Weekend Update – May 31, 2015

The one thing that’s been pretty clear as this earnings season is winding down is that the market hasn’t been very tolerant unless the bad news was somehow wrapped in a currency exchange story.

It was an earnings season that saw essentially free passes given early on to those reporting decreased top line revenue and providing dour guidance, as long as the bad news was related to a strong US Dollar.

As earnings season progressed, however, it became clear that some companies that could have asked for that free pass were somehow much better able to tolerate the conditions that investors were willing to forgive. That had to raise questions in some minds as to whether there was a little too much leniency as the market’s P/E ratio was beginning to get a little bit ahead of where it historically may have been considered fully priced. Not punishing share price when earnings may warrant doing so can lead to those higher P/E ratios that so often seem to have had a hard time sustaining themselves at such heights.

On the other hand, plunges of 20% or more weren’t uncommon when the disappointment and the pessimistic future outlook couldn’t be easily rationalized away. Sometimes the punishment seemed to be trying to make up for some of those earlier leniences, although if that’s the case, it’s not a very fair resolution.

In other words, this earnings season has been one where bad news was good news, as long as there was a good reason for the bad news. If there was no good reason for the bad news, then the bad news was extra bad news.

This past Friday’s GDP report was bad news. It was the kind of news that would make it difficult to justify increasing interest rates anytime very soon. That. of course, would make it good news.

The market, though, interpreted that as bad news as the week came to its close, while the same news a month ago would have been likely greeted as good news.

Same news, but take your pick on its interpretation.

This past week was one that i couldn’t decide how to interpret anything that was unfolding. Listless pre-open futures trading during the week sometimes failed to portend what was awaiting and so eager to reverse course, at the sound of the opening bell. While I tend to trade less on holiday shortened weeks usually due to lower option premiums, this past week offered me nothing to feel positive about and more than a few reasons to continue to want to wish that i had more in my cash reserve pile.

As the new week is getting ready to start, it’s another with fairly little to excite. Like this past week, perhaps the biggest news will come on the final trading day, as the Employment Situation Report is released.

Another strong showing may only serve to confuse the picture being painted by GDP data, which is now suggesting increased shrinking of our economy.

A weak employment report might corroborate GDP data, but at this point it’s hard to say what the market reaction might be. Whether that would be perceived as good news or bad news is a matter of guesswork.

If the news, however, is really good, then it’s really anyone’s guess as to what would happen, as a decreasing GDP wouldn’t seem to be a logical consequence of strongly expanding employment.

While the FOMC says that it will be data driven and has worked to remove any reference to a relative timeframe, ultimately it’s not about the data, but rather how they chose to interpret it, especially if logic seems to be failing to tie the disparate pieces together.

While markets may change how they interpret the data from day to day, hopefully the FOMC will be a bit more consistent and methodical than the paper fortune teller process markets have been subjected to of late.

As usual, the week’s potential stock selections are classified as being in Traditional, Double-Dip Dividend, Momentum or “PEE” categories.

Kohls (NYSE:KSS) is one of those companies that didn’t have a currency exchange excuse that could be used at earnings time and its shares took a nearly 15% plunge. Best of all, if not having owned shares, in the subsequent 2 weeks its share price has barely moved. That lack of movement can either represent an opportunity that hasn’t disappeared or could be the building of a new support level and invitation to take advantage of that opportunity.

With an upcoming ex-dividend date on Monday of next week, any decision to exercise an option to grab the dividend would have to be made by the close of trading this week. With only monthly options being sold, that could be an attractive outcome if purchasing shares and selling in the money June 2015 calls.

The potential downside is that the dramatic drop in Kohls’ share price still hasn’t returned it to where it launched much higher a few months ago and where the next level of technical support may be. For that reason, while hoping for a quick early assignment and the opportunity to then redeploy the cash, there is also the specter of a longer term holding in the event that shares start migrating lower to its most recent support level.

Mosaic (NYSE:MOS) is ex-dividend this week and represents a company that had a similar plunge nearly 2 years ago, but still has shown no signs of recovery. In its case the price plunge wasn’t related to poor sales or reduced expectations, but rather to the collapse of artificial price supports as the potash cartel was beginning to fall apart.

Mosaic, however, has traded in a fairly narrow range since then and has been an opportune short term purchase when at or below the mid-point of that range.

