Monthly Archives: November 2015

Daily Market Update – November 12,  2015  (Close)

Well, that was really bad news yesterday.

Macy’s had absolutely nothing good to say about itself nor its prospects for 2016, as it sunk to its lowest level in about 30 months.

It’s not that Macy’s is necessarily the harbinger of things to come or the leader in retail, but in many ways it can be and it is, respectively.

Even if it isn’t either of those, you would never know, based upon how most every other major national retailer followed suit, as Macy’s itself fell about 14%.

There’s still lots more to come from the retail sector, but you would have to think that most are going to follow Macy’s experience, although maybe some other, somewhat lower end retailers don’t count on foreign tourist’s spending quite as much as Macy’s may.

Just ask Nordstrom, which reported after today’s closing bell, and was about 21% lower in the after hours trades.

Still, their gloomy outlook for 2016, even when discounting decreased foreign tourist spending, doesn’t seem to be consistent with the idea of a resurging consumer with more money to spend than has been the case for the past few years.

Maybe they’re just spending it somewhere else, but we’ll find that out soon enough, unless everyone is losing substantial market share to on-line retailers, as Amazon has surprised everyone with profits the past two quarters.

While I ended yesterday thinking that there wasn’t too much likelihood of spending down some of that cash pile with what little remained this week, the sheer size of the decline in Macy’s has to make one at least curious about wondering just how much more short term risk could be involved if entering a position right now.

As it would turn out, just when you thought today’s market may have bottomed out at a 150 loss on the DJIA, that loss settled in at 254 points, with a final wave of selling beginning at 2 PM, although not in a crescendo kind of way.

As mentioned the past couple of days, with already a number of positions set to expire next week as the November 2015 cycle comes to an end, and as this week was nearing its own end, right now any new purchases would be more likely to look at a new definition of what constitutes “short term.” Instead of looking at weekly options, there may be reason to look at those expiring the week after the monthly expiration week.

That would take things to Thanksgiving week and beyond.

Of course, I though that the sale of puts on Seagate Technology might be an exception and went for the November 20 expiration, only to see Seagate follow the rest of the market in the final couple of hours, too.

The original idea was to take enough time to show some recovery, such as in retail, with Macy’s, at a time when even feeble recovery could be sufficient to get a decent return, particularly if also looking just a bit further out in time, as an ex-dividend date is at hand on December 11th, as well.

That was the plan executed with Macy’s today and an out of the money strike was used in an attempt to grab dividend, premium and share profits.

Time will tell, though.

Otherwise, with only a single position set to expire this week, there’s not too much else to be thinking about unless some other great opportunities may seem to pop up and find a way to be convincing enough to part with some cash at a time when the market seems to be pretty tentative and now could easily find a way to give back some more of what it had gained since the beginning of October.

Daily Market Update – November 12,  2015  (7:30 AM)

Well, that was really bad news yesterday.

Macy’s had absolutely nothing good to say about itself nor its prospects for 2016, as it sunk to its lowest level in about 30 months.

It’s not that Macy’s is necessarily the harbinger of things to come or the leader in retail, but in many ways it can be and it is, respectively.

Even if it isn’t either of those, you would never know, based upon how most every other major national retailer followed suit, as Macy’s itself fell about 14%.

There’s still lots more to come from the retail sector, but you would have to think that most are going to follow Macy’s experience, although maybe some other, somewhat lower end retailers don’t count on foreign tourist’s spending quite as much as Macy’s may.

Still, their gloomy outlook for 2016, even when discounting decreased foreign tourist spending, doesn’t seem to be consistent with the idea of a resurging consumer with more money to spend than has been the case for the past few years.

Maybe they’re just spending it somewhere else, but we’ll find that out soon enough, unless everyone is losing substantial market share to on-line retailers, as Amazon has surprised everyone with profits the past two quarters.

