Monthly Archives: March 2015

Daily Market Update – March 5, 2015 (8:30 AM)

With the ECB announcing that it was leaving its rates unchanged early this morning and with the pre-open futures once again trading listlessly, you would think that not much would be in store for the regular trading session.

With the first 3 days of this week having traded identically to this morning, perhaps only differing in direction, each of those days saw wide trading ranges once the opening bell rang and closed with relatively large changes for the day.

What’s most notable is that there really hasn’t been any kind of news to account for the daily and intra-day swings.

That may change during this morning’s ECB press conference, as Mario Draghi has shown the ability to move stock markets, usually higher, but there shouldn’t be too many surprises in anything that he will have to say, as we all expect the ECB version of Quantitative Easing to begin shortly.

The one surprise may be the realization that there aren’t as many bonds available for purchase as there is demand from the ECB. That would be interesting.

Meanwhile, while we await his words and responses to questioning, those market swings haven’t been limited to just stocks. Oil, metals and to a lesser degree interest rates have also been undecided in their direction the past few days and have also made some large moves without any news.

In that kind of environment it’s hard to justify putting too much new money at risk. For me, it’s easier to justify recycling money from assignments and perhaps holding some back.

Despite yesterday’s sell off and first triple digit loss in quite a while those positions that are set to expire this week weren’t disadvantaged, with the exception of the Gold Miners ETF put, but if you’ve had a long position in that ETF you can understand why I wouldn’t mind taking assignment, if necessary, as the volatility in precious metals and its proxy, the miners, has made that ETF a very frequent trading vehicle over the past few months.

For the next two days I just hope that nothing upsets the status quo as I would very much like to see a preponderance of assignments, but wouldn’t necessarily be upset if some of those hoped for assignments became rollovers, instead, as was the case last week.

Because that latter possibility is definitely better than the alternative to the contracts simply expiring out of the money if there is some sign of deterioration in pricing today, knowing that there is a potentially significant event tomorrow morning, there may be reason to jump the gun a little bit and make rollover trades, where possible.

Tomorrow’s Employment Situation Report isn’t expected to offer much in the way of surprises, especially after Wednesday’s ADP number was in line with expectations, so there’s not too much reason to think that there will be a decided increase in risk. However, with the first 3 days of this week having set the tone, it’s probably not a bad idea to be prepared for any kind of reaction, even in the event of no real news worthy of reaction.

Daily Market Update – March 4, 2015 (Close)

After the first 2 days of this week that looked as if they were going to be quiet trading days, based on the pre-opening futures, there wasn’t too much reason to try to guess what this morning’s futures trading would mean.

It certainly didn’t send a message that the DJIA would have its first triple digit loss in over a month.

Each of the first two days had large moves, albeit in opposite directions, but not for any real discernible reason. Following that pattern, there was absolutely no reason to believe that today would follow the other pattern.

This morning the futures were showing a mildly negative opening and it showed no change after the ADP job numbers were released, as those seemed to fall in line with what most expect for Friday’s Employment Situation Report.

With no real news until Friday morning there simply was not much reason to suspect that much would happen between now and Friday morning, but there really wasn’t any news on Monday or Tuesday, either.

Sometimes, stuff just happens.

The continuing stories for the week have been energy prices and interest rates and those are likely to go on, but there hasn’t been any theme to those stories, as they have bounced up and down as there are no markets that currently seem to have any idea of where they are going.

Today was the same, as there was every reason for energy prices to head lower as inventories keep growing and will soon result in the inability to store any more product, therby requiring a need to release it onto the market.

Instead prices turned around and closed nicely higher.

With a number of positions set for expiration this week I had hope that between now and Friday’s closing bell there would be an upward bias to the stock market and a mildly higher bias to energy prices.

Still, despite today’s broad weakness the expiring positions aren’t much worse the wear for the experience.

With a few positions now occupying next week’s expiration that gives a little more leeway in terms of actions for the week. Rollovers, if any can look at next week or the use of an extended option, however the week after next is already the end of the monthly option cycle and already has plenty of positions set to expire. Going much beyond that in a low volatility environment isn’t that appealing.

For that reason, my preference would be to see those positions expiring this week get assigned, although I wouldn’t mind continuing the energy – airline pair trade if that opportunity presents itself, as it surprisingly did last Friday.

Otherwise, I don’t expect that there will be much reason to think about any new purchases for the rest of the week, although there are some possible trades for stocks going ex-dividend on Monday, which would require trades by Friday’s close.

With a little bit of cash in reserve there is still the possibility of opening those new positions, such as in General Motors and Baxter International, but the likelihood is that I would wait until after the market shows its reaction to the Employment Situation Report, before making any decision. Additionally, before making those additional purchases I’d like to have some better assurance of whether some of the existing positions will be assigned or not.

Although I know not to count those chickens before they’re hatched, I still tend to do so every week. Last week was another good example of why it’s a bad idea to do so, but I’m sure I’ll still do the same this week, as well, despite today’s potential sp[iler.

Hopefully, I’ll be able to show some restraint, though, before committing next week’s money that may or may not be there when the dust settles.

Daily Market Update – March 4, 2015 (9:00 AM)

After the first 2 days of this week that looked as if they were going to be quiet trading days, based on the pre-opening futures, there’s not too much reason to try to guess what this morning’s futures trading will mean.

Each of the first two days had large moves, albeit in opposite directions, but not for any real discernible reason.

This morning the futures are showing a mildly negative opening and it showed no change after the ADP job numbers were released, as those seemed to fall in line with what most expect for Friday’s Employment Situation Report.

With no real news until Friday morning there’s not much reason to suspect that much will happen between now and Friday morning, but there really wasn’t any news on Monday or Tuesday, either.

