Monthly Archives: June 2015

Daily Market Update – June 24, 2015  (Close)

While we wait for some near term resolution to the Greek banking crisis, the market reacted very positively on Monday when there was reason to believe that an agreement was in sight and then did nothing the following day when there was no news.

This morning there was again no news from Europe and the pre-open futures are flat waiting for the morning’s GDP data to be released.

That data will be among those indicators that the FOMC will be closely looking at in about a month, before deciding whether or not to raise interest rates before it goes on its own vacation and won’t be heard from again until September.

What the data indicated in its final revision of the first quarter, was that it wasn’t as bad as thought. The decrease was revised from 0.7% to 0.2%. Better, but still at a very slow pace for the first half of the year.

Interestingly, in the past couple of days there have been more people popping up doubting whether we would see any increase in those rates in 2015, at all. That was a more common belief a few weeks ago, but seemed to disappear after the last FOMC meeting, when most became convinced that September was going to be “lift-off” for the rate hike.

Any surprises in GDP, particularly more revisions upward for the first quarter, could have gone a long way in convincing the FOMC that the consumer is coming to life. Whether due to more cash in pocket from decreasing energy prices or whether from greater employment numbers and at higher wages, sooner or later that consumer spending has to kick in.

With housing picking up and those prices increasing, and minimum wage increasing and more people working, the assumption has to be that some of that additional household money is going to get put back into the economy.

While everyone knows and understands that has to happen, what has come as a surprise is just how slowly the obvious is taking to happen, maybe because people had to dig such deep holes for themselves after the last financial crisis and collapse of the housing market.

Tomorrow’s Personal Income and Outlays data may give some more of that salient data that the FOMC craves and may also be a potential market mover.

If the data continues to be good and follows the path taken today with that good GDP news, no one will be very happy, as today’s market lost everything gained during the first 2 days of trading and none of it can be blamed on Greece.

For now, indexes still sit close to record highs and as long as they can stay at these levels heading into earnings, there’s reason to believe that those markets can go even higher.

So far, this week, despite Monday’s nice gain, hasn’t had any trades get executed.

I did have a couple of trades put out yesterday and some more today, but the options market has been very, very quiet, as volatility is just continuing to be so low. With today’s price declines those trades just got further out of hand.

With that volatility being so low and premiums following them, there’s actually reason to consider being on the purchasing end of the options transaction as the premiums are so low and as long as the market continues to have an upward bias. By the same token, portfolio insurance through the purchase of S&P 500 puts is fairly inexpensive, as well.

The cure for that would be some uncertainty and there should have been plenty of that over the past month, but somehow it never materialized. despite what common sense may have expected.

Common sense also says that with the market going higher you would think that premiums for call options would get bid higher, as well, as people would be looking at options increasingly as a way of cashing in on that upward momentum.

But it was that same common sense that would have expected a spike in consumer spending to have occured more than 6 months ago as oil prices plunged, andf that still hasn’t arrived.

This morning, as the market has a moderately negative tone, there wasn’t much to do other than to await the GDP release and see where things would go as the market got ready to open for trading.

After that. there was even less to do.

Maybe tomorrow.

While I’d like to see some more of that uphill climb so that I can finally make some trades, it would be nice to see some uncertainty come back and goive option buyers a reason to come back into the market.

.

Daily Market Update – June 24, 2015  (Close)

While we wait for some near term resolution to the Greek banking crisis, the market reacted very positively on Monday when there was reason to believe that an agreement was in sight and then did nothing the following day when there was no news.

This morning there was again no news from Europe and the pre-open futures are flat waiting for the morning’s GDP data to be released.

That data will be among those indicators that the FOMC will be closely looking at in about a month, before deciding whether or not to raise interest rates before it goes on its own vacation and won’t be heard from again until September.

What the data indicated in its final revision of the first quarter, was that it wasn’t as bad as thought. The decrease was revised from 0.7% to 0.2%. Better, but still at a very slow pace for the first half of the year.

Interestingly, in the past couple of days there have been more people popping up doubting whether we would see any increase in those rates in 2015, at all. That was a more common belief a few weeks ago, but seemed to disappear after the last FOMC meeting, when most became convinced that September was going to be “lift-off” for the rate hike.

Any surprises in GDP, particularly more revisions upward for the first quarter, could have gone a long way in convincing the FOMC that the consumer is coming to life. Whether due to more cash in pocket from decreasing energy prices or whether from greater employment numbers and at higher wages, sooner or later that consumer spending has to kick in.

With housing picking up and those prices increasing, and minimum wage increasing and more people working, the assumption has to be that some of that additional household money is going to get put back into the economy.

While everyone knows and understands that has to happen, what has come as a surprise is just how slowly the obvious is taking to happen, maybe because people had to dig such deep holes for themselves after the last financial crisis and collapse of the housing market.