While I ended yesterday thinking that there wasn’t too much likelihood of spending down some of that cash pile with what little remained this week, the sheer size of the decline in Macy’s has to make one at least curious about wondering just how much more short term risk could be involved if entering a position right now.

As mentioned the past couple of days, with already a number of positions set to expire next week as the November 2015 cycle comes to an end, and as this week was nearing its own end, right now any new purchases would be more likely to look at a new definition of what constitutes “short term.” Instead of looking at weekly options, there may be reason to look at those expiring the week after the monthly expiration week.

That would take things to Thanksgiving week and beyond.

Perhaps enough time to show some recovery in retail, such as Macy’s, at a time when even feeble recovery could be sufficient to get a decent return, particularly if also looking just a bit further out in time, as an ex-dividend date is at hand on December 11th, as well.

Otherwise, with only a single position set to expire this week, there’s not too much else to be thinking about unless some other great opportunities may seem to pop up and find a way to be convincing enough to part with some cash at a time when the market seems to be pretty tentative and now could easily find a way to give back some more of what it had gained since the beginning of October.

Daily Market Update – November 11,  2015  (7:30 AM)

For a while, it looked like yesterday might serve to heap on to Monday’s significant loss.

There wasn’t too much of a reason for what was seen on Monday, but by mid-morning of Tuesday the decline seemed to run out of steam.

There wasn’t much reason for it to have continued and there wasn’t much reason for it to have stopped, although some technicians could point to a very minor point of support at about 17663 on the DJIA, although they would be hard pressed to find anything really similar on the S&P 500.

Sometimes things just happen.

This morning, in the early futures trading, it appeared as if the trend higher that started yesterday morning was going to continue, but there’s really nothing to cause any significant kind of move in either direction as we awaited the flow of national retailer earnings that really started this morning with Macy’s.

And is wasn’t good.

What was needed from those retailers is collective optimism and not just cheery optimism regarding the future coming from the more high end among those in that sector.

That definitely wasn’t the way the flow of earnings got off to its start. Macy’s painted a pretty bleak picture for itself and it hit retail across the board.

That cheeriness that I was really expecting to hear couldn’t  be based on higher per share profits, but rather from increasing revenue.

That’s not the picture that was painted today.

Investors might still be willing to accept lower earnings per share if there is some tangible increase on the top line, especially for those companies that can report relatively clean top line numbers and not have to drag currency exchange into the discussion.

For the market to take a cue from retailers offering a positive view of what awaits them in 2016 there has to be some good news across the board, but especially at the middle level retailers.

Maybe Macy’s is just a tad too high in the pecking order and maybe it doesn’t reflect what is really going on.

But it does. At least the market believed so today as it hit that sector so hard after the disappointing news.

In essence, we have to see people demonstrating that they are not only back at work and collecting a paycheck once again, but that they are also confident enough in being able to hold onto that job for a while, so that they could do something with those paychecks other than paying down debt.

That’s something that’s been missing from the equation even as the unemployment rate begins to fall close to the levels that we usually refer to as “structural.”

Following today, it now looks as if it’s definitely going to end up being a very quiet week for personal trading.

With the opportunities for some ex-dividend trades now gone, at this point, if there are going to become actual new position trades, the greatest likelihood is that they would be paired with call sales for Thanksgiving week or beyond.

That theme may continue through next week, with sights being set beyond next week’s monthly expiration and more toward December extended weekly options.

Daily Market Update – November 11,  2015  (7:30 AM)

For a while, it looked like yesterday might serve to heap on to Monday’s significant loss.

There wasn’t too much of a reason for what was seen on Monday, but by mid-morning of Tuesday the decline seemed to run out of steam.

There wasn’t much reason for it to have continued and there wasn’t much reason for it to have stopped, although some technicians could point to a very minor point of support at about 17663 on the DJIA, although they would be hard pressed to find anything really similar on the S&P 500.

Sometimes things just happen.