Those shares are now at that mid-point and the dividend is an additional invitation to entry for me. With its ex-dividend day being Tuesday, it may also be an example of seeking early assignment by selling an in the money weekly call in the hopes of attaining a small, but very quick gain and then redeploying cash into a new position.

I recently had shares of Sinclair Broadcasting (NASDAQ:SBGI) assigned and tried to repurchase them last week in order to capture the dividend, but just couldn’t get the trade executed. However, even with the dividend now out of the picture, I am interested in adding the shares once again.

While so much attention has recently focused on cable and content providers, Sinclair Broadcasting is simply the largest television station operator in the United States. The tightly controlled family operation shows that there is still a future in doing nothing more than transmitting signals the old fashioned way.

While I usually prefer to start new positions with an eye toward a weekly option or during the final week of a monthly option, Sinclair Broadcasting is one of those companies that I don’t mind owning for a longer period of time and don’t get overly concerned if its shares test support levels. I would have preferred to have entered the position last week, but at $30/share I still see some opportunity, but would not chase this if it moved higher as the week begins.

With old tech no longer moribund, people are no longer embarrassed to admit that they own shares of Microsoft (NASDAQ:MSFT). Instead, so many seem to have re-discovered Microsoft before the rest of the world and no longer joke about or disparage its products or strategies. They simply forgot to tell the rest of the world that they were going to be so prescient, but fortunately, it’s never to late to do so.

Microsoft continues to have what has made it a great covered call trade for many years. It still offers an attractive premium and it offers dividend growth. Of course the risk is now greater as shares have appreciated so much over those years. But along with that risk comes an offset that may offer some support. In the belief that passivity or poorly conceived or integrated strategies are no longer the norm it is far easier to invest in shares with confidence, even as the 52 week high is within reach.

While new share heights provide risk there is also the feeling that Microsoft will be in a better position to proactively head into the future and react to marketplace challenges. Even the brief speculation about a buyout of salesforce.com (NYSE:CRM) helped to reinforce the notion that Microsoft may once again be “cool” and have its eyes on a logical strategy to evolve the company.

For the moment it seems as if some of the activist and boardroom drama at DuPont (NYSE:DD) may have subsided, although it’s not too likely that it has ended.

The near term question is whether activists give up their attempts at enhancing value and exit their positions with respectable profits or double down, perhaps with new strategic recommendations.

While the concern about Trian exiting its position may have been responsible for the steep price decline after the shareholder vote last month, it’s not entirely clear that the Trian stake was in any meaningful way responsible for DuPon’t share performance, as they like to credit themselves.

It’s apparently all a matter of interpretation.

In fact, from the time the Trian stake was first disclosed nearly 2 years ago, DuPont has only marginally out-performed the S&P 500. However, from the beginning of the market recovery in March 2009 up until the points that Trian’s stake was disclosed, DuPont’s share performance was more than 50% better than that of the S&P 500.

So while the market has clearly shown that they perceive Peltz’s position and strategy to be an important support for DuPont’s share price and they may have already discounted his exit, CEO Kullman’s strategic path may have easier going without activist distractions

Finally, following the release of some clinical trial results of its drug Opdivo in the treatment of lung cancer, shares of Bristol Myers Squibb (NYSE:BMY) fell nearly 7% on Friday. Those shares are still well above the level where they peaked following an earnings related move in October 2014, so there is still some concern that th
e decline last week may have more to go.

However, the results of those clinical trials actually had quite a few very positive bits of news, including significantly increased survival rates in a sizeable sub-population of patients and markedly lower side effects. On Friday, the market interpreted the results as being very disappointing, but after a few days that interpretation can end up becoming markedly different.

As we all know too well.

Traditional Stocks: Bristol Myers Squibb , DuPont, Microsoft, Sinclair Broadcasting

Momentum Stocks: none

Double-Dip Dividend: Kohls (6/8), Mosaic (6/2)

Premiums Enhanced by Earnings: none

Remember, these are just guidelines for the coming week. The above selections may become actionable, most often coupling a share purchase with call option sales or the sale of covered put contracts, in adjustment to and consideration of market movements. The overriding objective is to create a healthy income stream for the week with reduction of trading risk.

