Daily Market Update – March 25, 2015 (Close)

 

 

 

Daily Market Update – March 25, 2015  (Close)

Yesterday reverted back to recent form after having spent a couple of hours of the trading day looking as if it would simply be as flat as was the pre-open futures.

Instead it was another triple point move. This one was to the downside and was a continuation of the sell-off that happened on Monday afternoon that saw the DJIA give up its gains in the final 15 minutes of trading.

Today did not revert back to form, because if it had, it would have been an up day. Instead, it was an abysmal day that only got worse as it progressed, with the DJIA off almost 300 points.

This morning looked like it will be another flat open as the futures were doing almost nothing despite some excitement from the impending Kraft Foods deal. The fact that interest rates are still so low would make you think that more deals might be on the horizon, although it may be hard to justify the stock prices at these levels. Even for those companies that are sinking below 200 day moving averages are still pretty expensive for those looking for bargains.

That goes even for someone just looking to pick up 100 shares, although most things did get a little less expensive today.

Still, some increased activity would be welcome and they don’t all have to be blockbuster kind of deals, such as with Kraft Foods. Just look at yesterday’s announcement of a relatively tiny $1 Billion deal that Lexmark was undertaking in buying a company that I’d never heard of, but coincidentally also starts with the letter “K.”

Both of those companies appear to be getting pats on the back this morning, so there may be more, especially as Lexmark hasn’t exactly been the kind of company on the acquisitive prowl over the past few years, but opportunity is opportunity.

The real focus for the rest of the week will still be on Friday’s GDP release, although this morning’s Durable Goods could have potentially given the markets either a reason to celebrate or to fear that the news was a harbinger for impending interest rate hikes.

Instead of suggesting that the manufacturing portion of the economy was humming along those Durable Good numbers threw some cold water on the idea of any real economic expansion brewing.

But despite the absence of good news or the presence of bad news, depending on how you interpret the Durable Goods Report, it had no real impact on today’s trading.

At this point we don’t really know whether the market is going to view good news as good news or whether it’s going to take that paradoxical approach that it often does.

As the Durable Goods figures were released the futures did virtually nothing, befitting a market that may still find itself confused over what it wants to hear.

For the rest of the week I don’t see very much in activity, although it ended up being hard to resist a position in Activision which was going ex-dividend tomorrow. Since it has an annual dividend if it can be assigned quickly that will end up being much better than the 1% yield it offers on a yearly basis.

While I wouldn’t completely exclude the possibility of any other purchases of new positions for the rest of the week, it’s probably not too likely and there are only a handful of contracts that are possible rollover candidates this week that require much attention.

While I was wishing that today would be a very passive and watchful day, just like it was yesterday, that obviously wasn’t meant to be.

Hopefully tomorrow will bring something different as time is running out on this week and the chance to roll anything over.

 

 

 

 

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Daily Market Update – March 25, 2015

 

 

 

Daily Market Update – March 25, 2015  (8:30 AM)

Yesterday reverted back to recent form after having spent a couple of hours of the trading day looking as if it would simply be as flat as was the pre-open futures.

Instead it was another triple point move. This one was to the downside and was a continuation of the sell-off that happened on Monday afternoon that saw the DJIA give up its gains in the final 15 minutes of trading.

This morning looks like it will be another flat open as the futures are doing almost nothing despite some excitement from the impending Kraft Foods deal. The fact that interest rates are still so low would make you think that more deals might be on the horizon, although it may be hard to justify the stock prices at these levels. Even for those companies that are sinking below 200 day moving averages are still pretty expensive for those looking for bargains.

That goes even for someone just looking to pick up 100 shares.

Still, some increased activity would be welcome and they don’t all have to be blockbuster kind of deals, such as with Kraft Foods. Just look at yesterday’s announcement of a relatively tiny $1 Billion deal that Lexmark was undertaking in buying a company that I’d never heard of, but coincidentally also starts with the letter “K.”

Both of those companies appear to be getting pats on the back this morning, so there may be more, especially as Lexmark hasn’t exactly been the kind of company on the acquisitive prowl over the past few years, but opportunity is opportunity.

The real focus for the rest of the week will still be on Friday’s GDP release, although this morning’s Durable Goods could have potentially given the markets either a reason to celebrate or to fear that the news was a harbinger for impending interest rate hikes.

Instead of suggesting that the manufacturing portion of the economy was humming along those Durable Good numbers threw some cold water on the idea of any real economic expansion brewing.

At this point we don’t really know whether the market is going to view good news as good news or whether it’s going to take that paradoxical approach that it often does.

As the Durable Goods figures were released the futures did virtually nothing, befitting a market that may still find itself confused over what it wants to hear.

For the rest of the week I don’t see very much in activity. While I wouldn’t completely exclude the possibility of any other purchases of new positions for the week, it’s probably not too likely and there are only a handful of contracts that are possible rollover candidates this week that require much attention.

