Week in Review – July 27 – 31, 2015

Option to Profit

Week in Review

 

 

July 27 – 31, 2015

 

 

 

 

NEW POSITIONS/STO NEW STO ROLLOVERS CALLS ASSIGNED/PUTS EXPIRED CALLS EXPIRED/PUTS ASSIGNED CLOSED EX-DIVIDEND
1  /  1 0 2 0  /  0 2  /  0 0 2

 

Weekly Up to Date Performance

July 27 – 31,  2015

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.

 

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:   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 cyclenone

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 PositionsKMI (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)

* 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 – July 31, 2015

 

 

 

Daily Market Update – July 31,  2015  (8:45 AM)

 

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

The possible trade outcomes today are:

Assignments:   none

Rollovers:   BBY

Expirations:   DOW

The following were ex-dividend this week: KMI (7/29 $0.49), TXN (7/29 $0.34)

The following will be ex-dividend next week: INTC (8/5 $0.24)

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

 

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Daily Market Update – July 30, 2015 (Close)

 

 

 

Daily Market Update – July 30,  2015  (Close)

 

With no news coming from the FOMC yesterday, the market correctly anticipated that to be the case and tacked on another nice gain to the one seen on Tuesday.

Suddenly, the move to re-test the support level at the 2045 level of the S&P 500 was halted and the market is now within about 1.5% of its all time highs and in a position to re-test resistance.

Technicians like to think that as the lows get higher and the highs get lower, that kind of convergence of lines indicates that there will be some sort of break out, but they can’t say in which direction that breakout will be.

The catalyst to the upside could be earnings, but we’re now about at the mid-way point and many of the significant companies have now already reported. However, what may hold some potential for more moves could be retail earnings, which have yet to be released.

Other than that, the relative quiet on the world front, especially some calm now coming from the Chinese stock markets, after a rough start to the week, could remove a barrier from moving higher.

This morning was another GDP release, including revisions to previous data. In 2015 some of those revisions have been fairly significant and have caused an entire shift in sentiment about where we were and where we were going.

Today’s GDP data, even though showing growth of 2.3% was disappointing, but the market was basically a yawner all day, other than for the first 30 minutes when the DJIA was down triple digits.

A stronger than expected GDP and any upward revisions would have gotten tongues wagging again about a September rate hike, but that has been expected for so long at this point, that you would have to believe it has already been discounted and wouldn’t be considered as bad news. We might actually be at a point that good economic news would be seen as good economic news for a change.

Instead, the GDP was on the low side and was seen as bad news, the way you would expect normal people to react.

But eventually came the thought that if the FOMC is still swearing that it is going to be data driven and if growth isn’t heating up enough, then where’s the reason to raise rates, even in September?

This morning the futures were flat and after the past two days you couldn’t blame the market for taking a little break. But as we’ve been seeing lately, there’s very little predictive value in the futures. We’ve even seen some reversals on those days when the futures were making large moves, so it was really anyone’s guess how today would go. 

At this point, having already rolled over half of the positions set to expire this week, there’s not too much more to do other than to hope that the march higher continues.

With no expirations scheduled for next week and with cash at very low levels, I’d like to see some assignments, but that appears unlikely, although there’s still some glimmer of hope for Best Buy with two days of trading left in the week.

It, along with so many others, though, has had a rough time putting consecutive winning sessions together, just as the market has had a tough time doing so.

While it would have been nice if today could have added another day onto that modest market winning streak, there’s always the chance to start anew tomorrow and maybe see gains trickle down to members of the indexes in a more broad way than the market’s advance has been to date.

While most investors aren’t socialists at heart, they might agree that this one be an acceptable instance of sharing the wealth.


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Daily Market Update – July 30, 2015

 

 

 

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

 

With no news coming from the FOMC yesterday, the market correctly anticipated that to be the case and tacked on another nice gain to the one seen on Tuesday.

Suddenly, the move to re-test the support level at the 2045 level of the S&P 500 was halted and the market is now within about 1.5% of its all time highs and in a position to re-test resistance.

Technicians like to think that as the lows get higher and the highs get lower, that kind of convergence of lines indicates that there will be some sort of break out, but they can’t say in which direction that breakout will be.

The catalyst to the upside could be earnings, but we’re now about at the mid-way point and many of the significant companies have now already reported. However, what may hold some potential for more moves could be retail earnings, which have yet to be released.

