Monthly Archives: October 2015

Daily Market Update – October 14,  2015  (8:15 AM)

Yesterday was another pretty boring day made even more so by having had my internet and cable connections restored.

The day started with some disappointing earnings by Johnson and Johnson that couldn’t be ignored even after the announcement f a big stock buyback and ended with a less than enthusiastic reception from investors after the market closed when both JP Morgan and Intel reported earnings.

The response to the Intel earnings may paint a picture of what this new earnings season may be like, as the initial response was actually a very positive one, as the earnings were better than expected. Not too long afterward the selling started and reasonably good news was treated as if it was disappointing.

Early indications this morning, however, from Bank of America and Wells Fargo are showing their early earning gains as holding up, but their conference calls still await.

So this morning’s futures are again flat, as that’s been the theme for this week, so far.

With a couple of new purchases for the week and now entering the mid-point, I’m likely done spending money for the week and would love to have the opportunity to do anything to generate some more income for the week.

After a few weeks of large moves, this week, however, is shaping up as one for everyone to just sit back and take a deep collective breath.

From a technician’s point of view that would be a very good thing following a very quick 6% move higher, just as developing a period of stability after a large drop would be considered to be a good thing.

Having these periods of collection is usually a sign that those who are prone to rash trading have been flushed out and more rational minds can prevail, even if their time period for dominance can be measured only in minutes sometimes.

For now, things do seem rational, but there really hasn’t been much in the way of news that can elicit a market response. While we will be getting a torrent of earnings coming in over the next two weeks, the real news may just end up being the more macroeconomic stories that can be interpreted as having an influence over the FOMC as they prepare to have their October meeting.

Until then, though, it will be a focus on individual names and at some point there may be an over-riding theme, as there has been for the past couple of quarters. 

That theme has been missing on the top line and beating on th bottom line.

While everyone loves to see profits it doesn’t necessarily paint a very positive picture when comparative revenues are down or less than expected, even as profits may increase, especially when those profits are being reported on a per share basis and the denominator of shares is shrinking.

Or when the profits come as a result of cost savings, such as was the case for Bank of America this morning, which reported a quarter with significantly lower legal costs and was actually suffering from some of the bigger picture issues that JP Morgan reported.

That over-riding theme hasn’t been the most conducive for the market to continue its move higher, even though for the longest time the market did ignore the illusion of profits.

Daily Market Update – October 13,  2015  (Close)

Yesterday was a pretty boring day, or at least so I think it may have been.

That’s because I had an internet and cable outage from about 11 AM to 6 PM and spent the day trying to get the usual amount of information through the tiny form factor of a cell phone.

That’s not a very satisfying way of trying to get anything done, especially if you weren’t anticipating that to be the case.

As far as I could tell markets weren’t moving much, but for me the flow of news that usually serves as a background for what’s going on, was absent. Toggling back and forth between tiny screens and not having a grasp on whatever intuitive design there may have been to the brokerage app made it a long day.

I suppose I could have done something constructive around the house or otherwise with my time but the expectation was that the outage was only going to be momentary.

The good news was that the work crews beat their 3 AM estimate by about 9 hours.

I did have one other trade sitting hoping to get made, but tweaking the prices and checking the quotes on that little hand held is a lot harder than on a big screen and a full program, rather than a streamlined app.

Today the market looked as if it would be getting off to a slightly negative start. Despite having had a couple of tiny losses in the S&P 500 over the past week and half, the DJIA has been on a streak that may be challenged today.

Today would also turn out to be a boring day and it would also break the DJIA consecutive streak, but not in any meaningful way.

With some money sitting in reserve, I had no qualms about putting some more of it to work this week, although volatility has come down despite there still being considerable uncertainty about what’s coming next.

What is next are the beginning of the big names reporting earnings. Financials start this afternoon after the final bell and will continue through to next week.

Good numbers from the financial sector don’t necessarily say anything about how the rest of the market will react when they start reporting numbers, but good numbers from the financials wouldn’t hurt.

With a handful of positions expiring this week and some chance for either assignment or rollover and a couple of ex-dividend positions this week, I still wouldn’t mind trying to find some new opportunities to generate some more income and after today’s new purchase. The likelihood is that I would like to stick with a weekly option, but as the week draws on there’s more reason to look at expanded weekly time frames, especially if a dividend is involved, although there isn’t much on the dividend radar screen for next week.