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Week in Review – May 25 – 29, 2015

 

Option to Profit

Week in Review

 

May 25 – 29,  2015

 

NEW POSITIONS/STO NEW STO ROLLOVERS CALLS ASSIGNED/PUTS EXPIRED CALLS EXPIRED/PUTS ASSIGNED CLOSED
0 / 0 0 1 1  /  0 0  / 0 0

    

Weekly Up to Date Performance

May 25 – 29, 2015

This was a really very forgettable week. Last week it was just forgettable. This week took it to an extreme that I hadn’t experienced before.

There were no new positions opened for the week, representing the third of fourth time that has occurred in over 3 years. But to make things worse, there was only a single expiring position.

In what was a terrible week, overall, the unadjusted and adjusted S&P 500 ended the week having gone 0.9% lower.

Lots closed in 2015 continue to out-perform the market. They are an average of 5.2% higher, while the comparable time adjusted S&P 500 average performance has been 1.5% higher. That 3.7% difference represents a 256.6% performance differential.  That’s too large to be sustained, but I’ve been saying that for a while, including much of 2014.

I knew a few weeks ago that this was likely to be a quiet week, but had no clue just how quiet it would be.

With only one position set to expire this week and with premiums even lower due to the holiday shortened week, there wasn’t going to be much opportunity to work with existing positions, especially as the market was so indecisive.

With earnings no longer driving the market and interest rate concerns back in vogue, there’s not too much that looks as if it wants to push the market any higher, but that has been the prevailing opinion so many times over the past few years.

With it getting more and more rare to see a meaningful correction, we’ve tended to over-inflate the importance of even the smallest and inconsequential pullbacks.

Most, like this week, have been nothing more than minor hiccoughs on the way higher

With cash a little higher as a result of an assignment this week and no new purchases, I’m anxious to add some more positions as the new week opens, but am equally anxious not to get too anxious about doing so.

With a small number of positions set to expire next week, but a larger number to end the month in 3 weeks, any new positions next week are most likely going to look at either next week or the following week’s expirations.

As this week produced virtually no income, at least next week has a large number of positions going ex-dividend, and hopefully some opportunity to either add to the cash reserve or generate some needed income.

Next week will be an Employment Situation report on Friday and maybe there may be some fear re-introduced if it is going to offer a mumber that is deemed to be too good.

For now, I would welcome getting the pain of any interest rate increase out of the way so that we could back back to actually focusing on what’s going well in the economy and how good news should be treated as good news.

Wouldn’t that be nice for a change?

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 This week’s details may be seen in the Weekly Performance spreadsheet * or in the PDF file, as well as in the summary below

(Note: Duplicate mention of positions reflects different priced lots):



New Positions Opened:   none

Puts Closed in order to take profits:  none

Calls Rolled over, taking profits, into the next weekly cycle: none

Calls Rolled over, taking profits, into extended weekly cycle:  GDX (6/12)

Calls Rolled over, taking profits, into the monthly cycle: none

Calls Rolled Over, taking profits, into a future monthly cycle:  none

Calls Rolled Up, taking net profits into same cyclenone

New STO:  none

Put contracts expired: none

Put contracts rolled over: none

Long term call contracts sold:  none

Calls Assigned: LXK

Calls Expired:  none

Puts Assigned:  none

Stock positions Closed to take profits:  none

Stock positions Closed to take losses: none

Calls Closed to Take Profits: none

Ex-dividend Positions: RIG (5/27 $0.15), ANF (5/29 $0.20)


Ex-dividend Positions Next Week
: HAL (6/1 $0.19), JOY (6/2 $0.20), MOS (6/3 $0.28), BAC (6/3 $0.05), COH (6/3 $0.34), HFC (6/3 $0.33)

 

 

For the coming week the existing positions have lots that still require the sale of contracts:   AGQ, ANF, CHK, CLF,  FAST, FCX, HAL, .INTC, JCP, JOY, LVS,  MCP, MOS, RIG, WFM, WLT (See “Weekly Performance” spreadsheet or PDF file)



* If you don’t have a program to read or modify spreadsheets, you can download the OpenOffice Suite at no cost.



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Daily Market Update – May 29, 2015

 

 

 

Daily Market Update – May 29, 2015  (8:00 AM)

 

The Week in Revew will be posted by 6 PM and the Weekend Update will be posted by noon on Sunday.