Other than that, the relative quiet on the world front, especially some calm now coming from the Chinese stock markets, after a rough start to the week, could remove a barrier from moving higher.

This morning will be another GDP release, including revisions to previous data. In 2015 some of those revisions have been fairly significant and have caused an entire shift in sentiment about where we were and where we were going.

A stronger than expected GDP and any upward revisions will get tongues wagging again about a September rate hike, but that has been expected for so long at this point, that you would have to believe it has already been discounted and wouldn’t be considered as bad news. We might actually be at a point that good economic news would be seen as good economic news for a change.

This morning the futures are flat and after the past two days you couldn’t blame the market for taking a little break. But as we’ve been seeing lately, there’s very little predictive value in the futures. We’ve even seen some reversals on those days when the futures were making large moves, so it’s really anyone’s guess.

At this point, having already rolled over half of the positions set to expire this week, there’s not too much more to do other than to hope that the march higher continues.

With no expirations scheduled for next week and with cash at very low levels, I’d like to see some assignments, but that appears unlikely, although there’s still some glimmer of hope for Best Buy with two days of trading left in the week.

It, along with so many others, though, has had a rough time putting consecutive winning sessions together, just as the market has had a tough time doing so.

We’ll see whether today can add another day onto that modest market winning streak and whether or not that streak trickles down to members of the indexes in a more broad way than the market’s advance has been to date.

While most investors aren’t socialists at heart, they might agree that this one be an acceptable instance of sharing the wealth.


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Daily Market Update – July 29, 2015 (Close)

 

 

 

Daily Market Update – July 29,  2015  (Close)

 

Yesterday was a nice break from a series of days that could make one only pessimistic about what was to come next.

Possibly, the catalyst was that the Chinese market wasn’t down as much as it had been the previous day and may have looked as if it was beginning to moderate on this next wave of weakness, as the government again sought to control its behavior.

What would be really nice, unless all you care about is volatility, would be to see more than just a single day of gains,

Lately it has been very difficult to see stocks that aren’t in the news actually string together 2 or more days higher. It has also been a period in which stocks are taking longer and longer to recover from their declines. That is one of the things that makes the current levels of the DJIA and S&P 500 so deceiving.

It’s still on the backs of a few that the market looks to be healthy on the surface.

This morning the futures were pointing just a little bit higher, and that had to be taken as a cautious positive sign, but it turned out that no caution was required.

Overnight, the Chinese stock market reversed course and actually finished higher for the session and so that at least wasn’t going to be something to weigh on today’s market, although the situation in China isn’t going to be going away anytime soon.

Today was also to be the final FOMC Statement release until summer comes to its end in 2 months, but the market didn’t wait to start its party.

It’s wasn’t too likely that there would be anything contained in the release this afternoon that should either excite or spook markets, but it wouldn’t have been too surprising if some of the wording today in the statement gives people something to mull over for the next two months, as economic data will still be forthcoming between now and September.

With yesterday’s gain I wanted to see more of the same, even at the expense of volatility and premiums. Like some others, I’d especially like to see some moderation of the recent bear market in energy and materials. Although both sectors may represent oversold conditions, what they really need is not some sympathy from investors who are driven by technical factors, but rather some demand driven by economic activity.

With only a single new purchase so far this week and cash reserves down about as low as it can go, I’m not too likely to add any new positions this week. Having already rolled over 2 of the week’s expiring positions and the remaining 2 not looking as if they may be rollover candidates, this may be a very quiet few days ahead.

With regard to those rollovers, I decided that I wanted to try and keep the Texas Instruments dividend after seeing its price unexpectedly surge along with everything else yesterday.

The thinking was that there was still a possibility of early assignment with a rollover to the August 14th expiration, but at least that would have delivered the equivalent of about 85% of the dividend and then recycled the cash for further investment. Otherwise, there was a very high probability of assignment of the July 31st expiration contracts.

The other side of the coin is that in so doing it eliminated any possibility of being able to recycle the cash.

Twitter, on the other hand, was a rollover of puts in the face of significant strength heading into earnings. In that case the worst outcome of the rollover would be to delay being able to exit the position, while the advantage was being able to wring extra premium while awaiting some price recovery in the event that shares dropped.

For Twitter it was a real rollercoaster ride as shares went about $5 higher after earnings were announced. But then the dourness in the conference call ended up seeing shares drop $4, or a net change of about $9 from peak to trough, literally in the space of minutes in the after hours session.

