Daily Market Update – August 5, 2014 (Close)

This is possibly going to be the slowest news week of the year, at least as far as planned economic news goes.

That may be a nice change from the previous week when along with all of the unscheduled news we hit the peak in earnings reports and had an FOMC statement and Employment Situation Report to round things out.

I’m tired from even typing all of that out.

As the week will come to its close hopefully I’ll be in a position to also say that it was nice, for a change, to have started a week as was done this week. Coming off last Thursday and Friday’s sell-offs it was relatively easy to not be very hesitant in establishing some new positions to begin the week.

It seems like an eternity ago, but that used to be a fairly regular pattern with some weeks having as many as 10 new purchases and often little else for the rest of the week until Thursday or Friday.

Lately, though, the dynamic has been changed as bargains are harder to find. But the dynamic has also been changed by the increasing availability of expanded weekly options. That has meant that while a stock with a weekly option might not look so appealing for purchase and call sale on a Wednesday, the same stock with an expanded weekly option might look good with an expanded option.

Too bad that the forward week premiums have been so low, though.

While part of me would love to see that volatility continue rising, especially since it does so at a multiple to the market, there is also the realization that the generation of increased premium income comes at a cost. That is the fact that the market generally has to be in a decline in order to drive up the volatility.

Today turned out to be another good example of that as the market more than erased yesterday’s bounce back and more than erased the drop in the Volatility Index, as well.

I guess that’s what they mean by “bittersweet,” but if you’re not the kind that frets too much about the illusory bottom line then the reality of the income offsets the illusory decreases that typically work their way back.

Watching this morning’s market deteriorate somewhat from a mildly lower level in the early futures trading I don’t mind seeing some trading days that will help to form some kind of a resting phase for the market, even if that phase is lower. However, today was a bit too much,

With a number of trades already made for the week I wouldn’t have said “no” to any other potential new position opportunities, but would have been happy with those already made, especially if those other income producing trades could be made during the rest of the week. As it would turn out there were more opportunities today, but just as suddenly I wasn’t so happy now about the trades yesterday and the appearance of new opportunities may themselves be illusory as the market isn’t necessarily on firm ground.


Since my hope had been for some chance to make some opening call position trades that would have required some market stability or strength, or at least strength in individual positions going against the market grain. So in addition to the bittersweet feeling, there was also a hope for conflicting outcomes and that certainly wasn’t the case today.

Or you could just take it one trade at a time and let the other stuff work itself out.

I think that’s what I’ll be doing this week and take a break from trying to over-think that which can’t even really be understood in hindsight.