It was hard to understand what happened on Tuesday, just as it was hard to understand exactly what happened yesterday.

 

The following trade outcomes are possible today:

 

Assignments:  none

Rollovers:  none

Expirations:   none

 

The following were ex-dividend this week:  ANF (5/29 $0.20), RIG (5/27 $0.15)

The following will be ex-dividend next week:  HAL (6/1 $0.18), JOY (6/2 $0.20), MOS (6/2 $0.275), BAC (6/3 $0.05), COH (6/3 $0.34), HFC (6/3 $0.33)

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

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Daily market Update – May 28, 2015 (Close)

 

 

 

Daily Market Update – May 28, 2015  (Close)

 

It was hard to understand what happened on Tuesday, just as it was hard to understand exactly what happened yesterday.

Yesterday’s market wasn’t exactly an equal and opposite reaction, but at least it was noticeable in the correction to the previous day.

It still, however, doesn’t leave us anywhere other than continuing to be on that big piece of plywood delicately balanced on the head of a nail.

The pre-open futures was again poised to offer virtually nothing in the form of direction as I was getting ready to scan positions this morning. Today looked as if it would be bringing me one more step closer to a week with no trades, other than the early assignment of one position.

But somehow that market vectors Gold Miners ETF got yet another rollover. That as its 20 trade overall in the past 6 months.

While I do like the additional cash, it has been a frustrating week. Although I wasn’t expecting to make many trades and already aware that there was little to be rolled over this holiday shortened week, the very few trades that I’ve tried to make haven’t materialized. Even the one rollover couldn’t get executed yesterday.

With now just one day left in this week my expectations are low, but it will be very interesting to see how tomorrow’s GDP figure will look, as well as how the markets will react to it.

Any suggestion that the economy is heating up, or is on a stronger path than had been earlier indicated, is likely to be met with a bad market reaction. Following Tuesday’s sell off, it may not take much to tip over that perfectly balanced sheet of plywood.

With this week being a virtual wasteland and no activity, my eyes are on next week and hoping to be able to do something with the cash on hand as well as something with the few positions already set to expire next Friday.

Hopefully the next couple of days will show some more consistency and allow some more strategic planning. The back and forth that we’ve seen over the past few weeks, while occasionally setting some new record highs, isn’t the kind that creates confidence, nor does it create a strong support level for the market to climb even higher.

Still, as unhealthy as it seems, you do have to admire the way the market has been able to stick in and respond to every challenge with a new effort to recover.

I’m willing to do that, but I’d be much more willing if I could be a much more active participant.

That doesn’t look to be the case today or maybe not even tomorrow, but there’s always next week. At least then we have an Employment Situation Report and some FOMC Governors speaking to liven things up a little and maybe even get the futures back into the game.

 

 

 

 

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Daily Market Update – May 28, 2015

 

 

 

Daily Market Update – May 28, 2015  (8:00 AM)

 

It was hard to understand wat happened on Tuesday, just as it was hard to understand exactly what happened yesterday.

Yesterday’s market wasn’t exactly an equal and opposite reaction, but at least it was noticeable in the correction to the previous day.

It still, however, doesn’t leave us anywhere other than continuing to be on that big piece of plywood delicately balanced on the head of a nail.

The pre-open futures is again poised to offer virtually nothing in the form of direction as getting ready to scan positions this morning. Today brings me one more step closer to a week with no trades, other than the early assignment of one position.

While I do like the additional cash, it has been a frustrating week. Although I wasn’t expecting to make many trades and already aware that there was little to be rolled over this holiday shortened week, the very few trades that I’ve tried to make haven’t materialized. Even the one rollover couldn’t get executed yesterday.

With just two days left in this week my expectations are low, but it will be very interesting to see how tomorrow’s GDP figure will look, as well as how the markets will react to it.

Any suggestion that the economy is heating up, or is on a stronger path than had been earlier indicated, is likely to be met with a bad market reaction. Following Tuesday’s sell off, it may not take much to tip over that perfectly balanced sheet of plywood.

With this week being a virtual wasteland and no activity, my eyes are on next week and hoping to be able to do something with the cash on hand as well as something with the few positions already set to expire next Friday.