As the day gets ready to begin it doesn’t appear as if there will be too many chances to sell calls on uncovered positions, so it may be a very passive and watchful day today, just like it was yesterday.

 

 

 

 

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Daily Market Update – March 24, 2015 (Close)

 

 

 

Daily Market Update – March 24, 2015  (Close)

Well, at least yesterday came close to being able to put together two consecutive days of gains for the first time in a month.

Up until the last 10 minutes or so it looked as if it would happen.

There was actually some reason to feel optimistic yesterday as the Existing Home Sales were higher and Federal Reserve Vice-Chair Stanley Fischer gave the first of his two talks this week and didn’t shy away from plainly stating that rates were going up.

Perhaps had those events happened a week earlier the market may have taken it as a set of signs that it would be appropriate to take a plunge.

Instead, there was both something refreshing about Fischer actually joking about impending rate increases and the market reacting rationally to news that would have sent it into a panic just days ago.

That may be reason enough to have some optimism as the market continues to be able to find higher ground even as so many stocks are being challenged on a 50 day basis, which many consider to be a bearish signal.

While there’s nothing much else scheduled between today and the end of the week, there’s always Friday and Stanley Fischer has another chance to get people nervous now that he’s softened them up with economic humor.

It will be interesting to hear his comments in light of the GDP statistics that will be released that morning, as most everyone will be  focusing on whether the GDP finally begins to show the consumer led expansion that we’ve now been expecting for about 4 months of lower energy prices.

This morning the Consumer Price Index was up 0.2%, which did nothing to excite the pre-opening futures, which like yesterday were trading fairly flat. That was, however, the first increase seen since October 2014, but it actually reflected higher gas prices seen over the past month. The increase was, though, perhaps an indication that the annual inflation rate may reach the Federal Reserve target of 2% or even beyond, which could give some justification for the first interest rate increase.

In its very early response, though, the bond market was taking rates down ever so slightly. As the day wore on those rates went even lower.

So far there hasn’t been any validation of the thesis that consumer spending was going to increase in a meaningful way as energy prices decreased in a meaningful way. Even retailers that had initially started painting a rosy picture stepped back a little when providing earnings guidance over the past month.

Yesterday, though, most of the day was simply one of trading without any reason to go up nor down, although over the previous week the market hasn’t really needed a reason to make a large move, although each of those moves was in some way erased or mostly erased the following day.

Today, after that flat start in the futures the market hugged the flat line until about noon and then just gave up for the day until finally ending with another triple digit loss, with the selling picking up for real in the final 30 minutes again.

With a couple of new positions opened yesterday there still may be some more for the rest of the week, but there’s no real compelling reason to put more at risk when the market continues to be so directionless. Today w
as a good day to just sit and aimlessly watch and wonder.

If that direction does turn higher at any point this week, it would still be nice to see some very strong moves in that direction, even if they don’t have much in the way of staying power. Those are the kind of moves that can make sale of calls on uncovered positions begin to look appealing. Additionally, those large moves, especially if occurring with lots of intra-day price fluctuation sends premiums higher. Lately we’ve had the large moves, but without the intra-day fluctuation, so the volatility has actually been falling and taking premiums along with it.

As with yesterday and again today, there’s not too much reason to rush into any trades and plenty of reason to simply watch and see where the market may head again tomorrow.

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Daily Market Update – March 24, 2015

 

 

 

Daily Market Update – March 24, 2015  (9:00 AM)

Well, at least yesterday came close to being able to put together two consecutive days of gains for the first time in a month.

Up until the last 10 minutes or so it looked as if it would happen.

There was actually some reason to feel optimistic yesterday as the Existing Home Sales were higher and Federal Reserve Vice-Chair Stanley Fischer gave the first of his two talks this week and didn’t shy away from plainly stating that rates were going up.

Perhaps had those events happened a week earlier the market may have taken it as a set of signs that it would be appropriate to take a plunge.

Instead, there was both something refreshing about Fischer actually joking about impending rate increases and the market reacting rationally to news that would have sent it into a panic just days ago.

That may be reason enough to have some optimism as the market continues to be able to find higher ground even as so many stocks are being challenged on a 50 day basis, which many consider to be a bearish signal.

While there’s nothing much else scheduled between today and the end of the week, there’s always Friday and Stanley Fischer has another chance to get people nervous now that he’s softened them up with economic humor.

It will be interesting to hear his comments in light of the GDP statistics that will be released that morning, as most everyone will be  focusing on whether the GDP finally begins to show the consumer led expansion that we’ve now been expecting for about 4 months of lower energy prices.

This morning the Consumer Price Index was up 0.2%, which did nothing to excite the pre-opening futures, which like yesterday were trading fairly flat. That was, however, the first increase seen since October 2014, but it actually reflected higher gas prices seen over the past month. The increase was, though, perhaps an indication that the annual inflation rate may reach the Federal Reserve target of 2% or even beyond, which could give some justification for the first interest rate increase.

