Monthly Archives: December 2014

Daily Market Update – December 24, 2014 (Close)

This morning, the day before Christmas, was looking as if the market would be trying to add another day higher to the current string, in an attempt to make it 6 days higher in a row.

While most holidays see the day before trade to lower levels, that’s not the case for Christmas, as 67% of the time time, that shortened day ends up moving higher. Today that 67% edged up just a little itself, as the market set another new record high after having done so, with some fanfare yesterday.

Granted, after some last 15 minute selling, the DJIA barely escaped with a small gain and the S&P 500 finished just a hair lower, down 0.008%

Add that to the Santa Claus Rally that’s still owed to us and 2014 may go out on a high note, despite how energy continues to drag the broader market lower.

Still, yesterday saw the 18000 level broken for the very first time and the S&P 500 also made a new high.

In that regard 2014 is very much like 2007 in that seemingly new highs were being made on about a weekly basis, on average.

In 2014 there have now been over 50 new highs.

Today may be a day that just gets lost in that shuffle, as in 2007 those new highs stopped being news, much as they’re not very much news these days, either, unless they encompass some round number in them, such as 18000.

For now, I really don’t care whether the moves higher are newsworthy or not. I don’t mind seeing prices edging higher, but would still be every happy to see energy sector stocks make up some of what they’ve lost over the past month or more.

I wasn’t expecting to do very much today, certainly not expecting to add to the week’s new positions. Still, I was disappointed by not getting any trades come across, at all.

The likelihood, at this point of selling any new call contracts expiring this week is now very small, as the premiums were going to be tiny reflecting only 1 1/2 days of time and seeing volatility moving lower, as they are now down nearly 40% from their levels of just a week ago. For that reason sights are now set for next week’s expirations, the first week of 2015.

During that rise in volatility is was easier to diversify expiration dates, but as they are returning to their low levels seen at the time of the previous run higher beginning in mid-October came to its peak, it’s more difficult to accept the low marginal premium increases that are seen when adding more time into the equation.

With what was likely to be a slow day anyway and then a short one, at that, it’s was just a good time to wish everyone a Merry Christmas and a hope that all is in place to get 2015 off t
o a great start.

Maybe Friday will actually begin the real rally.

Daily Market Update – December 24, 2014 (9:00 AM)

This morning, the day before Christmas, is looking as if the market will be trying to add another day higher to the current string.

While most holidays see the day before trade to lower levels, that’s not the case for Christmas, as 67% of the time time, that shortened day ends up moving higher.

Add that to the Santa Claus Rally that’s still owed to us and 2014 may go out on a high note, despite how energy continues to drag the broader market lower.

Still, yesterday saw the 18000 level broken for the very first time and the S&P 500 also made a new high.

In that regard 2014 is very much like 2007 in that seemingly new highs were being made on about a weekly basis, on average.

In 2014 there have now been over 50 new highs.

Today may be a day that just gets lost in that shuffle, as in 2007 those new highs stopped being news, much as they’re not very much news these days, either, unless they encompass some round number in them, such as 18000.

For now, I really don’t care whether the moves higher are newsworthy or not. I don’t mind seeing prices edging higher, but would still be every happy to see energy sector stocks make up some of what they’ve lost over the past month or more.

I’m not expecting to do very much today, certainly not expecting to add to the week’s new positions. The likelihood, at this point of selling any new call contracts expiring this week is now very small, as the premiums are going to be tiny reflecting only 1 1/2 days of time and seeing volatility moving lower, as they are now down nearly 40% from their levels of just a week ago. For that reason sights are now set for next week’s expirations, the first week of 2015.

During that rise in volatility is was easier to diversify expiration dates, but as they are returning to their low levels seen at the time of the previous run higher beginning in mid-October came to its peak, it’s more difficult to accept the low marginal premium increases that are seen when adding more time into the equation.

With what is likely to be a slow day anyway and then a short one, at that, it’s probably just a good time to wish everyone a Merry Christmas and a hope that all is in place to get 2015 off to a great start.

