Monthly Archives: January 2015

Daily Market Update – January 23, 2015 (8:00 AM)

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

The following trade outcomes are possible today:

Assignments: INTC, MET

Rollovers:  BBY

Expirations:  BAC, EMC

There were no ex-dividend positions this week.

FAST will be ex-dividend next week (1/28 $0.28)

The following positions will be reporting earnings next week:

COH (1/27), FCX (1/27), LXK (1/27), EMC (1/28), LVS (1/28), BX (1/29), DOW (1/29), MAT (1/29), PBR (1/30)

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

Daily Market Update – January 22, 2015 (Close)

All eyes were on this morning’s announcement from the European Central Bank regarding an initiation of its version of Quantitative Easing.

Over the past few months as all eyes had previously been focused on the ECM in expectation of the very same announcement, there had been nothing but disappointment, as Mario Draghi, the President of the ECB talked a great game and occasionally spoke with a John Wayne like swagger and confidence, but delivered on none of it.

This morning, although this has been said before, had the appearances of being different.

The reason it was being given some greater likeliness of finally really be different was because of a credible leak yesterday that gave details of the monthly size of the ECB bond buybacks. The figures suggested seemed to be right along the lines of what many believed it needed to be and was received warmly, although with nowhere near the enthusiasm of previous  well placed source leaks or educated guesses regarding the FOMC’s upcoming actions, from the Wall Street Journal’s Jon Hilsenrath.

Yesterday’s leak may have been what was responsible for the market’s decisive turnaround shortly after the opening bell.

This morning, ahead of the expected announcement the futures were just mildly higher, so it remained to be seen what effect, if any and in what size the reaction might be and, of course, for how long that reaction would last.

About an hour before the official announcement came word that European interest rates would remain unchanged and even though that was not a surprise it gave a small bump to the futures.

Later, when Draghi spoke, not only confirming that action was going to begin, he indicated that the size of the monthly European bond buyback would be 20% larger than thought and would last longer than anyone thought and in fact would be open-ended, lasting until at least September 2016.

The initial response was ebullient in the futures market, but did calm down a little.

In fact, shortly after the opening bell the market actually turned negative, but somewhere along the line, about 45 minutes after the open, the market took off, having really embraced the news.

While the news may be beneficial for European stock markets in the longer term, there’s really no reason to think that it will be the kind of news or provide the kind of fuel needed to send US markets higher for anything much more than a day or so, but it was certainly good to see, even if it is short lived.

The real impetus for further increases could still be upcoming earnings, although thus far, they haven’t been very impressive, although we really haven’t heard anything yet from those businesses that would reasonably be expected to benefit from a severe drop in energy prices.< /span>

Interestingly, in an interview yesterday, the CEO of Dow Chemical, which has small oil holdings as part of a Kuwaiti partnership and has seen its shares drop sharply in concert with oil prices, said that the net result of energy price declines was very good for Dow Chemical, because it is a far greater user of energy than it is a producer of energy. That’s something that hasn’t really been factored in yet and Dow Chemical reports its earnings next week.

As with many companies, the earnings may be of interest, but it’s the future guidance that may hold the key.

Hopefully this morning’s ECB announcement will bring some happy news to the US markets as that would be a good way to bring a shortened trading week to its end.

With a few positions set to expire tomorrow, I’d like to see them positioned to either be assigned or rolled over and a couple of good days in succession would really help.

So, Mario, we wanted to know “What’s it going to be?” and this time you didn’t disappoint, but what have you done for us lately?

Daily Market Update – January 22, 2015 (7:30 AM)

All eyes are on this morning’s announcement from the European Central Bank regarding an initiation of its version of Quantitative Easing.

Over the past few months as all eyes had previously been focused on the ECM in expectation of the very same announcement, there had been nothing but disappointment, as Mario Draghi, the President of the ECB talked a great game and occasionally spoke with a John Wayne like swagger and confidence, but delivered on none of it.

This morning, although this has been said before, may be different.

