thought was centered on the Middle East, but I thought it somewhat odd that when tuning into various TV stations this morning there was really no discussion of the weak futures and no discussion of what was its root cause.

If the lessons from 2010 and 2011 are to be heeded, it’s that problems in the European banking system aren’t necessarily the sort of things that short support the ability for it to start a contagion across the Atlantic Ocean.

Back then our own markets would respond in a sympathetic manner and then relatively quickly shrug its shoulders and wonder why we were bothering to slow down.Back then our own markets were on a decidedly upward trajectory and its momentum wasn’t about to be slowed down by much of anything and certainly not for very long. Now the momentum may not be gone, but it is stalled and the only moves higher of late have been related to assuring words from the Federal Reserve rather than from fundamental factors, such as earnings and revenues.

So this morning will be a little bit of a ride with some relief of not having spent too much opening new positions this week and having had some good luck and fortune in rolling over more than the usual number of positions for the week and having done so unusually early in the week.

I should stress the word “luck.”

Had it not been for this week’s release of the FOMC statement there would have been little reason to consider the early rollovers as there was absolutely no reason to suspect a breaking story such as greeted us this morning.

But with the market seeming to slow down, despite all of the new record highs, a little bit of caution probably has made some sense, but as with most everything that caution has to be in balance with the ability to dip a toe in even when it seems chilly.

Today may offer some opportunity even if taking advantage of any apparent opportunity can simply be  a case of being too early. However, if taking advantage of re-purchasing recently assigned positions at lower prices is the outcome being too early isn’t the worst thing in the world and simply relieves the burden of some of the intermediate drop in price had shares been part of a buy and hoid strategy.

We’ll see. We’ll see.

Daily Market Update – Jul 9, 2014 (Close)

The CEO of Wal-Mart made an observation yesterday that seemed to come as a surprise to most everyone.

He commented that despite increasing jobs numbers there hasn’t been any real improvement on the consumer spending level.

How could that possibly be the case if the economy was actually improving? The stock market has certainly been advancing in reflection of that belief, although it’s probably just a coincidence that the market had a decidedly negative day yesterday.

After all, why would they begin to focus on rational thought and reality now?

I’ve been asking that seemingly obvious question for at least the past two earnings seasons, wondering why retail sales, other than at the very high end, were continuing to disappoint everyone. It just doesn’t make sense if people are actually going back to work and increasing their ability to make discretionary purchases.

Somehow, there has been a disconnect and increasing employment statistics may not be translating into what it traditionally meant.

Add to that, or better yet, subtract from it the two revisions of GDP for the first quarter of 2014 and you really do have to wonder what economic expansion people are talking about. Ultimately any economic growth is only as good as the ability for it to improve the lives of everyday people who are given the opportunity to contribute to that expansion

The weakness in retail, insofar as it seems to have lagged increasing employment levels, preceded the winter’s horrible weather and succeeded it, as well. Still, there has been money to be made in the retail sector, despite the  continuing lack of good news.

Imagine what may await retail sales if and when the consumer does return, although then you have to deal with those who will sell on the news, in the belief that the market had already discounted sales growth.

No matter what happens and no matter what the issue, there’s always a ready answer and a ready opposing view.

While the Wal-Mart CEO’s question was digested yesterday, today seemed to be ready to get off to a mildly positive start heading into the afternoon’s FOMC release. It did just that and maintained that mild advance and then wasn’t quite certain how to react to the statement once it was released.

Again, while it’s not likely that there would be anything surprising in the statement, you can never tell what the reaction would be, especially in the early days of summer. Following yesterday’s sell-off there could also have been additional reason to see an exaggerated reaction to news or even the lack of news.

The only surprise contained in the minutes was actaully what was expected last month. That is how to handle the odd $5 billion remaining in the taper as it got wound down from $85 billion per month to $0 in $10 billion increments. Last month there was concern that the Federal Reserve might decide to do a $15 billion taper in the final month.

Today that’s what they announced and the market didn’t explode.

As with the last couple of days, I was looking for any opportunity to do additional rollovers in an attempt to reduce exposure to any adverse market response to the FOMC prior to this week’s expiration. As a nice side effect that also created some income without having to dip into cash reserves, as there’s enough uncertainty in the air to be hesitant about spending too much while the market is still so close to those all time highs of last week.

So far, the rollovers for the week have all bypassed next week’s monthly expiration and have used the July 25th contract date. I would like to populate next week’s list of expiring positions a little better, but the monthly contract doesn’t usually offer as wide of a selection of strike prices as do the weekly options, so that has limited the ability to create rollovers with strike prices delivering decent dividends.

That may change on Thursday when some new strike levels may be added for the coming week, but with the FOMC today, I’ll still be looking for the opportunities wherever they may end up.

So, it was just another day of sitting back and seeing what may have  developed. AS it turned out not much really did. So even while the money is available for new purchases I wasn’t expecting to add any new positions today, so I wasn’t too disappointed, especially as some rollovers and other sales got made.

Tomorrow those expectations aren’t likely to change,.but if anything can change on a dime it’s the gap between expectations and actions.