Tomorrow’s Personal Income and Outlays data may give some more of that salient data that the FOMC craves and may also be a potential market mover.

If the data continues to be good and follows the path taken today with that good GDP news, no one will be very happy, as today’s market lost everything gained during the first 2 days of trading and none of it can be blamed on Greece.

For now, indexes still sit close to record highs and as long as they can stay at these levels heading into earnings, there’s reason to believe that those markets can go even higher.

So far, this week, despite Monday’s nice gain, hasn’t had any trades get executed.

I did have a couple of trades put out yesterday and some more today, but the options market has been very, very quiet, as volatility is just continuing to be so low. With today’s price declines those trades just got further out of hand.

With that volatility being so low and premiums following them, there’s actually reason to consider being on the purchasing end of the options transaction as the premiums are so low and as long as the market continues to have an upward bias. By the same token, portfolio insurance through the purchase of S&P 500 puts is fairly inexpensive, as well.

The cure for that would be some uncertainty and there should have been plenty of that over the past month, but somehow it never materialized. despite what common sense may have expected.

Common sense also says that with the market going higher you would think that premiums for call options would get bid higher, as well, as people would be looking at options increasingly as a way of cashing in on that upward momentum.

But it was that same common sense that would have expected a spike in consumer spending to have occured more than 6 months ago as oil prices plunged, andf that still hasn’t arrived.

This morning, as the market has a moderately negative tone, there wasn’t much to do other than to await the GDP release and see where things would go as the market got ready to open for trading.

After that. there was even less to do.

Maybe tomorrow.

While I’d like to see some more of that uphill climb so that I can finally make some trades, it would be nice to see some uncertainty come back and goive option buyers a reason to come back into the market.

.

Daily Market Update – June 24, 2015  (8:30 AM)

While we wait for some near term resolution to the Greek banking crisis, the market reacted very positively on Monday when there was reason to believe that an agreement was in sight and then did nothing the following day when there was no news.

This morning there’s again no news from Europe and the pre-open futures are flat waiting for the morning’s GDP data to be released.

That data will be among those indicators that the FOMC will be closely looking at in about a month, before deciding whether or not to raise interest rates before it goes on its own vacation and won’t be heard from again until September.

Interestingly, in the past couple of days there have been more people popping up doubting whether we would see any increase in those rates in 2015, at all. That was a more common belief a few weeks ago, but seemed to disappear after the last FOMC meeting, when most became convinced that eptember was going to be “lift-off” for the rate hike.

Any surprises in GDP, particularly more revisions upward for the first quarter, could go a long way in convincing the FOMC that the consumer is coming to life. Whether due to more cash in pocket from decreasing energy prices or whether from greater employment numbers and at higher wages, sooner or later that consumer spending has to kick in.

With housing picking up and those prices increasing, and minimum wage increasing and more people working, the assumption has to be that some of that additional household money is going to get put back into the economy.

While everyone knows and understands that has to happen, what has come as a surprise is just how slowly the obvious is taking to happen, maybe because people had to dig such deep holes for themselves after the last financial crisis and collapse of the housing market.

Tomorrow’s Personal Income and Outlays data may give some more of that salient data that the FOMC craves and may also be a potential market mover.

For now, indexes sit close to record highs or at new highs and as long as they can stay at these levels heading into earnings, there’s reason to believe that those markets can go even higher.

So far, this week, despite Monday’s nice gain, hasn’t had any trades get executed.

I did have a couple of trades put out yesterday but the options market has been very, very quiet, as volatility is just continuing to be so low.

There’s actually reason to consider being on the purchasing end of the options transaction as the premiums are so low and as long as the market continues to have an upward bias. By the smae token, portfolio insurance through the purchase of S&P 500 puts is fairly inexpensive, as well.

The cure for that would be some uncertainty and there should have been plenty of that over the past month, but somehow it never materialized. despite what common sense may have expected.

Common sense also says that with the market going higher you would think that premiums for call options would get bid higher, as well, as people would be looking at options increasingly as a way of cashing in on that upward momentum.

But it was that same common
sense that would have expected a spike in consumer spending to have occured more than 6 months ago as oil prices plunged, andf that still hasn’t arrived.

This morning, as the market has a moderately negative tone, there’s not much to do other than to await the GDP release and see where things will go as the market gets ready to open for trading.

While I’d like to see some more of that uphill climb so that I can finally make some trades, it would be nice to see some uncertainty come back and goive option buyers a reason to come back into the market.

.

Daily Market Update – June 23, 2015  (Close)

There was a lot of optimism yesterday coming from Europe, ostensibly because people believed that some sort of agreement, maybe a very short term one, was at hand regarding the Greek financial crisis.