The reason it may finally really be different is because of a credible leak yesterday that gave details of the monthly size of the ECB bond buybacks. The figures suggested seemed to be right along the lines of what many believed it needed to be and was received warmly, although with nowhere near the enthusiasm of previous  well placed source leaks or educated guesses regarding the FOMC‘s upcoming actions, from the Wall Street Journal’s Jon Hilsenrath.

Yesterday’s leak may have been what was responsible for the market’s decisive turnaround shortly after the opening bell.

This morning, ahead of the expected announcement the futures are just mildly higher, so it remains to be seen what effect, if any and in what size the reaction might be and, of course, for how long that recation will last.

While the news may be beneficial for European stock markets in the longer term, there’s really no reason to think that it will be the kind of news or provide the kind of fuel needed to send US markets higher for anything much more than a day or so.

The real impetus could still be upcoming earnings, although thus far, they haven’t been very impressive, although we really haven’t heard anything yet from those businesses that would reasonably be expected to benefit from a severe drop in energy prices.

Interestingly, in an interview yesterday, the CEO of Dow Chemical, which has small oil holdings as part of a Kuwaiti partnership and has seen its shares drop sharply in concert with oil prices, said that the net result of energy price declines was very good for Dow Chemical, because it is a far greater user of energy than it is a producer of energy. That’s something that hasn’t really been factored in yet and Dow Chemical reorts its earnings next week.

As with many companies, the earnings may be of interest, but it’s the future guidance that may hold the key.

Hopefully this morning’s ECB announcement will bring some happy news to the US markets as that would be a good way to bring a shortened trading week to its end.

With a few positions set to expire tomorrow, I’d like to see them positioned to either be assigned or rolled over and a couple of good days in succession would really help.

So, Mario? What’s it going to be?

Daily Market Update – January 21, 2015 (Close)

Yesterday was not very different from much of the rest of this month.

It was actually a very volatile day, only the magnitude was missing.

This past week Jamie Dimon mentioned that JP Morgan traders  were victims of “bad volatility,” making the kind of distinction that isn’t really discussed very much, especially as the concept of volatility itself is so complex.

Yesterday, though, was an example of the good kind of volatility, as the market made intra-day moves in alternating directions. The more about faces in a single day and the less the net result of those moves, the better is the volatility, which is also sometimes considered to be a measure of uncertainty felt by traders.

The moves back and forth keep you on your toes and you never can really develop any confidence about direction. What can be more uncertain than that?

Yesterday finished virtually unchanged after positive indications in the pre-open futures trading that didn’t last very long. The ensuing decline after the open looked as if it might convincingly take the market toward another of the now familiar triple digit losses, but it reversed itself as inexplicably as the reverse from the futures occurred.

During the early part of yesterday’s decline I surprised myself by actually liking some positions during a time that I was thinking in terms of conserving cash.

I’m still surprised, but after last week’s incredibly slow trading and waiting for something to happen, I wasn’t particularly interested in repeating that, even though the outcome was acceptable.

But passivity has its limits and if the volatility seen thus far is any indication of what’s to come in 2015, passivity isn’t going to have the kind of success that it had in 2014.

This morning the market was pointing lower in the pre-open trading, very similar to the level at which it was pointing higher yesterday. In neither situation was there much reason for the moderate gain or loss, respectively and when there was no real reason to account for futures trading, those mild or moderate moves often have a way of disappearing once trading gets started for real.

So despite the indication of a loss to begin the day, I was still hopeful that there will be some new opportunities arising, especially when it comes to selling calls on uncovered positions. I think that the 3 new positions opened yesterday may end up being the sum total for the week, but even as cash shrinks away, it’s hard to think in terms of absolutes.

As it would turn out, today was pretty much the mirror opposite of yesterday, as the early losses in the futures turned out within the first 30 minutes of trading and the day ended with a decent gain, but again with a fairly wide trading range
due to the early triple digit decline.

More good volatility.

