Option to Profit
Week in Review
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Weekly Up to Date Performance
It was another weak Friday, but thanks to two back to back triple digit gains the market is now in a 2 steps forward and one step backward kind of dance.
After last week’s large loss that erased the previous week’s large gain, this week had a nice gain due to nothing really happening in the world.
There was again only one new position opened for the week and it out-performed both the adjusted and unadjusted S&P 500 by 1.0%.
That position was 2.2% higher for the week while the S&P 500 was up own by 1.2%.
With the week bouncing back from the previous week and avoiding getting too close to support levels, you have to think that there will be some kind of a test of resistance, but the week didn’t have enough steam left in it to get that done.
With no assignments once again, the 46 closed lots in 2015 continue to outperform the market. They are an average of 5.0% higher, while the comparable time adjusted S&P 500 average performance has been 1.3% higher. That difference represents a 283.3% performance differential.
This was a week with lots of earnings and despite most companies reporting better EPS data, they are continuing to do so on reduced revenues.
That’s not such a good thing and now marks the second consecutive quarter of that being the case. But because expectations were so low, in part due to forward guidance that was based on an expectation for Euro/USD parity, the majority of companies are reporting better than expected earnings.
You wouldn’t necessarily know that when you look at the reactions of some stocks even to better than expected earnings reports.
That’s all happening at a moment in time that the S&P 500 is barely 1.5% off of its all time highs, yet 12 of the DJIA components are in bear market mode, meaning that they are down at least 10% from their recent highs.
How is that even a thing?
That’s such a bizarre combination, but it’s just another way of pointing out how skewed and artificial the index levels really are, as there’s lots of evidence that the broader markets just aren’t very healthy, despite what things may look like.
This week’s two strong days were mostly owing to the lack of anything going on in the world and the lack of any kind of news from the FOMC.
With some economic data yesterday and today, there’s very little reason to now think that the economy is heating up enough to provide the kind of data that the FOMC can rely upon as warranting an increase in its interest rates. GDP data was disappointing and there’s no evidence of any upward pressure on wages.
After coming within a hair of dropping below its support level when the Chinese market seemed to recover just in time from its swoon after the government stepped in, the market started getting ready to challenge its highs, but China got back in the way.
The ensuing reversal of the challenge to its resistance was fairly short lived, but if you look at the recent experience and draw lines connecting each spike’s highs and each drop’s lows, you see that the highs are lower and the lows are higher.
While I’m not a technician and I don’t really buy into the validity of technical analysis, that sort of pattern usually is said to indicate some kind of impending large break-out.
Up or down? Who knows? Just a big move of indeterminate direction.
WIth no assignments this week and barely any trades at all, the new week is set to begin with very little cash and with no positions set to expire for the week.
Outside of an ex-dividend date on a single stock, that combination of factors isn’t very conducive to generating portfolio revenue for the week.
The pressure continues until energy and commodity prices change course, but consenus is that won’t be happening anytime soon, so I’m optimistic that it will, just as a month ago everyone was proclaiming that energy prices had successfully emerged from the onslaught.
Next week has more earnings, but other than the Employment Situation Report, there’s not too much else going on, as the Federal Reserve goes on vacation and will soak in everything that’s happening.
Hopefully next week China will remain under control and earnings will continue to be relatively good, at least leaving us in better shape to deal with whatever surprise is awaiting around the corner.
(Note: Duplicate mention of positions reflects different priced lots):
New Positions Opened: TXN
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: TXN (8/14)
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 cycle: none
New STO: none
Put contracts expired: none
Put contracts rolled over: TWTR (8/28)
Long term call contracts sold: none
Calls Assigned: none
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: KMI (7/29 $0.49), TXN (7/29 $0.34)
Ex-dividend Positions Next Week: INTC (8/5 $0.24)
For the coming week the existing positions have lots that still require the sale of contracts: AGQ, ANF, AZN, CHK, CLF, FCX, GDX, GM, GPS, HAL, INTC, JCP, JOY, KMI, KSS, LVS, MCPIQ, MOS, RIG, WFM, WLTGQ (See “Weekly Performance” spreadsheet or PDF file)
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