At this point, with so many back and forth stories and with the clock ticking away toward a deadline imposed by Christine Legarde, I’m not even sure where the story currently resides.

Today did nothing to really clarify things, but at least I know enough to know that nothing big happened today.

Judging by the pre-open futures this morning, either nothing had changed over-night, or the US stock market is ready to de-couple and move forward.

As it turns out nothing did happen, but the US market just took the opportunity to do nothing.

The pre-open futures were mildly higher and may have even been able to continue yesterday’s very nice session, but not giving up anything is good too.. Despite having given up some of those gains the previous day, it was still a very nice day and today didn’t squander any of that good spirit.

With it looking just a few days ago as if we might be heading into another of those mini-corrections, or even more, the market wouldn’t go beyond a 3% decline. Even those 5% mini-corrections that we had become accustomed to over the past 3 years aren’t able to coalesce lately.

The market was set to begin the day less than 1% below its all time highs, with the NASDAQ having surpassed those highs. A curveball from Europe could upset that picture a little, but more and more there is talk about how inconsequential the Greek economy really is and how the EU would be able to withsatnd the departure of Greece from its grand experiment.

What recourse Greece may have is doubtful, as its new government hasn’t done much to move it forward and has only tried playing various sides against one another.

In the meantime, regardless of outcome, it will be time to move on. Unlike the situation of a few years ago, with Greece again at center stage, there’s not the same kind of fear that a failure in Greece would lead to some kind of domino effect across more of the EU.

So for us it will just be another story that disappears into the ether.

It would, of course, have been very nice if some of yesterday’s strength could have continued today as we tried to get out from under the Greek story and look forward to the next earnings season or at least get over any concerns that an interest rate increase will come as early as the end of next month.

With yesterday’s Existing Home Sales up a very strong 5% and with the price of a median home back up to the high levels last seen at the peak in 2007, there was going to be extra attention paid to New Home Sales data released today, in addition to GDP data tomorrow and Personal Income and Outlays on Thursday.

In essence, it’s a busy week that may better put together a picture of how much and how fast the economy may be growing, especially on the consumer side of the equation.

Too much good news, while good, could be bad in terms of expectations for when that interest rate increase finally arrives.

For today, I didn’t expect to be parting with any cash, but retained the hope that I could finally create some with a sale or two of option contracts to help give some meaning to the week.

I tried, but there were no takers.

Maybe tomorrow.

Daily Market Update – June 23, 2015  (8:30 AM)

There was a lot of optimism yesterday coming from Europe, ostensibly because people believed that some sort of agreement, maybe a very short term one, was at hand regarding the Greek financial crisis.

At this point, with so many back and forth stories and with the clock ticking away toward a deadline imposed by Christine Legarde, I’m not even sure where the story currently resides.

Judging by the pre-open futures this morning, either nothing has changed over-night, or the US stock market is ready to de-couple and move forward.

The pre-open futures are mildly higher and may even be able to continue yesterday’s very nice session. Despite having given up some of those gains, it was still a very nice day.

With it looking just a few days ago as if we might be heading into another of those mini-corrections, or even more, the market wouldn’t go beyond a 3% decline. Even those 5% mini-corrections that we had become accustomed to over the past 3 years aren’t able to coalesce lately.

The market is set to begin the day less than 1% below its all time highs, with the NASDAQ having surpassed those highs. A curveball from Europe could upset that picture a little, but more and more there is talk about how inconsequential the Greek economy really is and how the EU would be able to withsatnd the departure of Greece from its grand experiment.

What recourse Greece may have is doubtful, as its new government hasn’t done much to move it forward and has only tried playing various sides against one another.

In the meantime, regardless of outcome, it will be time to move on. Unlike the situation of a few years ago, with Greece again at center stage, there’s not the same kind of fear that a failure in Greece would lead to some kind of domino effect across more of the EU.

So for us it will just be another story that disappears into the ether.

It would, of course, be very nice if some of yesterday’s strength could continue today as we try to get out from under the Greek story and look forward to the next earnings season or at least get over any concerns that an interest rate increase will come as early as the end of next month.

With yesterday’s Existing Home Sales up a very strong 5% and with the price of a median home back up to the high levels last seen at the peak in 2007, there’s going to be extra attention paid to New Home Sales data released today, in addition to GDP data tomorrow and Personal Income and Outlays on Thursday.

In essence, it’s a busy week that may better put together a picture of how much and how fast the economy may be growing, especially on the consumer side of the equation.

Too much good news, while good, could be bad in terms of expectations for when that interest rate increase finally arrives.

For today, I don’t expect to be parting with any cash, but retain the hope that I can finally create some with a sale or two fo option contracts to help give some meaning to the week.