Hopefully the next couple of days will show some more consistency and allow some more strategic planning. The back and forth that we’ve seen over the past few weeks, while occasionally setting some new record highs, isn’t the kind that creates confidence, nor does it create a strong support level for the market to climb even higher.

Still, as unhealthy as it seems, you do have to admire the way the market has been able to stick in and respond to every challenge with a new effort to recover.

I’m willing to do that, but I’d be much more willing if I could be a much more active participant.

That doesn’t look to be the case today or maybe not even tomorrow, but there’s always next week. At least then we have an Employment Situation Report and some FOMC Governors speaking to liven things up a little and maybe even get the futures back into the game.

 

 

 

 

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Daily Market Update – May 27, 2015 (Close)

 

 

 

Daily Market Update – May 27, 2015  (Close)

 

It’s still hard to understand what exactly happened yesterday.

Sometimes on the first day back after a holiday weekend of the kind that’s not celebrated elsewhere in the world, our markets can have a gap up or gap down if there was some kind of large move in European or Asian markets.

But that wasn’t the case. It was a quiet 3 days all over the world and our own futures market was predicting more of the same.

With most major companies having already reported earnings, the price of oil stabilizing and the US Dollar getting a little less precious in foreign exchanges there really wasn’t much threatening in the air, other than the fact that we were right near all time highs and haven’t had a real correction in 3 years.

Maybe that’s enough.

Within minutes of the opening bell the market began telling a very different story from what the futures had portended. While those muted futures performances don’t necessarily have great predictive value, it is unusual to see the market diverge so strongly and so quickly from the futures.

The real emphasis on that last line goes on just how quickly the market turned negative and turned its back on the futures.

With most of my new position trades typically occurring on Mondays and Tuesdays and most rollovers usually on Thursdays and Fridays, this really has the makings for being a very unusual week.

While there have been two or three weeks over the past 3 years that have not had any new positions opened, there has never been a week without either a new position being opened or some position being rolled over.

This could be that week.

The only positive thing about yesterday was that volatility, which has been plummeting lately, at least got a little bit of a boost. Even so, it still has a long way to go to make things interesting again.

This morning’s futures were again looking as if it would be a quiet day, this time with a little bias to the upside.

Today simply proved to be another example of how those futures, especially when they’re muted in their expression, are pretty meaningless.

All they show is that the professional money, the kind that’s supposed to be smarter than the other kind of money, doesn’t really know what it’s doing on certain days.

For me, the relative calm before the market opened didn’t feel very inviting. As with previous weeks I would still like to see the cash reserve pile being bigger than it is at the moment, especially if there are some more days like yesterday ahead.

With the early assignment of Lexmark this morning to capture its dividend, I do feel a little better about having some more cash available, though, especially since it meant keeping the entire month’s option premium and still having another 3 weeks to put that money to work. But even then, I’d like to see some more cash in that pile.

Unless there’s an unexpected purchase opportunity with an expiration for this week, that’s not too likely, so without much to focus on for this week, as there’s only one position possibly up for assignment or rollover, the focus shifts to next week. Even with that in mind, I kept looking for anything that could be justified, but had a hard time talking myself into any trades.

At least there are already some positions set to expire next week and maybe between now and then there may be a little more clarity ahead and some more clear signal as to whether it makes sense to dip into cash.

Not to mix metaphors too much, but while that cash does burn a hole in my pocket, I’d rather feel that heat than see it go down the drain.

 

 

 

 

 

 

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Daily Market Update – May 27, 2015

 

 

 

Daily Market Update – May 27, 2015  (8:00 AM)

 

It’s still hard to understand what exactly happened yesterday.

Sometimes on the first day back after a holiday weekend of the kind that’s not celebrated elsewhere in the world, our markets can have a gap up or gap down if there was some kind of large move in European or Asian markets.

But that wasn’t the case. It was a quiet 3 days all over the world and our own futures market was predicting more of the same.

With most major companies having already reported earnings, the price of oil stabilizing and the US Dollar getting a little less precious in foreign exchanges there really wasn’t much threatening in the air, other than the fact that we were right near all time highs and haven’t had a real correction in 3 years.

Maybe that’s enough.

Within minutes of the opening bell the market began telling a very different story from what the futures had portended. While those muted futures performances don’t necessarily have great predictive value, it is unusual to see the market diverge so strongly and so quickly from the futures.

