Daily Market Update – December 31, 2014 (Close)

 

  

 

Daily Market Update – December 31, 2014 (Close)

So far the first two days of this week have been disappointing if you’ve been looking for that fabled Santa Claus Rally, as I have.

You may have had a better chance of spotting the real Santa Claus on Christmas Eve than experiencing that rally, although there’s still Friday, strictly speaking, as that is the fifth day after Christmas.

This morning’s futures looked as if today will be just like the previous two days of this week and that trading would be in a narrow range.

The good news is that the range wasn’t anywhere near as narrow, but the bad news was that it was in the wrong direction, especially in the last hour.

This morning it looked as if that trading may get off to a positive start, even as energy prices were again moderately lower and getting further away from that $54 level.

I didn’t expect that there would be be much personal action today, but I didn’t expect much yesterday, either, and at least two trades came out of the boredom and even more today. 

Fortunately, those opportunities came before the market decided to not cooperate with those in a party mood.

While there was some economic news today, such as the Jobless Claims, nothing was really of the stature to typically move markets. Friday reveals an ISM number and sometimes that has an impact on things, but the beginning of a new tax year can bring its own dynamic, regardless of economic report activity.

Today, instead, was a day to think about last minute tax strategies, as looking through closets that are screaming for items to be donated and maybe losing positions longing to be sold.

The basic rule for the former may be related to how your waist size has changed over the year. Meanwhile, the basic rule for the latter is based on your tax rate.

That rate, together with the time frame of your holding determines what kind of tax benefit you can get from taking a loss on the position.

That value can be expressed on a per share basis.

The question becomes can you reasonably expect the stock to appreciate by that much in the next 30 days, at which point you can buy shares back without triggering the “Wash Sales Rule.”

If the answer is that you don’t expect the stock to gain that much in that time frame, then there may be a tax advantage from selling, if in a taxable account.

A spreadsheet to do the calcul
ations is located at http://j.mp/1BhNGMI and offers a quick and simple analysis of whether or not it may make sense to take a loss.

That’s always a touchy subject and I hate taking losses other than for tax reasons, but I especially hate the idea of taking a loss in what should be a sound company, but may be subject to basic economic laws or business cycles

That definitely is the case in the energy sector, but I also think that is the case in all commodities, including metals. In the latter case that cycle has been much more prolonged than I ever would have imagined, but at some point an ascent will occur, as it always has in the past. Just as I hate taking losses, I especially hate to watch that ascent occur after I’ve taken the losses.

For today I wasn’t too worried about such things, but surprisingly did get an answer to my hopes for any errant opportunities to sell some calls on uncovered positions. I was prepared to hold my breath for those opportunities, even at the risk of turning blue, but it didn’t have to be that way.

I’d rather be a nice shade of pink, anyway, but maybe even more appropriately, a really nice shade of green to start the new year. A few of those unexpected sales at least may end up paying for tonight’s libations, just as the last hour’s sell off put me in a less festive mood, but at least the bubbles may cure that.

Happy New Year and wishes for health, happiness and prosperity to all.

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Daily Market Update – December 31, 2014

 

  

 

Daily Market Update – December 31, 2014 (9:00 AM)

So far the first two days of this week have been disappointing if you’ve been looking for that fabled Santa Claus Rally, as I have.

You may have had a better chance of spotting the real Santa Claus on Christmas Eve than experiencing that rally, although there’s still Friday, strictly speaking, as that is the fifth day after Christmas.

This morning’s futures look as if today will be just like the previous two days of this week and that trading will be in a narrow range.

This morning it looks as if that trading may get off to a positive start, even as energy prices are again moderately lower and getting further away from that $54 level.

I don’t expect that there will be much action today, but I didn’t expect much yesterday, either, and at least two trades came out of the boredom.

While there’s some economic news today, such as Jobless Claims, nothing is really of the stature to typically move markets. Friday reveals an ISM number and sometimes that has an impact on things, but the beginning of a new tax year can bring its own dynamic, regardless of economic report activity.

Today, instead, may just be a day to think about last minute tax strategies, as I look through closets that are screaming for items to be donated and maybe losing positions longing to be sold.

The basic rule for the former may be related to how your waist size has changed over the year. Meanwhile, the basic rule for the latter is based on your tax rate.

That rate, together with the time frame of your holding determines what kind of tax benefit you can get from taking a loss on the position.

That value can be expressed on a per share basis.

The question becomes can you reasonably expect the stock to appreciate by that much in the next 30 days, at which point you can buy shares back without triggering the “Wash Sales Rule.”

If the answer is that you don’t expect the stock to gain that much in that time frame, then there may be a tax advantage from selling, if in a taxable account.