Tomorrow does bring a Retail Sales Report that could also serve to move markets. With credit card companies now suggesting that consumer discretionary spending is finally starting to move higher, perhaps representing the energy dividend that we’ve been waiting to receive for nearly a year, there may finally be reason to think that the data will become more compelling for the FOMC to take some action.

The next FOMC meeting is later this month, although it seems that there would have to be a lot of good news and in a very short period of time to result in an interest rate increase, especially after the last Employment SItuation Report.

So for now, we may simply be guided by fundamentals for the next few weeks, barring any international crises in the Middle East or financial meltdowns in China.

A world guided by fundamentals and not distracted by explosive events and fears would be a good thing, even if only until the end of the year.

Daily Market Update – October 13,  2015  (9:00 AM)

Yesterday was a pretty boring day, or at least so I think it may have been.

That’s because I had an internet and cable outage from about 11 AM to 6 PM and spent the day trying to get the usual amount of information through the tiny form factor of a cell phone.

That’s not a very satisfying way of trying to get anything done, especially if you weren’t anticipating that to be the case.

As far as I could tell markets weren’t moving much, but for me the flow of news that usually serves as a background for what’s going on, was absent. Toggling back and forth between tiny screens and not having a grasp on whatever intuitive design there may have been to the brokerage app made it a long day.

I suppose I could have done something constructive around the house or otherwise with my time but the expectation was that the outage was only going to be momentary.

The good news was that the work crews beat their 3 AM estimate by about 9 hours.

I did have one other trade sitting hoping to get made, but tweaking the prices and checking the quotes on that little hand held is a lot harder than on a big screen and a full program, rather than a streamlined app.

Today the market looks as if it will be getting off to a slightly negative start. Despite having had a couple of tiny losses in the S&P 500 over the past week and half, the DJIA has been on a streak that may be challenged today.

With some money sitting in reserve, I have no qualms about putting some of it to work this week, although volatility has come down despite there still being considerable uncertainty about what’s coming next.

What is next are the beginning of the big names reporting earnings. Financials start this afternoon after the final bell and will continue through to next week.

Good numbers from the financial sector don’t necessarily say anything about how the rest of the market will react when they start reporting numbers, but good numbers from the financials wouldn’t hurt.

With a handful of positions expiring this week and some chance for either assignment or rollover and a couple of ex-dividend positions this week, I still wouldn’t mind trying to find some new opportunities to generate some more income. The likelihood is that I would like to stick with a weekly option, but as the week draws on there’s more reason to look at expanded weekly time frames, especially if a dividend is involved.

Tomorrow does bring a Retail Sales Report that could also serve to move markets. With credit card companies now suggesting that consumer discretionary spending is finally starting to move higher, perhaps representing the energy dividend that we’ve been waiting to receive for nearly a year, there may finally be reason to think that the data will become more compelling for the FOMC to take some action.

The next FOMC meeting is later this month, although it seems that there would have to be a lot of good news and in a very short period of time to result in an interest rate increase, especially after the last Employment SItuation Report.

So for now, we may simply be guided by fundamentals for the next few weeks, barring any international crises in the Middle East or financial meltdowns in China.

A world guided by fundamentals and not distracted by explosive events and fears would be a good thing, even if only until the end of the year.

Daily Market Update – October 12,  2015  (Close)

This is a week that has the Shanghai market in China back in action and starting the week off with a large gain and the People’s Republic of China  putting out comments saying that the correction is over.

History shows that it’s difficult to know with much certainty when an economy or when a stock market is really at an inflection point and braggarts have a way of getting humbled very easily if they own up to their own comments.

This morning begins the first substantive week of earnings with the financial sector getting things started. As long as using history as a barometer, it’s pretty clear that the financials don’t necessarily tell us too much about the rest of the economy.

Over the past few years as the market has been in recovery, we’ve had lots of quarters with earnings jumping out of the gate as the financials had roared back, but the retail and industrial portion of the S&P 500 didn’t necessarily follow along in reporting great revenues.