The real emphasis on that last line goes on just how quickly the market turned negative and turned its back on the futures.

With most of my new position trades typically occurring on Mondays and Tuesdays and most rollovers usually on Thursdays and Fridays, this really has the makings for being a very unusual week.

While there have been two or three weeks over the past 3 years that have not had any new positions opened, there has never been a week without either a new position being opened or some position being rolled over.

This could be that week.

The only positive thing about yesterday was that volatility, which has been plummeting lately, at least got a little bit of a boost. Even so, it still has a long way to go to make things interesting again.

This morning’s futures were again looking as if it would be a quiet day, this time with a little bias to the upside, but the relative calm doesn’t feel very inviting. As with previous weeks I would still like to see the cash reserve pile being bigger than it is at the moment, especially if there are some more days like yesterday ahead.

With the early assignment of Lexmark this morning to capture its dividend, I do feel a little better about having some more cash available, though, especially since it meant keeping the entire month’s option premium and still having another 3 weeks to put that money to work. But even then, I’d like to see some more cash in that pile.

Unless there’s an unexpected purchase opportunity with an expiration for this week, that’s not too likely, so without much to focus on for this week, as there’s only one position possibly up for assignment or rollover, the focus shifts to next week.

AT least there are already some positions set to expire next week and maybe between now and then there may be a little more clarity ahead and some more clear signal as to whether it makes sense to dip into cash.

Not to mix metaphors too much, but while that cash does burn a hole in my pocket, I’d rather feel that heat than see it go down the drain.

 

 

 

 

 

 

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Daily Market Update – May 26, 2015 (Close)

 

 

 

Daily Market Update – May 26, 2015  (Close)

 

Well, today was certainly a surprise.

Looking at the pre-open futures every indication was that this holiday shortened week was going to get off on the same foot that reflected all of last week.

If that was going to be the case it was destined to be another very listless trading session.

But it didn’t take long for things to deteriorate. Within about 10 minutes the market was already down 100 points and with no real reason to account neither for it nor for the additional 100 points that was tacked on.

The question, at some point, and maybe that point started this morning, was just how long the market can essentially do nothing as it sits right at all time highs. That’s basically like trying to balance an 8 foot length piece of plywood on the head of a pin. For a split second there may be an equilibrium, but you just know that it can’t last.

The only difference is that the plywood can only drop and the market doesn’t necessarily need a reason, such as the suspension of gravity and the laws of nature, to go higher.

There’s not too much economic news this week, although there are a few that can give the FOMC some reason to begin the interest rate hiking process.

This week there are Durable Goods, New Home Sales, Jobless Claims and perhaps, most importantly, Friday’s GDP.

This morning none of those were really on anyone’s mind. Maybe only the weight of the precarious piece of plywood was dangling over investor’s heads enough to stir some nerves.

With today finally out of the way, there is still some things to consider as the week progresses, most notably as it comes to its close.

With all of the controversy surrounding the accuracy of the previous winter months GDP reports, this Friday’s release may cause a re-set in thinking. That’s because the rate of change may now take on a very different character as the results of those winter months are more closely re-scrutinized.

The FOMC probably doesn’t care where the economy has been, but they do care about where it’s going and how fast it’s getting there. With what may have been faulty Q1 data, it’s really difficult to then assess the velocity or acceleration rate of change.

But that’s their problem and I’m sure that they’ll deal with it in a measured and rational way.

Not too many people are still thinking that a rate hike might be announced at the June meeting, but all it may take is a couple of corroborating reports to suggest that things are heating up after the winter and there could still easily be room for a small interest rate increase in the coming month.

That would cast a near term pall on markets, as the debate had shifted to whether the rate hike would be coming in September or maybe even waiting until 2016.

But that leaves the rest of us to wonder whether much of the foundation of the market’s recent strengt
h, that is the expectation that higher interest rates weren’t coming too soon, may prove to have been a misguided expectation.

As the market does started the morning right below all time closing highs and with cash still lower than I would like, I’m probably not going on a spending spree this week. However, if I’m going to meet the weekly goal of generating an income stream, that’s going to require some new purchases.

I’m not a big fan of having competing interests in life, but this is one of those time when the desire to conserve cash is in conflict with the need to generate cash.