A spreadsheet to do the calculations is located at http://j.mp/1BhNGMI and offers a quick and simple analysis of whether or not it may make sense to take a loss.

That’s always a touchy subject and I hate taking losses other than for tax reasons, but I especially hate the idea of taking a loss in what should be a sound company, but may be subject to basic economic laws or
business cycles

That definitely is the case in the energy sector, but I also think that is the case in all commodities, including metals. In the latter case that cycle has been much more prolonged than I ever would have imagined, but at some point an ascent will occur, as it always has in the past. Just as I hate taking losses, I especially hate to watch that ascent occur after I’ve taken the losses.

For today I won’t worry about such things and instead will hope for any errant opportunities to sell some calls on uncovered positions, but I won’t be holding my breath until I turn blue.

I’d rather be a nice shade of pink, but maybe even more appropriately, a really nice shade of green to start the new year.

Happy New Year and wishes for health, happiness and prosperity to all.

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Daily Market Update – December 30, 2014 (Close)

 

  

 

Daily Market Update – December 30, 2014 (Close)

If you wanted another example of how oil and the energy sector have stopped taking control of the broader market, yesterday was a good example for you.

The pre-open futures yesterday and the trading right up until noon had oil prices going modestly.

In the meantime the market was just treading water and not traveling very far up or down up until that point.

At noon the factor that was believed to have sent oil higher, some potential for reduced oil output by Libya was realized to not have been new news. How the people who follow this sort of thing 24/7 didn’t realize that there was no new news to digest is a question in itself, but the realization that it wasn’t made for a reversal in oil and brought it below that $54 level.

In the meantime the stock market didn’t even notice, although energy stocks did, but not by that much. Most shares just kept treading water and the S&P 500 traded in only an 8 point range, finishing less than 0.1% higher, while the DJIA finished less than 0.1% lower.

With that test now done and out of the way  and with more evidence that US stocks may be able to separate themselves from falling energy prices, is the realization that most global economies that count, will benefit from falling crude oil prices. There really isn’t too much in the near term that should act to get in the way of the market being able to maintain or surpass current levels, although Greece is trying to get back onto the front page again as it may be making noises about leaving the European Union and that can drag European and US markets lower.

But, it is the final 2 trading days of December, after all, and that means that Greece can’t possibly matter yet, but now we’re left with even less time for the traditional rally to take place.

Yesterday, low volume and all, just wasn’t able to get that anticipated rally started, but maybe today could have been a little different?

Not really.

With such little movement yesterday there wasn’t too much opportunity to do anything, other than a longer term position that oil will be headed higher in a 3 month time frame. Otherwise, the range was so narrow and the volatility returning to such low levels, that there is very little that can entice, especially as this is a shortened trading week and has already chopped about 20% off from already low premiums.

Today the range was wider, but still not to much opportunity to do anything, although energy is beginning to look as if there may be some room for entry, but cautiously. The same may be true for those that dabble in metals; precious and otherwise.

This morning’s pre-open futures looked just like they did at this time yesterday morning except that oil is slightly weaker to start off the morning. The changes through the day of trading were really very mi
nor, with no one really committing one way or the other, as many may have already headed for, or are still on their ski or beach vacations.

As that early trend set the tone for today’s trading that now leaves it all to tomorrow to deliver on the promise and hope of a Santa Claus Rally, although the purists will tell you that it really encompasses the 5 trading days after Christmas, which would then also include the first trading day of 2015.

So there’s still some hope, but today was a good day to start cleaning out the garage and tomorrow may be more of the same.

 

 

 

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Daily Market Update – December 30, 2014

 

  

 

Daily Market Update – December 30, 2014 (8:00 AM)

If you wanted another example of how oil and the energy sector have stopped taking control of the broader market, yesterday was a good example for you.

The pre-open futures yesterday and the trading right up until noon had oil prices going modestly.

In the meantime the market was just treading water and not traveling very far up or down up until that point.

At noon the factor that was believed to have sent oil higher, some potential for reduced oil output by Libya was realized to not have been new news. How the people who follow this sort of thing 24/7 didn’t realize that there was no new news to digest is a question in itself, but the realization that it wasn’t made for a reversal in oil and brought it below that $54 level.

In the meantime the stock market didn’t even notice, although energy stocks did, but not by that much. Most shares just kept treading water and the S&P 500 traded in only an 8 point range, finishing less than 0.1% higher, while the DJIA finished less than 0.1% lower.

