Monthly Archives: May 2015

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

The Week in Review will be posted by 6:00 PM and the Weekend Update will be posted by Noon on Sunday.

The following trade outcomes are possible today:

Assignments:  none

Rollovers:  ANF

Expirations:  AZN, LVS, WFM

The following positions were ex-dividend this week:  INTC (5/5 $0.24), BP (5/6 $0.60).  

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

Daily Market Update – May 7 , 2015  (Close)

The one lesson that can be learned from Alan Greenspan and Janet Yellen is that the market doesn’t like it when they vocalize an opinion that essentially says that they believe stocks are too expensive.

Whether it’s Greenspan’s “frothy exuberance” or Yellen’s questioning of bio-technology stock prices, yesterday’s comment  that equities were “priced quite high,” seemed to get an immediate response.

While the knee-jerk reaction is hard to argue, the longer term consequence is less clear cut, as such statements have tended to lead toward the market or the sector to move higher.

Despite a late minute reduction in the decline, taking it out of triple digit territory, yesterday was a very negative trading session, adding onto the decline from the day before.

Lately, when faced with a decline of some note there has been a reflexive bounce back the following day, so yesterday did stand out a little for not following that pattern.

In a week that has basically no scheduled news sometimes it doesn’t take too much to make things happen and yesterday was a good example of that. Tomorrow, however, as the Employment Situation Report is released and most expect a bounce much higher from last month’s disappointing report, anything can happen.

Both “too good” and “bad” are likely to lead in the same downward direction and even “as expected” may be seen as a disappointment.

This morning’s futures, just prior to the Jobless Claims Report had already shown quite a bit of improvement and was only very slightly lower, hopefully putting the brakes on the past couple of days and giving those positions expiring this week a chance to either be assigned or get rolled over. The past few days put either of those goals a little further off the horizon.

With the Jobless Claims Report released and essentially showing no change, the market also showed essentially no change from its improved position and looked at least be ready to start the day without the extreme prejudice that was hanging over it yesterday.

Instead, it actually provided a nice surprise, as the market actually spent quite a bit of the day in triple digit gain territory and at least was there long enough to allow a couple of rollovers. Of course, that doesn’t leave too much for tomorrow, although there may at least be one rollover or assignment still in contention.

Hopefully there will be some more rally tomorrow, even a relief rally would be fine right now, as long as giving some chance to generate some more income from holdings.

As we close in on next week’s month ending expirations and with enough expiring positions to get my attention, we will hopefully not be taken further away from the goal line heading into the expiration date.

After that anything is fair game

 

Daily Market Update – May 7 , 2015  (8:45 AM)

The one lesson that can be learned from Alan Greenspan and Janet Yellen is that the market doesn’t like it when they vocalize an opinion that essentially says that they believe stocks are too expensive.

Yesterday, should have been a quiet day, but then someone remembered that bonds were starting to pose a threat to stocks, as their interest rate has been climbing higher and higher.Whether it’s Greenspan’s “frothy exuberance” or Yellen’s questioning of bio-technology stock prices, yesterday’s comment  that equities were “priced quite high,” seemed to get an immediate response.

While the knee-jerk reaction is hard to argue, the longer term consequence is less clear cut, as such statements have tended to lead toward the market or the sector to move higher.

Despite a late minute reduction in the decline, taking it out of triple digit territory, it was a very negative trading session, adding onto the decline from the day before.

Lately, when faced with a decline of some note there has been a reflexive bounce back the following day, so yesterday did stand out a little for not following that pattern.

In a week that has basically no scheduled news sometimes it doesn’t take too much to make things happen and yesterday was a good example of that. Tomorrow, however, as the Employment Situation Report is released and most expect a bounce much higher from last month’s disappointing report, anything can happen.

Both “too good” and “bad” are likely to lead in the same downward direction and even “as expected” may be seen as a disappointment.

This morning’s futures, just prior to the Jobless Claims Report has already shown quite a bit of improvement and is only very slightly lower, hopefully putting the brakes on the past couple of days and giving those positions expiring this week a chance to either be assigned or get rolled over. The past few days put either of those goals a little further off the horizon.

With the Jobless Claims Report released and essentially showing no change, the market also showed essentially no change from its improved position and may, at least be ready to start the day without the extreme prejudice that was hanging over it yesterday.

Hopefully there will be some rally, even a relief rally would be fine right now, as long as giving some chance to generate some more income from holdings, but for now that doesn’t look too likely today.

As we close in on next week’s month ending expirations and with enough expiring positions to get my attention, we will hopefully not be taken further away from the goal line heading into the expiration date.

After that anything is fair game

Daily Market Update – May 6 , 2015  (Close)

Yesterday, should have been a quiet day, but then someone remembered that bonds were starting to pose a threat to stocks, as their interest rate has been climbing higher and higher.

That move isn’t the first one in the past couple of months, as an earlier one mis-read the likelihood of the FOMC making an interest rate change and then very quickly retreated.

This week Friday’s Employment Situation Report could make the difference between those rates going higher or returning below 2%.

Last month’s report was pretty abysmal, but this time around the expectations are for some good numbers, returning to a stronger path that had been the case up until very recently.

Whether a strong earnings number heats up concerns over an interest rate increase is anyone’s guess, but it probably would do so.

In light of bond rates moving higher and the FOMC removing any calendar references to the timing of an increase, while re-iterating its dependence on data, would make you think that the slightest evidence of an economy heating up might finally be enough to move those rates higher.

Then we will probably get a collective sigh and maybe that will prove to be the catalyst for the market itself moving higher. After all, even at 2.2%, the bond market isn’t that much of an attractive competitor to stocks.

Yesterday’s plunge seemed to be entirely related to bond worries and this morning the market, if it follows the recent pattern, will be setting itself up for a recovery bounce higher, albeit on much lower volume.

As the morning futures are trading, at least there was a mild move higher in advance of the ADP release. That release, unless it is really somewhere unexpectedly high or low, doesn’t do too much to move the needle, but does give people a sense of where the government employment statistics may be leaning.

As usual, despite a somewhat disappointing ADP statistic, the market didn‘t really seem to care.

What it did care about was an errant comment by Janet Yellin who said that she believed that equities were priced “quite high.”

That’ll do it.

And so the market put together another of these decidedly negative days, so much so that the DJIA is now unchanged for 2015

For now, my eyes and attention are focused on trying to extricate from any positions that are due to expire this week. Yesterday’s decline made both the prospects or rollovers and assignments become more and more distant, but lately big moves have become more frequent, so you never do know what may unfold over the next couple of trading days, especially with a big event on Friday.

Today did nothing to help things.

More importantly, though, at this point, is being left in a good position so that next week’s monthly option cycle ending week goes off smoothly and delivers a good combination of rollovers and assignments.

For that, we will need Thursday and Friday to cooperate.