With this being a shortened trading week and with a little bit of that volatility being built into premiums, if those opportunities do show up, there’s reason to look at establishing some contracts for next week, particularly since it would be nice to get diversified in time again and lock in some of the premiums that reflect some of that volatility.

Additionally, while there’s very little economic news coming from our shores this week to really move markets, there is a chance that the ECB may be able to move markets in one direction or another when it either makes an announcement regarding the implementation of quantitative easing or again simply defers action.

While most want to hear news of an European QE becoming reality and it would likely give a momentary boost to our markets, especially if there are those who still doubt its announcement tomorrow, I think that it would serve to detract from US equity liquidity by removing some money from our markets to European markets.

For those who believed that was the mechanism that fueled our own market’s rally from 2009, it would be difficult to ignore the same mechanism helping Europe to some degree and that money for new investment in European equities  has to come from somewhere.

So while European QE may be a good idea and while ECB President Draghi has certainly been dragging, I’m fine with him continuing to talk the talk and leaving it at that.

Daily Market Update – January 21, 2015 (8:00 AM)

Yesterday was not very different from much of the rest of this month.

It was actually a very volatile day, only the magnitude was missing.

This past week Jamie Dimon mentioned that JP Morgan traders  were victims of “bad volatility,” making the kind of distinction that isn’t really discussed very much, especially as the concept of volatility itself is so complex.

Yesterday, though, was an example of the good kind of volatility, as the market made intra-day moves in alternating directions. The more about faces in a single day and the less the net result of those moves, the better is the volatility, which is also sometimes considered to be a measure of uncertainty felt by traders.

The moves back and forth keep you on your toes and you never can really develop any confidence about direction. What can be more uncertain than that?

Yesterday finished virtually unchanged after positive indications in the pre-open futures trading that didn’t last very long. The ensuing decline after the open looked as if it might convincingly take the market toward another of the now familiar triple digit losses, but it reversed itself as inexplicably as the reverse from the futures occurred.

During the early part of yesterday’s decline I surprised myself by actually liking some positions during a time that I was thinking in terms of conserving cash.

I’m still surprised, but after last week’s incredibly slow trading and waiting for something to happen, I wasn’t particularly interested in repeating that, even though the outcome was acceptable.

But passivity has its limits and if the volatility seen thus far is any indication of what’s to come in 2015, passivity isn’t going to have the kind of success that it had in 2014.

This morning the market is pointing lower in the pre-open trading, very similar to the level at which it was pointing higher yesterday. In neither situation was there much reason for the moderate gain or loss, respectively and when there is no real ereason to account for futures trading, those mild or moderate moves often have a way of disappearing once trading gets started for real.

So despite the indication of a loss to begin the day, I’m still hopeful that there will be some new opportunities arising, especially when it comes to selling calls on uncovered positions. I think that the 3 new positions opened yesterday may end up being the sum total for the week, but even as cash shrinks away, it’s hard to think in terms of absolutes.

With this being a shortened trading week and with a little bit of volatility being built into premiums, if those opportunities do show up, there’s reason to look at establishing some contracts
for next week, particularly since it would be nice to get diversified in time again and lock in some of the premiums that reflect some of that volatility.

Additionally, while there’s very little economic news coming from our shores this week to really move markets, there is a chance that the ECB may be able to move markets in one direction or another when it either makes an announcement regarding the implementation of quantitative easing or again simply defers action.

While most want to hear news of an European QE becoming reality and it would likely give a momentary boost to our markets, especially if there are those who still doubt its announcement tomorrow, I think that it would serve to detract from US equity liquidity by removing some money from our markets to European markets.

For those who believed that was the mechanism that fueled our own market’s rally from 2009, it would be difficult to ignore the same mechanism helping Europe to some degree and that money for new investment in European equities  has to come from somewhere.

So while European QE may be a good idea and while ECB President Draghi has certainly been dragging, I’m fine with him continuing to talk the talk and leaving it at that.

.