Monthly Archives: January 2015

Daily Market Update – January 14, 2015 (9:00 AM)

This morning was already getting off to a bad start as last night’s futures trading had the DJIA down nearly 100 points. Given the kind of reversal that we saw yesterday, the continuing weakness in the after hours futures market wasn’t very good.

This morning, when we could have expected a little bit of help from the earnings reports of both JP Morgan and Wells Fargo, that help didn’t come.and the market sold off even more.

Then came news of the Retail Sales Report, which isn’t usually that big of a deal, but this time it was.

That’s because people were expecting to see some evidence of increased consumer spending as people were supposed to be feeling richer from the drop in oil prices and then converting that feeling into spending.

But according to those retail sales figures that wasn’t the case. That’s even though yesterday’s JOLT Survey showed that the majority of the new jobs created in 2014 were at wages that were above the average of all wages in the US, meaning that it was higher paying jobs that were being created and not just more burger flipper jobs.

But this morning the interpretation of all of that news is decidedly negative, as oil falls a bit more, as well, to start the trading day.

With today’s likely downturn, this may end up being the lightest trading week in a long while, as the added downturn, after the first two weak days already encountered, makes teh ability to rollover positions more out of reach and also makes it less likely that new call positions will be sold on existing uncovered positions.

It’s not lost on me that it has been the Gold Miners ETF (GDX) options that have seen a lot of trading activity lately. That’s generally not a very healthy sign when you see that proxy for precious metals bouncing back and forth. Certainly that kind of bouncing has also been seen in the broader market, but when you see it in that very speculative sector it demonstrates lots of uncertainty among those that generally thrive in uncertainty and chaos.

The preliminary earnings from JP Morgan and Wells Fargo are disappointing, as you generally need strong performance from the financial sector to have a strong market. Those two banks represent very different markets and so together they send a powerful message when reporting in tandem.

Later this week we also hear from Goldman Sachs and they could offer some saving grace.

It will still be a few weeks before we start to hear from the major retailers, but today’s Retail Sales Report makes it less likely that they will be able to report earnings that reflect any significant increase in consumer spending. However, they will have had the advantage of seeing a few weeks of data after the close of the quarter that may indicate whether any trend in increased spending is developing
.

If it is and ends up being part of a more optimistic pattern of forward guidance, the market may respond very positively.

In the meantime, if those sales aren’t there and there is no upward pressure on prices, the likelihood of an interest rate coming from the FOMC is reduced, and that can be a positive for the markets.

For the rest of the week, though, it may be a case of strapping in and hanging on to see whether fear or opportunism takes hold.

Daily Market Update – January 13, 2015 (Close)

This morning was getting off to the same kind of start that yesterday did.

That’s not necessarily a good thing.

Yesterday the pre-open futures got off to a triple digit gain and then saw some slight erosion of those advances before the opening bell.

It then only took a few minutes to see those gains all lost and we ended up the day with a triple digit loss.

This morning, the early triple digit gain in the futures had also eroded just a bit, but hopefully the similarity would end there, was my thought as sipping coffee.

Yesterday, the culprit was said to be oil prices, which continued their decline.

This morning that decline goes even further as OPEC has reiterated its decision to not curtail production.

The difference between yesterday and today’s early trading may be the good earnings news that Alcoa provided after the closing bell.

There’s going to be lots more news coming this week, predominated by bank earnings.

While the economy needs good earnings from its banks, they don’t necessarily tell the story of how the other sectors will perform. There have been a number of quarters over the past few years where the banks have done very well, while everyone else fell behind. Had it not been for the impact of unprecedented buy backs over these past few years and the continuing reliance on the “EPS” metric, some of those quarters would have been abysmal.

Another factor that can potential propel today’s market is the morning’s JOLT Survey.

A few months ago we were all told by Janet Yellen to pay more attention to this report, which indicates the willingness of people to give up the security of their jobs in the expectation that they can find something even better.

That’s an optimistic thing if that’s what’s indicated by the report, but ever since Janet Yellen told us to pay attention to it, we’ve only done so right after she told us, having ignored its data for the past two months.

Regardless of what would be in this month’s report, even if spectacular, its impact will disappear by the time the next economic report is delivered.

Instead, the earnings reports may offer something every day for the next couple of weeks to move us forward.

Still, I didn’t think that there will be much opportunity to do trading today, but would have gladly accepted any if it came my way. While I always want to open new weekly positions and was disappointed that I couldn’t get some of those trades done yesterday, there’s usually something more satisfying about being able to generate the income with what you already have in hand.

My hope was that satisfaction wouldn’t be in short supply, but it was.