In its very early response, though, the bond market was taking rates down ever so slightly.

So far there hasn’t been any validation of the thesis that consumer spending was going to increase in a meaningful way as energy prices decreased in a meaningful way. Even retailers that had initially started painting a rosy picture stepped back a little when providing earnings guidance over the past month.

Yesterday, though, most of the day was simply one of trading without any reason to go up nor down, although over the previous week the market hasn’t really needed a reason to make a large move, although each of those moves was in some way erased or mostly erased the following day.

With a couple of new positions opened yesterday there still may be some more for the rest of the week, but there’s no real compelling reason to put more at risk when the market continues to be so directionless.

If that direction does turn higher, it would still be nice to see some very strong mo
ves in that direction, even if they don’t have much in the way of staying power. Those are the kind of moves that can make sale of calls on uncovered positions begin to look appealing. Additionally, those large moves, especially if occurring with lots of intra-day price fluctuation sends premiums higher. Lately we’ve had the large moves, but without the intra-day fluctuation, so the volatility has actually been falling and taking premiums along with it.

As with yesterday there’s not too much reason to rush into any trades and plenty of reason to simply watch and see where the market may head for the day.

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Dashboard – March 23 – 27, 2015 (Close)

 

  

 

Daily Market Update – March 23, 2015  (Close)

This should be a relatively quiet week on the news front 

I don’t usually look at “Existing Home Sales” very much, but that was one of the factors cited by the FOMC last week as being a reason to delay interest rate hikes, as those sales continue to be disappointing, having been on a downtrend for the past 9 months.

While the weather may still be at play as those figures are reported this morning any uptick leading into Friday’s GDP report and then Stanley Fischer’s scheduled speech could easily get markets fearful again of coming interest rate increases.

As it would turn out those Existing Home Sales were improved and Stanley Fischer spoke today, as well as still being scheduled on Friday and the world didn’t explode.

In fact, the market actually finally was almost able to string two higher days on the DJIA, missing out only in the final 2 minutes of trading. But the market did break that string of alternating triple digit moves.

It still is confusing why everyone is so afraid of the initiation of such increases, as the market has generally done very well during the early stages of such increases.

Unless there are real signs of an economy heating up too fast there shouldn’t be the fears that rates are going to start increasing too often and too quickly. That would definitely stifle stocks as investors would look for alternatives.

The technical indicators after the past 7 or 8 trading sessions point higher even as the market has been unable to even have 2 consecutive days higher.

This morning the market was perfectly flat as we awaited the beginning of trading. Lately, however, with only a single day’s exception, that pre-open trading hasn’t been an indicator of the direction nor the size of the move by the closing bell.

Today it was pretty good as the market traded in a fairly tight range, only showing a little bit of relative weakness in the closing 15 minutes.

What has been especially interesting is that in the time of those previous trading sessions there had also only been a single day in which the trading theme saw a reversal, so it was interesting to see whether the market would continue trading in a state of fugue as the week began.

With a couple of assignments last week and some cash added to the pile I was less reluctant to spend some money to establish new positions. Since there are only 2 positions set to expire this week the greatest likelihood is that I would look for opportunities with contracts also expiring this week, in order to increase the likelihood of being able to recycle money to re-deploy in the following week.

A couple of those opportunities did come along, but I’m still open to some more.

But as the volatility has moved again near its low point for the past year, despite all of those triple digit moves, there’s little attraction for looking at longer time frame contracts, as those premiums are just getting so low. With a smattering of contracts already set to expire for all of the weeks in the April 2015 cycle there’s not too much reason to look for opportunities to populate those at the moment.

Again, as has been the case for quite some time, I would most invite any opportunity to simply conserve cash and generate income through the sale of options on existing uncovered positions. After making those new purchases today I would now especially welcome a repeat of some of last week’s unfounded moves higher.

Last week was a good week for that and that always offers some enhancement to return as it generates cash flow. However, what has been especially frustrating is that the market’s inability to string together meaningful moves forward has resulted in lost opportunities to sell those call options. That’s because any hopes of seeing shares move even higher in anticipation of some sort of rally have generally been dashed, although there have also been some exceptions.

Despite those exceptions, such as with Astra Zeneca and Sinclair Broadcasting, I think that I would still jump at any opportunity at this point to lock in any premiums on moves higher, as more and more stocks are moving higher in isolated ways and unable to hold those levels.

This morning I waited until the Existing Home Sales data was released to see if there was any reason for the markets to forget about their celebration of a continued dovish stance on interest rates. The last time the market responded with relief it only lasted 2 days, so it seemed right to see how long the party would keep going this time.

And if the party does keep going?

I still wouldn’t mind a repeat of last week, with or without new positions to enjoy the ride.

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