Monthly Archives: November 2015

Daily Market Update – November 4,  2015  (7:30 A.M.)

After 2 days of really nice gains, despite some give back in yesterday’s trading, the S&P 500 is now sitting only about 1.5% below its all time high.

There was certainly nothing to suggest that the market would have taken the opportunity to spend the past 2 days in a celebratory mode, especially since the final day of this week could be an antidote to the happiness.

It’s really hard to understand how the market will react to Friday’s Employment Situation Report, but it seems that everyone is again willing to accept the fact that the FOMC will either be really ready to raise rates very soon, or at the very least will increase their hawkish tone, as there’s little reason to believe that the upcoming Employment Situation Report won’t reach the fairly feeble threshold that was just set.

The difficulty in predicting what may happen at the end of the week is that there could be a “buy on the rumor, sell on the news” kind of situation being set up if the number is well above 150,000, as it had been for much of the past 3 years, other than last month.

Alternatively, if the number continues on the very low side and maybe teeters near 150,000 again, there may be some concern.

If the number is really strong and especially if there are revisions to last month’s low number, there could be reason for even more buying on the basis of “good news is again good news,” with traders believing that rates could possibly be raised even as early as December.

Friday will be a big day, but next week, as national retailers report, could be even bigger, if the top line numbers are strong.

While the bottom line is important, right now the real focus is on whether people are spending money and not as much on how businesses are managing their businesses.

With only a single purchase for the week and with all of those prospective dividend plays being ex-dividend today, I don’t think there will be too much more activity for the week, other than to keep an eye on those positions due to expire in a few days.

With the unknown of Friday’s Employment Situation report coming up and with volatility back down to its usual low levels, there’s very little reason now to think about taking the risk of 3 day options, as the reward is so very low. Any new purchase now would really have to look at an extended or a monthly option to be remotely appealing. But with big news looming on Friday, I don’t have much reason to get in front of that news.

At this point, I would much rather see the market continue the week’s trend and move higher. I don’t mind going along for the ride, especially if energy is part of it, as it was yesterday and being able to roll over existing positions or see them assigned.

If that’s the case, then the pattern starts over again and the wish is for some pullback to start next week, perhaps with more cash in hand to pick up relative bargains, as the evidence will continue coming in to suggest that the economy is heating up and may perhaps serve as the most appropriate catalyst for the market to begin testing and exceeding its highs.

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Daily Market Update – November 3,  2015  (Close)

Yesterday was a really unexpected move higher to start the week.

When you think about how the market reacted to the last release of the Employment Situation Report, there was a quick shift in sentiment as the October numbers were disappointingly low.

Right up to that report the market had finally started looking at economic news in a rational way and its initial response to the bad news was exactly what a rational person would have predicted and the market added to its already 10% loss having started in the latter half of August.

It got down to about a 12% loss and then just turned around on a dime early in the morning of that release, getting to where it ended up yesterday, now less than 2% below its all time highs as the day was set to begin.

By the time today’s final bell tolled, the market was closing in on just about a 1% loss from those highs.

So yesterday’s and today’s moves higher in advance of this Friday’s release of the next round of employment numbers means only one of two things now that the FOMC seems to be saying that the number that we thought was so disappointing last month, is actually just fine and dandy in justifying an interest rate increase.

So, either the market went higher these past 2 days in expectation of continued bad news, meaning bad news is good news, or it went higher in expectation that Friday will bring good news.

It’s hard to believe that the former is the case and maybe the market is setting itself up to respond in a rational way, although you would have expected some negative response, given how so much of the rise from the 12% drop seemed to be fueled by the “bad news is good news” kind of mentality.

But that’s the problem with applying rational thought processes to what is really an irrational entity, despite all of its metrics, charting and analyses.

This morning’s pre-opening futures weren’t indicating that it would add to yesterday’s gains, but you certainly wouldn’t have predicted yesterday’s gain from yesterday’s p[re-opening futures.

You would have been a fool to predict today, even though it didn’t finish at its highs. It was still higher enough.

With the fairly rapid and sustained climb yesterday there wasn’t very much opportunity to jump in and buy anything. Most of what I had my eye on this week were dividend related and today was the last day to make those purchases, but today came and went without those buying opportunities, so it may end up being a very quiet week, despite a single new position being added in the afternoon.

With a few positions set to expire this week there are still some opportunities to either rollover those positions or potentially see assignments, but as the week progresses and as those dividend related opportunities have disappeared, the likelihood is that any more new trades will now look at an expiration the following week.

After having rolled over next week’s sole expiring position yesterday, I wouldn’t mind being able to populate next week’s list of expiring positions, particularly if there may be a chance of getting some assignments this week.