Both of those early rollovers seemed warranted, but as always, time will tell, as I still had my Texas Instrument shares this morning and now another month to see whether Twitter can overcome itself.

Also, for a change, tomorrow we get to see whether we can string yet another day on to these gains and make the illusion of a healthy market become a reality.

.


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Daily Market Update – July 29, 2015

 

 

 

Daily Market Update – July 29,  2015  (9:00 AM)

 

Yesterday was a nice break from a series of days that could make one only pessimistic about what was to come next.

Possibly, the catalyst was that the Chinese market wasn’t down as much as it had been the previous day and may have looked as if it was beginning to moderate on this next wave of weakness, as the government again sought to control its behavior.

What would be really nice, unless all you care about is volatility, would be to see more than just a single day of gains,

Lately it has been very difficult to see stocks that aren’t in the news actually string together 2 or more days higher. It has also been a period in which stocks are taking longer and longer to recover from their declines. That is one of the things that makes the current levels of the DJIA and S&P 500 so deceiving.

It’s still on the backs of a few that the market looks to be healthy on the surface.

This morning the futures are pointing just a little bit higher, but for now that has to be taken as a positive.

Overnight, the Chinese stock market reversed course and actually finished higher for the session and so that at least wasn’t going to be something to weigh on today’s market, although the situation in China isn’t going to be going away anytime soon.

Today will be the final FOMC Statement release until summer comes to its end in 2 months.

It’s not too likely that there will be anything contained in the release this afternoon that should either excite or spook markets, but it wouldn’t be too surprising if some of the wording today in the statement gives people something to mull over for the next two months, as economic data will still be forthcoming between now and September.

With yesterday’s gain I’d like to see more of the same, even at the expense of volatility and premiums. Like some others, I’d especially like to see some moderation of the recent bear market in energy and materials. Although both sectors may represent oversold conditions, what they really need is not some sympathy from investors who are driven by technical factors, but rather some demand driven by economic activity.

With only a single new purchase so far this week and cash reserves down about as low as it can go, I’m not too likely to add any new positions this week. Having already rolled over 2 of the week’s expiring positions and the remaining 2 not looking as if they may be rollover candidates, this may be a very quiet few days ahead.

With regard to those rollovers, I decided that I wanted to try and keep the Texas Instruments dividend after seeing its price unexpectedly surge along with everything else yesterday.

The thinking was that there was still a possibility of early assignment with a rollover to the August 14th expiration, but at least that would have delivered the equivalent of about 85% of the dividend and then recycled the cash for further investment. Otherwise, there was a very high probability of assignment of the July 31st expiration contracts.

The other side of the coin is that in so doing it eliminated any possibility of being able to recycle the cash.

Twitter, on the other hand, was a rollover of puts in the face of significant strength heading into earnings. In that case the worst outcome of the rollover would be to delay being able to exit the position, while the advantage was being able to wring extra premium while awaiting some price recovery in the event that shares dropped.

For Twitter it was a real rollercoaster ride as shares went about $5 higher after earnings were announced. But then the dourness in the conference call ended up seeing shares drop $4, or a net change of about $9 from peak to trough, literally in the space of minutes in the after hours session.

Both of those early ro
llovers seemed warranted, but as always, time will tell, as I still have my Texas Instrument shares this morning and now another month to see whether Twitter can overcome itself.

.


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Daily Market Update – July 28, 2015 (Close)

 

 

 

Daily Market Update – July 28,  2015  (Close)

 

Yesterday was another in a series of down days and deteriorating internal metrics. 

That latter part refers to the mix of up and down stocks and the relative number of new lows to new highs, as well as other indicators that are all pointing to a loss of optimism.

But you definitiely wouldn’t have known any of that by today’s action, although it was hard to understand what lit the fire and especially what can keep it going.

If earnings can’t help the market seek newer heights, there really isn’t much that will push the market higher at the moment other than these unforeseen daily oddities.

Even the upcoming FOMC Announcement has little that it can offer to make the markets feel optimistic, especially as the situation in China is weighing so heavily on our own markets. It’s not so much that there’s really contagion that’s the risk, but rather, in the event of a cash crisis in China or a significant need for capital, there’s always the chance the the government will sell their US Treasury holdings.

That wouldn’t be very good.