Increasingly lots of attention is being placed on both the top line and the bottom line, with the top line having recently become more important. That’s because every one now admits that the bottom lines have been artificially altered by all of the stock buy backs and it has been nearly impossible to compare one quarter to a next when the number of outstanding shares has really been a moving target.

When that point comes that the top lines of companies do start to grow, we are likely headed for another leg higher and are likely to finally give the FOMC some reason to act.

This week does have a Retail Sales Report and that may give some glimpse into what is being experienced within the economy, but the more telling information will come in a few weeks as the major retailers begin spinning their numbers.

With some money in hand from a fair number of assignments last week and with only a small number of potential assignments or rollovers this week, I am very open to adding new positions, but will likely be looking at weekly expirations.

This morning the pre-opening futures were very flat, having ended last week in the same way, after accruing some nice gains for the week. The market has essentially been on an upward climb since the mid-morning turnaround on the Friday of the last Employment SItuation Report. 

With the S&P 500 having hit a low point of being nearly 12% lower, it starts this week only about 6% lower, but when the day came to its end, it was one of those rare days when not much happened and the trading range was very narrow.

That climb higher had been great, but you do have to wonder about those straight shots higher. The market rarely goes on to gains in that manner. It usually puts together lots of incremental pieces that just create a cumulative effect.

As with large declines, the market usually tries to fill in the gaps and there is certainly a big gap right now. 

Part of the reason for that gap may be that markets have again gone to believing that the delay in an interest rate increase means that their party ways can now continue. In other words, bad economic news has created an environment that’s perceived to be good for the markets.

What that means is that we will likely once again be faced with a market that will then look at good economic news as being bad for markets, just as we had finally started interpreting news on its face value.

So there may be reason to buckle up again and maybe not spend all of that money that recently showed up after last week’s assignments.

Daily Market Update – October 12,  2015  (8:45 AM)

This is a week that has the Shanghai market in China back in action and starting the week off with a large gain and the People’s Republic of China  putting out comments saying that the correction is over.

History shows that it’s difficult to know with much certainty when an economy or when a stock market is really at an inflection point and braggarts have a way of getting humbled very easily if they own up to their own comments.

This morning begins the first substantive week of earnings with the financial sector getting things started. As long as using history as a barometer, it’s pretty clear that the financials don’t necessarily tell us too much about the rest of the economy.

Over the past few years as the market has been in recovery, we’ve had lots of quarters with earnings jumping out of the gate as the financials had roared back, but the retail and industrial portion of the S&P 500 didn’t necessarily follow along in reporting great revenues.

Increasingly lots of attention is being placed on both the top line and the bottom line, with the top line having recently become more important. That’s because every one now admits that the bottom lines have been artificially altered by all of the stock buy backs and it has been nearly impossible to compare one quarter to a next when the number of outstanding shares has really been a moving target.

When that point comes that the top lines of companies do start to grow, we are likely headed for another leg higher and are likely to finally give the FOMC some reason to act.

This wee does have a Retail Sales Report and that may give some glimpse into what is being experienced within the economy, but the more telling information will come in a few weeks as the major retailers begin spinning their numbers.

With some money in hand from a fair number of assignments last week and with only a small number of potential assignments or rollovers this week, I am very open to adding new positions, but will likely be looking at weekly expirations.

This morning the pre-opening futures are very flat, having ended last week in the same way, after accruing some nice gains for the week. The market has essentially been on an upward climb since the mid-morning turnaround on the Friday of the last Employment SItuation Report. 

With the S&P 500 having hit a low point of being nearly 12% lower, it starts this week only about 6% lower.

That climb has been great, but you do have to wonder about those straight shots higher. The market rarely goes on to gains in that manner. It usually puts together lots of incremental pieces that just create a cumulative effect.

As with large declines, the market usually tries to fill in the gaps and there is certainly a big gap right now. 

Part of the reason for that gap may be that markets have again gone to believing that the delay in an interest rate increase means that their party ways can now continue. In other words, bad economic news has created an environment that’s perceived to be good for the markets.

What that means is that we will likely once again be faced with a market that will then look at good economic news as being bad for markets, just as we had finally started interpreting news on its face value.

So there may be reason to buckle up again and maybe not spend all of that money that recently showed up after last week’s assignments.