That’s because what I mentioned a few weeks ago as a possibility has become the reality. As I mentioned a few weeks ago this Friday’s expiration could have ended up being one with no expiring positions and that’s almost the case, with only the Market Vectors Gold Miners ETF set to expire this week.

With virtually no positions to rollover there are no income producing positions unless new ones are added.

With only 4 days of time reflected in this week’s option premiums there may be reason to look at extended weekly expirations for any new positions that may be opened and simply adding to the small handful that are already set to expire next week.

 

 

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Daily Market Update – May 26, 2015

 

 

 

Daily Market Update – May 26, 2015  (8:45 AM)

 

Looking at the pre-open futures every indication is that this holiday shortened week is going to get off on the same foot that reflected all of last week.

If that’s going to be the case it’s going to be another very listless trading session.

The question, at some point, becomes just how long the market can essentially do nothing as it sits right at all time highs. That’s basically like trying to balance an 8 foot length piece of plywood on the head of a pin. For a split second there may be an equilibrium, but you just know that it can’t last.

The only difference is that the plywood can only drop and the market doesn’t necessarily need a reason, such as the suspension of gravity and the laws of nature, to go higher.

There’s not too much economic news this week, although there are a few that can give the FOMC some reason to begin the interest rate hiking process.

This week there are Durable Goods, New Home Sales, Jobless Claims and perhaps, most importantly, Friday’s GDP.

With all of the controversy surrounding the accuracy of the previous winter months GDP reports, this Friday’s release may cause a re-set in thinking. That’s because the rate of change may now take on a very different character as the results of those winter months are more closely re-scrutinized.

The FOMC probably doesn’t care where the economy has been, but they do care about where it’s going and how fast it’s getting there. With what may have been faulty Q1 data, it’s really difficult to then assess the velocity or acceleration rate of change.

But that’s their problem and I’m sure that they’ll deal with it in a measured and rational way.

Not too many people are still thinking that a rate hike might be announced at the June meeting, but all it may take is a couple of corroborating reports to suggest that things are heating up after the winter and there could still easily be room for a small interest rate increase in the coming month.

That would cast a near term pall on markets, as the debate had shifted to whether the rate hike would be coming in September or maybe even waiting until 2016.

But that leaves the rest of us to wonder whether much of the foundation of the market’s recent strength, that is the expectation that higher interest rates weren’t coming too soon, may prove to have been a misguided expectation.

As the market does sit right below all time closing highs and with cash still lower than I would like, I’m probably not going on a spending spree this week. However, if I’m going to meet the weekly goal of generating an income stream, that’s going to require some new purchases.

I’m not a big fan of having competing interests in life, but this is one of those time when the desire to conserve cash is in conflict with the need to generate cash.

That’s because what I mentioned a few weeks ago as a
possibility has become the reality. As I mentioned a few weeks ago this Friday’s expiration could have ended up being one with no expiring positions and that’s almost the case, with only the Market Vectors Gold Miners ETF set to expire this week.

With virtually no positions to rollover there are no income producing positions unless new ones are added.

With only 4 days of time reflected in this week’s option premiums there may be reason to look at extended weekly expirations for any new positions that may be opened and simply adding to the small handful that are already set to expire next week.

 

 

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Dashboard – May 25 – 29, 2015

 

 

 

 

 

SELECTIONS

MONDAY:   HAPPY MEMORIAL DAY

TUESDAY:  Looks like markets will start the shortened trading week right where they left off last week and will be doing just about nothing. That can’t last, however, when perched at all time highs

WEDNESDAY: The pre-open futures are pointing to a mildly positive bias this morning, but a lot of good it did as a predictor of yesterday’s trading. Lots of people are still scratching their heads over what caused such a swift turnaround from the futures the moment the market opened for trading

THURSDAY:  After 2 days in which the pre-open futures foretold nothing, today is another in a series of lackluster openings being poretended

FRIDAY: Finally, an end to this week of no trades and no meaning, as the pre-open futures again point at more of the same.

 

 

 


 



 

                                                                                                                                           

Today's TradesCash-o-Meter

 

 

 





 “SNEAK PEEK AT NEXT WEEK” APPEARS ON FRIDAYS

Sneak PeekPie Chart Distribution

 

 

 

 

 

 

 

Weekly Summary

  

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