This morning, in the early futures trading, it appears as if the trend higher that started yesterday morning was going to continue, but there’s really nothing to cause any significant kind of move in either direction as we await the flow of national retailer earnings that really started this morning.

What is needed from those retailers is collective optimism and not just cheery optimism regarding the future coming from the more high end among those in that sector.

That cheeriness also can’t be based on higher per share profits, but rather from increasing revenue. Investors might even be willing to accept lower earnings per share if there is some tangible increase on the top line, especially for those companies that can report relatively clean top line numbers and not have to drag currency exchange into the discussion.

For the market to take a cue from retailers offering a positive view of what awaits them in 2016 there has to be some good news across the board, but especially at the middle level retailers. In essence, people have to demonstrate that they are not only back at work and collecting a paycheck once again, but that they are also confident enough in being able to hold onto that job for a while, so that they could do something with those paychecks other than paying down debt.

That’s something that’s been missing from the equation even as the unemployment rate begins to fall close to the levels that we usually refer to as “structural.”

It looks as if this going to end up being a very quiet week for personal trading.

While there are still some opportunities available with some ex-dividend positions, at this point, if those are going to become actual trades, the greatest likelihood is that they would be paired with call sales for Thanksgiving week or beyond.

If there are no new positions opened today, that theme may continue through next week, with sights being set beyond next week’s monthly expiration and more toward December extended weekly options.

Daily Market Update – November 10,  2015  (Close)

For people who like to track such things, yesterday’s very unexpected and unwarranted market decline brought the DJIA. on a YTD basis to a loss.

The S&P 500 wasn’t very far behind and stood only about 20 points, or 1% away from the flat line, with only about 7 weeks left to go in 2015.

It’s really hard to say what was responsible for yesterday’s sharp decline, which was actually less of a sharp decline after it all settled.

It could be that some finally came to the realization that we’re about to enter into an era that we haven’t seen in about 9 years, as the FOMC has to be getting as ready as it ever has to institute that very first interest rate hike.

However, given the fact that no one believes that rate increase will be more than 0.5%, with most in the 0.25% camp, it’s equally hard to understand what the logical basis is for the belief that even the larger end of that rise would result in any meaningful slowing of any economic expansion.

That’s generally the fear, but it usually only becomes a real issue when in hindsight you come to the realization that the cumulative interest rate hikes over time have tipped the economy.

That’s just not likely to occur with the first in a series, especially when there’s no indication of a really heated up economy that’s in danger of boiling.

Besides, history shows that the early stages of interest rate increases are during a healthy economy and a healthy stock market.

That’s what you would expect if the market is looking at fundamentals and is also discounting the future 6 months, as is widely believed to be the case.

Who knows what accounted for yesterday, but this morning shows some moderation as the futures are trading, although they showed the same thing yesterday and then the bottom just dropped out when the bell finally rang.

With yesterday’s decline I wasn’t as enthused about spending money from cash reserves as I might have been had the decline been more moderate. I just like to have some idea of why a market is climbing strongly or declining strongly, especially the latter.

The exercise of hindsight may demonstrate that it would have been a good idea to dip further into cash reserves, as most declines since the August correction began have represented some good entry points.

The difference here, perhaps, is that even with yesterday’s decline, the S&P 500 is now only down about 3% from its all time highs. That leaves plenty of room for more downside, especially given the uninterrupted climb higher since the beginning of October.

For a little while, at least for the first hour of trading, it looked as if that decline might grow, but then some buying came into play.

Although I was still on the lookout for anything that may seem like a bargain today and would be especially attracted to more dividend paying positions, caution still felt like it would be warranted, although the buying that crept in eventually erased all of the first hour’s loss..

At this point, now coming to the half way point in the week, I’m more concerned with positions expiring next week and am hopeful that among them will be some assignments and rollovers. I don’t really want to add much to that list if buying any other new positions this week and would like to get much better diversified in terms of expiration dates.

That will be played by ear as the week plays itself out.