With that test now done and out of the way  and with more evidence that US stocks may be able to separate themselves from falling energy prices, is the realization that most global economies that count, will benefit from falling crude oil prices. There really isn’t too much in the near term that should act to get in the way of the market being able to maintain or surpass current levels, although Greece is trying to get back onto the front page again as it may be making noises about leaving the European Union and that can drag European and US markets lower.

But, it is the final 2 trading days of December, after all, and that means that Greece can’t possibly matter yet, but now we’re left with even less time for the traditional rally to take place.

Yesterday, low volume and all, just wasn’t able to get that anticipated rally started, but maybe today will be a little different.

With such little movement yesterday there wasn’t too much opportunity to do anything, other than a longer term position that oil will be headed higher in a 3 month time frame. Otherwise, the range was so narrow and the volatility returning to such low levels, that there is very little that can entice, especially as this is a shortened trading week and has already chopped about 20% off from already low premiums.

This morning’s pre-open futures look just like they did at this time yesterday morning except that oil is slightly weaker to start off the morning.

If that early trend is what will set the tone for today’s trading that leaves it all to tomorrow to deliver on the promise and hope of a Santa Claus Rally, although the purists will tell you that it really encompasses the 5 trading days after Christmas, which would then also include the first trading day of 2015.

So there’
s still some hope, but today may be a good day to start cleaning out the garage.

 

 

 

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Daily Market Update – December 29, 2014 (Close)

 

  

 

Daily Market Update – December 29, 2014 (Close)

With only a few trading days left for 2014 the Santa Claus Rally doesn’t have much time left, but then again, it never does.

After today’s uneventful trading it now has even less time.

While December is typically the best month of the year, or at least right up there with the very best, by comparison to past years, so far the 1% advance for the month is disappointing. It’s also a little deceiving, as essentially the entire net gain for the month came last week, after two very large moves in opposite directions the first two weeks of December.

Two back to back days accounted for the entire month’s worth of gains

So if you’re looking for trends or patterns to explain this December, you can keep looking for clues. What has been largely missing, as there have been some big international macro-economic stories, has been an almost complete absence of discussion about retail sales.

Maybe not today and maybe not tomorrow, but very soon lots of attention will be paid to those reports as they start to come out.

Usually at this time of the year, the last few days of December we find out that sales haven’t been as bad as we thought and that last minute price cutting by retailers helped to rescue the season.

So far, that’s not the way it has been playing out, as there hasn’t been the kind of widely held cries about how preliminary sales were lagging projections and last year’s statistics.

Given what’s going on in the economy, with increasing employment, better jobs and much lower energy costs, you would have to think that unless people are paying down debt or saving, they would have to be spending.

If that’s the case, it didn’t look as if the pre-opening futures knew about it. Based on the early trading it looked as if it was going to be a quiet start to a quiet week and it wasn’t looking as if anything was being done to push that rally forward.

There’s not too much scheduled news this week and the world is usually quiet during the final week of the year, as well.

It’s funny how that works out. Somehow the world is often able to put everything on the back burner and just watch the old year go out like a lamb.

As usual, whenever there’s going to be a week of relatively low volume, like this shortened 4 day trading week, there’s always the talk of artificially large moves created by the light volume.You certainly couldn’t prove that theory based on today’s light volume, though, as the market barely mopved around a 20 point range from being unchanged all through the d
ay.

That low volume axiom doesn’t seem to be quite as true or frequent anymore, as those that really control market volume aren’t likely to just sit back and watch a large move in either direction occur without them, But still, there’s nothing lost by keeping fingers crossed and hoping for a nice rally to close the year and to get us off to a good start.

No matter what the last few days of the year will bring, the theories to explain any large moves are the same, year in and year out.

There will be those claiming traders taking tax losses. There will then be those claiming that those that already took tax losses are now jumping back in before a traditional January rally.

Of course, that traditional January Rally isn’t so traditional anymore, either.

With some cash replenished and only a single position set to expire this week, I’d be much more happy being able to use existing positions to create the week’s income stream. However, early indications aren’t showing the kind of broad advance that would make that likely.

The alternative is to add some new positions to begin the week and in all probability looking at the weekly option, although the shortened trading week again offers lower premiums, just as with last week.

The exception, just as with last week, is again found in the energy sector, which has lots of uncertainty built into option premiums, a oil is able to hold above $54 for now, which may be a good level at which to anchor energy related strategies, whether bullish or bearish on near term price.

However, because of the inherent near term risk, some thought, was given to using longer option contracts, especially when considering trades directly based on the price of oil, such as BNO.

Otherwise, it’s more of the same for now. Sitting back and watching to see how the market wants to begin the week once the bell rings for real.

I don’t think that tomorrow will be very different, although it couldn’t possibly be any slower.

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