Daily Market Update – December 23, 2014 (Close)

This morning’s GDP report, plus any revisions, was expected to give us a glimpse into what lower energy prices can do for the economy.

At best, it will only be a glimpse, as those lower energy prices haven’t been around for too long, but all you have to do is speak to anyone and you know that they feel as if they have more money in their pockets.

Americans like to spend money that’s in their pockets, so hopefully that sensation of feeling better off will translate into something tangible.

If the parking lots at the malls are any indication, they are doing just that, but we haven’t heard too much from retailers, as everyone has been talking about nothing but fuel prices, but in a good way..

That lack of retail in the conversation will end soon, just as Christmas Day is now just a couple of days away.

As it turned out that glimpse offered some good news as the GDP is now indicating 5% growth, which is the highest rate in 10 years.

Not quite what we used stand in awe over when it was China reporting rates even higher, but ours are a bit more believable and if the law of large numbers ever applies to anything, it’s not that easy to grow an economy the size of the United States.

The real fun may start next month, as the next scheduled GDP comes the morning after the FOMC Statement release. Of course, if today’s report shows too much growth, there’s always a chance that a data driven FOMC would see that kind of accelerating growth as a reason to begin to move interest rates higher in an effort to prevent over-heating off the economy.

But that’s an issue for another day.

This morning, in anticipation of the GDP the futures market seemed as if it is willing to add to yesterday’s record closing high. It looked as if the markets were dropping their good is bad and bad is good perspective and getting ready to make an expression of “good is good.”

With oil headed lower yesterday it was another example of the de-coupling that started last week, as stocks went very nicely higher, although this time they left the energy sector behind.

Mt thinking early this morning was that another nice day today, maybe fueled by the GDP could give some opportunity to sell some calls on those uncovered positions and that would be more important to me today than adding another new position or two, or three.

Instead, I sold those one or two new positions and only one new covered position. So much for plans.

With trading for the week rapidly coming to an end there’s even more reason to begin looking at expanded weekly options or those ending at the month’s conclusion.

This morning was a morning to watch and see where the news leads us and hopefully be able to sit passively for a while as they move higher. Instead, the trades ended up being relatively early in the session and then sitting back and watching as most everything went higher, although the S&P 500 continues to lag the DJIA, which topped 18000 for the first time ever, today.

The continuing challenge, as it has been for the past week, has been to wonder whether any climb higher is just part of the dead cat and should be taken advantage of, or part of a concerted climb higher.

So far, it has been good to resist some of the moves higher, although energy sector prices have been going back and forth. But what may have been a full correction in the making looks as if it was just another of those regular mini-corrections that come along every two months.

For the moment it looks good not having committed to strike prices, especially of a longer term nature, as there may be even more recovery ahead.

But time will tell soon enough.

Daily Market Update – December 23, 2014 (8:30 AM)

This morning’s GDP report, plus any revisions, may give us a glimpse into what lower energy prices can do for the economy.

At best, it will only be a glimpse, as those lower energy prices haven’t been around for too long, but all you have to do is speak to anyone and you know that they feel as if they have more money in their pockets.

Americans like to spend money that’s in their pockets, so hopefully that sensation of feeling better off will translate into something tangible.

If the parking lots at the malls are any indication, they are doing just that, but we haven’t heard too much from retailers, as everyone has been talking about nothing but fuel prices, but in a good way..

That lack of retail in the conversation will end soon, just as Christmas Day is now just a couple of days away.

The real fun may start next moth, as the next scheduled GDP comes the morning after the FOMC Statement release. Of course, if today’s report shows too much growth, there’s always a chance that a data driven FOMC would see that kind of accelerating growth as a reason to begin to move interest rates higher in an effort to prevent over-heating off the economy.

But that’s an issue for another day.

This morning, in anticipation of the GDP the futures market seems as if it is willing to add to yesterday’s record closing high.

With oil headed lower yesterday it was another example of the de-coupling that started last week, as stocks went very nicely higher, although this time they left the energy sector behind.