What wasn’t expected was that a 250+ point gain would degenerate into about a 140 point loss at its lowest point, representing one of the largest reversals we’ve seen in a while, although lately those reversals have been more frequent.

Yesterday’s decline moved some of those opportunities to get rollovers done and new call sales executed further away, but that was exactly the situation last week, as well and that turned out nicely.

After today’s really negative action, even though the net result is now just like last week, the reversal is in the wrong direction if you’re a bull.

Last week the first two days of the week were really, really bad, but then a reversal came and the middle of the week was a completely different story.

Nothing would be more welcome right now than a repeat of the middle part of last week and seeing a couple of strong days in succession and providing the opportunity to get those rollovers and call sales done, even if no new positions are open.

With volatility a little bit higher, there may be reason to look at some expanded option opportunities, but now earnings also have to be kept in mind.

It’s just too bad that today wasn’t the start of those successive days moving higher, but we still have the possibility of stringing three of those together to end the week and it’s no less bleak than it was this time last week.

Daily Market Update – January 13, 2015 (8:45 AM)

This morning is getting off to the same kind of start that yesterday did.

That’s not necessarily a good thing.

Yesterday the pre-open futures got off to a triple digit gain and then saw some slight erosion of those advances before the opening bell.

It then only took a few minutes to see those gains all lost and we ended up the day with a triple digit loss.

This morning, the early triple digit gain in the futures has also eroded just a bit, but hopefully the similarity ends there.

Yesterday, the culprit was said to be oil prices, which continued their decline.

This morning that decline goes even further as OPEC has reiterated its decision to not curtail production.

The difference between yesterday and today may be the good earnings news that Alcoa provided after the closing bell.

There’s going to be lots more news coming this week, predominated by bank earnings.

While the economy needs good earnings from its banks, they don’t necessarily tell the story of how the other sectors will perform. There have been a number of quarters over the past few years where the banks have done very well, while everyone else fell behind. Had it not been for the impact of unprecedented buy backs over these past few years and the continuing reliance on the “EPS” metric, some of those quarters would have been abysmal.

Another factor that can potential propel today’s market is the morning’s JOLT Survey.

A few months ago we were all told by Janet Yellen to pay more attention to this report, which indicates the willingness of people to give up the security of their jobs in the expectation that they can find something even better.

That’s an optimistic thing if that’s what’s indicated by the report, but ever since Janet Yellen told us to pay attention to it, we’ve only done so right after she told us, having ignored its data for the past two months.

Regardless of what will be in this month’s report, even if spectacular, its impact will disappear by the time the next economic report is delivered.

Instead, the earnings reports may offer something every day for the next couple of weeks to move us forward.

Still, I don’t think that there will be much opportunity to do trading today, but would gladly accept any if it comes my way. While I always want to open new weekly positions and was disappointed that I couldn’t get some of those trades done yesterday, there’s usually something more satisfying about being able to generate the income with what you already have in hand.

Hopefully that satisfaction won’t be in short supply.

Yesterday’s decline moved some of those opportunities to get rollovers done and new call sales executed further away, but that was exactly the situation last week, as well and that turned out nicely.

In that case, that was the situation for the first two days of the week and then the middle of the week was a completely different story.

Nothing would be more welcome right now than a repeat of last week and seeing a couple of strong days in succession and providing the opportunity to get those rollovers and call sales done, even if no new positions are open.

With volatility a little bit higher, there may be reason to look at some expanded option opportunities, but now earnings also have to be kept in mind.

Daily Market Update – January 12, 2015 (Close)

Last week was quite a week.

Even though there was lots of important economic news and there was certainly enough going on in the world, the market followed none of it. It didn’t listen to the FOMC, it didn’t listen to the EMployment Situation Report.

It also didn’t melt when events unfolded in France.

Anyone who follows charts or believes in technical indicators would also be at a loss to explain either the sharp decline or the strong rally back.

This week there isn’t quite as much news and the markets looked as if they were going to get off to a better start than they had last week.

Most of all, another earnings season begins this week and it may hold the key to finding something that may propel markets higher.

But not today.

The market quickly gave up its early futures gains without any real reason for doing so, although oil could again have been the culprit, as there was significant price deterioration in the oil futures markets.

But if the theory that reduced energy prices will be good for the consumer is true, there’s some chance that we’ll catch a glimpse of it soon enough, as the quarter being reported should reflect some of that data. That can start as early as when Alcoa reports its results, as it’s a big user of energy.