But for now, even though this morning’s decline in Shanghai was 2%, that’s a moderation from what happened over the weekend and may show that at least in the short term, China is beginning to control some of those forces that would take their markets even lower.

One question to be asked is just how long the government can continue to stop or slow down the natural direction of the market, but anopther important question is always “How low will it go?” and that applies just as well to energy and commodity prices here in the US, as it does to stocks in those sectors.

Of course, to some degree those are both also related to Chinese prosperity and increasing economic activity.

Regardless, today looked as if it was the day that traders began to ask that “How low can you go?” question.

This morning the futures were moving higher, although moderating a little as the opening bell neared. After 5 consecutive days of losses, it would be nice to have some kind of an end to that string occur, but as we had seen with previous turnarounds to the upside, the best turnaround is one that seems insidious. The ones that are done 200 points at a time to the upside seem to have very little lasting power.

But at least we’ll have a chance to see if that’s true tomorrow, as the market finished the day nearly 200 points higher, more than erasing yesterday’s loss.

Just as “death by a thousand cuts,” the more sure way to work back from technical support and overwhelm technical resistance is to do so by small pieces, especially as nearing that resistance level, but I wouldn’t mind some quantum kind of leaps forward.

So for now, I’d still be happy to see some small gains and wouldn’t mind if those triple digit moves, usually coming after triple digit losses, just went on a break for a while.



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Daily Market Update – July 28, 2015

 

 

 

Daily Market Update – July 28,  2015  (9:15 AM)

 

Yesterday was another in a series of down days and deteriorating internal metrics.

That latter part refers to the mix of up and down stocks and the relative number of new lows to new highs, as well as other indicators that are all pointing to a loss of optimism.

If earnings can’t help the market seek newer heights, there really isn’t much that will push the market higher at the moment.

Even the upcoming FOMC Announcement has little that it can offer to make the markets feel optimistic, especially as the situation in China is weighing so heavily on our own markets. It’s not so much that there’s really contagion that’s the risk, but rather, in the event of a cash crisis in China or a significant need for capital, there’s always the chance the the government will sell their US Treasury holdings.

That wouldn’t be very good.

But for now, even though this morning’s decline in Shanghai was 2%, that’s a moderation from what happened over the weekend and may show that at least in the short term, China is beginning to control some of those forces that would take their markets even lower.

One question to be asked is just how long the government can continue to stop or slow down the natural direction of the market, but anopther important question is always “How low will it go?” and that applies just as well to energy and commodity prices here in the US, as it does to stocks in those sectors.

Of course, to some degree those are both also related to Chinese prosperity and increasing economic activity.

This morning the futures are moving higher, although moderating a little as the opening bell nears. After 5 consecutive days of losses, it would be nice to have some kind of an end to that string occur, but as we had seen with previous turnarounds to the upside, the best turnaround is one that seems insidious. The ones that are done 200 points at a time to the upside seem to have very little lasting power.

Just as “death by a thousand cuts,” the more sure way to work back from technical support and overwhelm technical resistance is to do so by small pieces, especially as nearing that resistance level.

So for now, I’d be happy to see some small gains and wouldn’t mind if those triple digit moves, usually coming after triple digit losses, just went on a break for a while.



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Daily Market Update – July 27, 2015

 

 

 

Daily Market Update – July 27,  2015  (Close)

 

Last week was one of revelation.

There came the realization that despite the markets having hovering near new highs the indexes were portraying a picture of market health that was largely illusory.

All it took to realize that was to see the consistent deviations that the major indexes had from one another and then to dissect out some of the biggest winners whose equally big market capitalizations moved their respective indexes while leaving so many other index members behind.

As last week came to its end, with the entire week having taken a strong turn downward as the second full week of earnings started uncovering some disappointments among the few gems, the expectation was that this week would be guided by more earnings reports and the FOMC Statement release.

While some good earnings could help to bring the market higher, it’s not too likely that the FOMC will have anything to say that would be interpreted in a positive way by the markets in the immediate day or two of its release.

For the most part, there wasn’t too much reason to believe that this week would be very active, but that was the case last week, too, as there was very little in the way of scheduled economic news, other than earnings and the rest of the world seemed to be quiet.

It was a little different than expected this morning, however. There’s not very much scheduled economic news this week, but the week looked as if it would be getting off to a negative start as the unexpected comes into play.

While China’s overnight sharp sell-off took about 8% off the Shanghai market, it probably shouldn’t have been too unexpected.