Another nice day today, maybe fueled by the GDP could give some opportunity to sell some calls on those uncovered positions and that would be more important to me today than adding another new position or two, or three.

With trading for the week rapidly coming to an end there’s even more reason to begin looking at expanded weekly options or those ending at the month’s conclusion.

This morning will probably be a morning to watch and see where the news leads us and hopefully be able to sit passively for a while as they move higher.

The continuing challenge, as it has been for the past week, has been to wonder whether any climb higher is just part of the dead cat and should be taken advantage of, or part of a concerted climb higher.

So far, it has been good to resist
some of the moves higher, although energy sector prices have been going back and forth. But what may have been a full correction in the making looks as if it was just another of those regular mini-corrections that come along every two months.

For the moment it looks good not having committed to strike prices, especially of a longer term nature, as there may be even more recovery ahead.

But time will tell soon enough.

Daily Market Update – December 22, 2014 (Close)

Today looked as if it would open with a mildly higher bias, but the real impetus may come tomorrow, as the GDP is released, including any revisions to prior months.

Given how the day ended 150 points higher today that could really be a beautiful thing if the GDP could really give that push to the next level. Maybe it would offset the weakness shown by the energy sector today that put a lid on the S&P 500’s gains, as compared to the DJIA.

Oil prices have now been low enough and long enough to possibly already begin showing up in the GDP and that statistic has created some powerful moves in markets this year in both directions. If not this month, then the next month’s GDP report, which comes a day after the next FOMC Statement could be the one to start showing some real impact of lower energy prices on consumer spending and economic growth.

Although oil prices and the market seemed to de-couple last week there  will still be plenty of attention placed on the energy sector, which also seemed to de-couple somewhat from oil prices.

Today was another day of de-coupling, as it is sinking in that there’s much more to a market of stocks than just energy companies.

The morning already indicated a decline in oil prices, but the market was clearly heading again in the opposite direction. However, during this trade shortened week, with its expected low volume, anything can easily magnify and distort any trends.

While the traditional Santa Claus Rally is usually set to begin right after Christmas and even with some nice recovery last week, I’m not really anticipating establishing much in the way of new positions in anticipation of that rally.

I would just be happy to see prices, especially in the energy sector move higher and would like to see attention return to the retail sector, which is usually where we’re focused at this time of the year.

Although energy didn’t play along, it was good seeing the market rise without any real provocation and if we can get over the oil issue we may be able to start paying attention to the usual story this time of year.

The typical December story is that retail sales are disappointing heading into the final days of the Christmas holiday and then surprisingly, turn out to be better than expected when the dust settles.

This year we have almost none of the information that usually accompanies this time of the year, but the expectation has to be for good numbers as all of the signs are now pointing to an improving economy with more jobs, better paying jobs, a relatively warm winter, so far, and dropping oil and gas prices.

That would be a nice scenario to end out the year and usher in the next earni
ngs season that starts in  just a little more than 2 weeks.

Last week was an exceptionally slow trading week. Hopefully this week will provide an opportunity to make some trades, especially the sale of new call positions. I would like to see some more assignments this week, although at the moment there are only a handful of positions set to expire this Friday. Any opportunity to add to that list from among current positions would be a good thing, as in addition to the income received, I’d still like to reduce the total number of positions held.

With such a short trading week option premiums are going to be lower than usual, especially for the weekly variety. With some give back in volatility last week after that two day 700 point gain, there’s probably going to be less enticement to look at expanded weekly options, but that still may offer a little bit better premium.

Although last Friday was a fairly quiet trading day after a preceding 4 days of triple digit moves, including lots of intra-day volatility, there’s no reason to believe that it will be overly quiet this week, despite the calm that seems to be characterizing this morning’s open.

While I’d like to see an early week’s market climb in order to have some opportunity to sell calls, any sign of a give back of gains would be the time that I would consider adding some new positions, in the anticipation that this week could be as much of a roller coaster as last week.

Today’s strong triple digit gain is an indication of the kind of surprises, good and bad, that may await.