The continuing stories for the week have been energy prices and interest rates and those are likely to go on, but there hasn’t been any theme to those stories, as they have bounced up and down as there are no markets that currently seem to have any idea of where they are going.

With a number of positions set for expiration this week I hope that between now and Friday’s closing bell there is an upward bias to the stock market and a mildly higher bias to energy prices.

With a few positions now occupying next week’s expiration that gives a little more leeway in terms of actions for the week. Rollovers, if any can look at next week or the use of an extended option, however the week after next is already the end of the monthly option cycle and already has plenty of positions set to expire. Going much beyond that in a low volatility environment isn’t that appealing.

For that reason, my preference would be to see those positions expiring this week get assigned, although I wouldn’t mind continuing the energy – airline pair trade if that opportunity presents itself, as it suprisingly did last Friday.

Otherwise, I don’t expect that there will be much reason to think about any new purchases for the rest of the week, although there are some possible trades for stocks going ex-dividend on Monday, which would require trades by Friday’s close.

With a little bit of cash in reserve there is still the possibility of opening those new positions, such as in General Motors and Baxter International, but the likelihood is that I would wait until after the market shows its reaction to the Employment Situation Report, before making any decision. Additionally, before making those additional purchases I’d like to have some better assurance of whether some of the existing positions will be assigned or not.

Although I know not to count those chickens before they’re hatched, I still tend to do so every week. Last week was another good example of why it’s a bad idea to do so, but I’m sure I’ll do the same this week, as well.

Hopefully, I’ll be able to show some restraint, though, before committing next week’s money that may or may not be
there when the dust settles.

Daily Market Update – March 3, 2015 (Close)

It’s probably a good thing that the NASDAQ broke 5000 yesterday.

That at least is giving everyone something to talk about and a chance to reflect over the past 15 years in an effort to explain why 2015 is different from 2000.

All you really need to do to see the difference is to watch the clips from 2000 and compare the neck wrinkles before and after. Trying to compare hair color before and after would lead you to believe that there has been no change.

While NASDAQ 5000 is the big story that gives an opportunity to ignore discussing what happened yesterday everywhere else, as the market went up 155 points for no reason at all.

Along with stocks bonds and energy were big movers yesterday and sometimes it’s just as difficult to understand those moves, either.

This morning interest rates were continuing their move higher, although just edging up, but still a long, long way from where they were to start 2014 at 3%.

As the interest rate climbs higher, perhaps Stanley Fischer’s comment last Friday will hold more true than the one Janet Yellen offered on Wednesday, as again there’s lots of speculation regarding an interest rate hike by June.

At some point those interest rates become competition for stocks, but it has been so long since that’s been the case.

For now it’s just something that people keep their eye on as the overall sentiment continues to be that the bond traders and the ones who live and breathe interest rates are the ones best positioned to really know the future.

Based on the continuing stream of data, despite more and better paying jobs, there is still very little indication of inflationary pressures, with the exception of what Wal-Mart and now others may be generating at the level of entry wages.

Those relatively large percentage increases in pay should have a greater impact on the consumer economy than all of the trickle down over the past 30 years. I know that if I received a $100 stock dividend each week I would be much less likely to spend it than if the $100 weekly raise I received happened to represent more than 15% of my salary.

So while this morning looked as if it was going to take a little bit of a break from yesterday’s surprisingly big move to the upside there seemed to be plenty of reason to just watch. As it would turn out, despite a recovery late in the day the NASDAQ came well off of yesterday’s close and the broader market gave up most of yesterday’s gain.

There was no real reason for that either, other than getting even with yesterday.

I was glad to be able to add some positions into next
week’s expirations and hope that this week’s Employment Situation Report will bring the week to an end that sees its share of assignments and rollovers, just as had been the case throughout February.

Daily Market Update – March 3, 2015 (9:15 AM)

It’s probably a good thing that the NASDAQ broke 5000 yesterday.

That at least is giving everyone something to talk about and a chance to reflect over the past 15 years in an effort to explain why 2015 is different from 2000.

All you really need to do to see the difference is to watch the clips from 2000 and compare the neck wrinkles before and after. Trying to compare hair color before and after would lead you to believe that there has been no change.

While NASDAQ 5000 is the big story that gives an opportunity to ignore discussing what happened yesterday everywhere else, as the market went up 155 points for no reason at all.

Along with stocks bonds and energy were big movers yesterday and sometimes it’s just as difficult to understand those moves, either.

This morning interest rates are continuing their move higher, although just edging up at the moment, but still a long, long way from where they were to start 2014 at 3%.

As the interest rate climbs higher, perhaps Stanley Fischer’s comment last Friday will hold more true than the one Janet Yellen offered on Wednesday, as again there’s lots of speculation regarding an interest rate hike by June.

At some point those interest rates become competition for stocks, but it has been so long since that’s been the case.

For now it’s just something that people keep their eye on as the overall sentiment continues to be that the bond traders and the ones who live and breathe interest rates are the ones best positioned to really know the future.

Based on the continuing stream of data, despite more and better paying jobs, there is still very little indication of inflationary pressures, with the exception of what Wal-Mart and now others may be generating at the level of entry wages.

Those relatively large percentage increases in pay should have a greater impact on the consumer economy than all of the trickle down over the past 30 years. I know that if I received a $100 stock dividend each week I would be much less likely to spend it than if the $100 weekly raise I received happened to represent more than 15% of my salary.

So while this morning looks as if it is going to take a little bit of a break from yesterday’s surprisingly big move to the upside there seems to be plenty of reason to just watch. I was glad to be able to add some positions into next week’s expirations and hope that this week’s Employment Situation Report will bring the week to an end that sees its share of assignments and rollovers, just as had been the case throughout February.