What may have been more unexpected is that their attempt to manipulate the market and keep natural forces from doing what they need to do, had worked for the 2 weeks that it did. That’s a very long time to be able to hold markets back from what they find as their natural course.

As the futures were trading this morning in the aftermath of the sharp sell-off in China, they were relatively muted in response, although we had seen that last week as well, with the market taking mild to moderate negative trading in the futures market and then exploding it in a bad way once trading started.

That’s what ended up happening today, but not in anything resembling an explosive way.

WIth a small number of positions set to expire this week and with cash reserves still at much lower levels than I would like to see, despite the possibility of another lower opening this morning, my expectation was to keep my personal activity low, but it was still hard to resist, although I didn’t go after one of last week’s really big losers – and there plenty of those.

Last week there was a prevailing belief that bargains were being formed, but with each day they became better and better bargains. While there may seem to be compelling reason to step in and buy something, at this point it really takes a fair amount of faith to do so.

The bounce higher from the lows of a few weeks ago that erased the 5% decline so quickly was a good sign, but the rapidity in which that gain has eroded is definitely not a good sign. As the week sets to begin in continuation of last week’s decline that erased all of the previous week’s really nice advance, there’s not too much reason to want to “buy on the dip,” at least not yet.

With the market having tested its support at about the 2045 level on the S&P 500, but failing to surpass its resistance level at about 2037, it looks as if the market wants to re-test its support and I will likely be testing the support of my La-Z-Boy as the week progresses, while watching to see how the market reacts to an overnight return of natural forces and wondering how those forces may take control and then what actions the Chinese government takes next, particularly with its own portfolio of bond holdings.


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Daily Market Update – July 27, 2015

 

 

 

Daily Market Update – July 27,  2015  (8:30 AM)

 

Last week was one of revelation.

There came the realization that despite the markets having hovering near new highs the indexes were portraying a picture of market health that was largely illusory.

All it took to realize that was to see the consistent deviations that the major indexes had from one another and then to dissect out some of the biggest winners whose equally big market capitalizations moved their respective indexes while leaving so many other index members behind.

As last week came to its end, with the entire week having taken a strong turn downward as the second full week of earnings started uncovering some disappointments among the few gems, the expectation was that this week would be guided by more earnings reports and the FOMC Statement release.

While some good earnings could help to bring the market higher, it’s not too likely that the FOMC will have anything to say that would be interpreted in a positive way by the markets in the immediate day or two of its release.

For the most part, there wasn’t too much reason to believe that this week would be very active, but that was the case last week, too, as there was very little in the way of scheduled economic news, other than earnings and the rest of the world seemed to be quiet.

It’s a little different than expected this morning, however. There’s not very much scheduled economic news this week, but the week looks as if it will be getting off to a negative start as the unexpected comes into play.

While China’s overnight sharp sell-off took about 8% off the Shanghai market, it probably shouldn’t have been too unexpected.

What may have been more unexpected is that their attempt to manipulate the market and keep natural forces from doing what they need to do, had worked for the 2 weeks that it did. That’s a very long time to be able to hold markets back from what they find as their natural course.

As the futures are trading this morning in the aftermath of the sharp sell-off in China, they are relatively muted in response, although we had seen that last week as well, with the market taking mild to moderate negative trading in the futures market and then exploding it in a bad way once trading started.

WIth a small number of positions set to expire this week and with cash reserves still at much lower levels than I would like to see, despite the possibility of another lower opening this morning, my expectation is to keep my personal activity low.

Last week there was a prevailing belief that bargains were being formed, but with each day they became better and better bargains. While there may seem to be compelling reason to step in and buy something, at this point it really takes a fair amount of faith to do so.

The bounce higher from the lows of a few weeks ago that erased the 5% decline so quickly was a good sign, but the rapidity in which that gain has eroded is definitely not a good sign. As the week sets to begin in continuation of last week’s decline that erased all of the previous week’s really nice advance, there’s not too much reason to want to “buy on the dip,” at least not yet.

With the market having tested its support at about the 2045 level on the S&P 500, but failing to surpass its resistance level at about 2037, it looks as if the market wants to re-test its support and I will likely be testing the support of my La-Z-Boy, while watching to see how the market reacts to an overnight return of natural forces and wondering how those forces may take control and then what actions the Chinese government takes next, particularly with its own portfolio of bond holdings.


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