If it does, you can expect companies to give guidance that will be more cheery than we’ve heard in a long, long time and if investors have shown that they really like anything, it’s positive guidance. Just look at today’s happy announcement from LuLuLemon, nearly 2 months ahead of its earnings.

By the same token they don’t like  negative guidance, but that’s an issue for another time, unless you’re holding shares of either SanDisk or Tiffanys, both of which gave some early warnings today and took about 15% hits.

This week I wouldn’t have minded seeing a repeat of the last week to get us started.. Even though the broad market was lower there was lots of opportunity to rollover existing positions and sell calls on some uncovered positions. While there was one assignment for the week, the only real disappointment was that there weren’t more, as I’d like to be sitting on more cash than is currently in reserve.

What we got was a literal repeat of the start of last week, with the market ending sharply lower and having traded lower all day without any real evi
dence of an attempt to stem the losses.

This week with 8 positions set to expire as the monthly January 2015 option cycle comes to its end, another week that has some positive days, especially some strong days higher, may offer the opportunities to have a repeat of last week. Last week there were just three days to get it all accomplished after a terrible first two days of the trading week. This week we still have 4 days left.

While there may still be some potential new positions that look appealing this week, I don’t think I’ll be very aggressive in adding to the existing roster, although I thought that last week, as well, and was actually a little surprised to have added any. Today I tried to get a dividend related trade in AbbVie made, but just couldn’t get the right combination of prices.

This morning’s rise in the futures had an optimistic tone, but it was slowly being degraded by even further price drops in oil prices, so it would be especially nice to see some stability coming to that market. The stock market and the economy don’t necessarily need those prices to go any lower, as the decline in energy prices has already been a significant gift, well beyond what has been expected. It’s unlikely that companies, as they do guide forward, will be projecting even lower prices for their good fortunes, so this would be a good place to stop and build a base.

The removal of uncertainty in the direction, magnitude and suddenness of energy price moves would likely be good for most everyone, even if oil prices move higher. In the absence of a significant decrease in production, possibly due to some geo-political event, it’s not too likely that we’ll see the kind of price increase similar to the decline, so anything that removes the downward uncertainty may end up being a gift that keeps giving for quite a while.

I’m ready to accept whatever gifts may come my way and would like to start this week.

Daily Market Update – January 12, 2015 (8:30 AM)

Last week was quite a week.

Even though there was lots of important economic news and there was certainly enough going on in the world, the market followed none of it. It didn’t listen to the FOMC, it didn’t listen to the EMployment Situation Report.

It also didn’t melt when events unfolded in France.

Anyone who follows charts or believes in technical indicators would also be at a loss to explain either the sharp decline or the strong rally back.

This week there isn’t quite as much news and the markets look as if they are going to get off to a better start than they had last week.

Most of all, another earnings season begins this week and it may hold the key to finding something that may propel markets higher.

If the theory that reduced energy prices will be good for the consumer is true, there’s some chance that we’ll catch a glimpse of it soon enough, as the quarter being reported should reflect some of that data.

If it does, you can expect companies to give guidance that will be more cheery than we’ve heard in a long, long time and if investors have shown that they really like anything, it’s positive guidance.

By the same token they don’t like  negative guidance, but that’s an issue for another time.

This week I wouldn’t mind seeing a repeat of last. Even though the broad market was lower there was lots of opportunity to rollover existing positions and sell calls on some uncovered positions. While there was one assignment for the week, the only real disappointment was that there weren’t more, as I’d like to be sitting on more cash than is currently in reserve.

This week with 8 positions set to expire as the monthly January 2015 option cycle comes to its end, another week that has some positive days, especially some strong days higher, may offer the opportunities to have a repeat of last week.

While there may still be some potential new positions that look appealing this week, I don’t think I’ll be very aggressive in adding to the existing roster, although I thought that last week, as well, and was actually a little surprised to have added any.

This morning’s rise in the futures has an optimistic tone, but it is slowly being degraded by even further price drops in oil prices, so it would be especially nice to see some stability coming to that market. The stock market and the economy don’t necessarily need those prices to go any lower, as the decline in energy prices has already been a significant gift, well beyond what has been expected. It’s unlikely that companies, as they do guide forward, will be
projecting even lower prices for their good fortunes, so this would be a good place to stop and build a base.

The removal of uncertainty in the direction and magnitude of energy prices would likely be good for most everyone, even if oil prices move higher. In the absence of a significant decrease in production, possibly due to some geo-political event, it’s not too likely that we’ll see the kind of price increase similar to the decline, so anything that removes the downward uncertainty may end up being a gift that keeps giving for quite a while.

I’m ready to accept whatever gifts may come my way and would like to start this week.