Otherwise, it will be another morning of watching and waiting to see how sentiment unfolds. I wouldn’t mind a little weakness, although it never did come in time for those ex-dividend positions.

Daily Market Update – November 3,  2015  (7:00 AM)

Yesterday was a really unexpected move higher to start the week.

When you think about how the market reacted to the last release of the Employment Situation Report, there was a quick shift in sentiment as the October numbers were disappointingly low.

Right up to that report the market had finally started looking at economic news in a rational way and its initial response to the bad news was exactly what a rational person would have predicted and the market added to its already 10% loss having started in the latter half of August.

It got down to about a 12% loss and then just turned around on a dime early in the morning of that release, getting to where it ended up yesterday, now less than 2% below its all time highs.

So yesterday’s move higher in advance of this Friday’s release of the next round of employment numbers means only one of two things now that the FOMC seems to be saying that the number that we thought was so disappointing last month, is actually just fine and dandy in justifying an interest rate increase.

So, either the market went higher yesterday in expectation of continued bad news, meaning bad news is good news, or it went higher in expectation that Friday will bring good news.

It’s hard to believe that the former is the case and maybe the market is setting itself up to respond in a rational way, although you would have expected some negative response, given how so much of the rise from the 12% drop seemed to be fueled by the “bad news is good news” kind of mentality.

But that’s the problem with applying rational thought processes to what is really an irrational entity, despite all of its metrics, charting and analyses.

This morning’s pre-opening futures aren’t yet indicating that it would add to yesterday’s gains, but you certainly wouldn’t have predicted yesterday’s gain from yesterday’s p[re-opening futures.

With the fairly rapid and sustained climb yesterday there wasn’t very much opportunity to jump in and buy anything. Most of what I have my eye on this week are dividend related and today would be the last day to make those purchases. If today comes and goes without those buying opportunities, it may end up being a very quiet week.

With a few positions set to expire this week there are still some opportunities to either rollover those positions or potentially see assignments, but as the week progresses, if those dividend related opportunities disappear, the likelihood is that any new trades will then look at an expiration the following week.

After having rolled over next week’s sole expiring position yesterday, I wouldn’t mind being able to populate next week’s list of expiring positions, particularly if there may be a chance of getting some assignments this week.

Otherwise, it will be another morning of watching and waiting to see how sentiment unfolds. I wouldn’t mind a little weakness, especially in those ex-dividend positions in an effort to set up some trades for the week.

Daily Market Update – November 2,  2015  (Close)

While it’s still a busy week for earnings ahead, the real action starts at the end of the week and then next week.

At the end of this week is yet another Employment Situation Report and next week begins a slew of earnings from big box retailers.

It was just a month ago that following an initial negative reaction to a worse than expected Employment Situation Report that the market turned things around and has, in the course of those 4 weeks, almost entirely erased a 12% decline.

That turned out to help make October a really great market month, as long as you started your investing career in the market after 10 AM on that Friday morning.

Undoubtedly, in a few years there will be someone on some financial news network show whose returns will be based on having started tracking performance from that mid-morning.

What makes those two events so important is that good numbers from both could easily give the FOMC the push that it wants from the data.

Particularly since the FOMC has seemed to suggest that 150,000 new jobs would be sufficient to give them reason to do what now seems very clear that they are aching to get done.

While the FOMC has repeatedly said that they will be data driven, they have never said what thresholds they would use in making their decisions, so the suggestion that 150,000 may be enough, particularly as the last report, which was a rare one coming in at below 200,000, would no longer be considered “disappointing.”

Beyond that, next week’s retail reports will probably give an earlier indication of what the consumer is doing, as opposed to the official GDP reports.

While the earnings are backward looking, if retailers start painting some optimistic pictures with regard to forward guidance, you can feel pretty assured, that barring some unforeseen calamity, things are going to get better and better.

That would really be what the FOMC would be looking for as a signal to finally raise interest rates.

While we are all expecting that such a decision won’t come before the December meeting and many believe that it won’t come until 2016, back in October when the word didn’t come, it was made clear that the FOMC didn’t have to wait until its next meeting to make and announce a decision.

So everyone should still be on their toes between now and Thanksgiving.

The market was set to start the week off with a mild gain, but like last week, there wasn’t too much reason to expect any big moves.

So of course, what did we get? A big move to start the week, only it went higher, instead of where I was hoping it might go.

Last week also didn’t need an excuse to start running higher in advance of the FOMC Statement release and then had sufficient reason to make big moves afterward.

But that was mid-week. This time around I thought we might have to wait until the end of the week to get a fire lit, but you never do know.

With some assignments and cash to spend, I’m willing to do so, especially if there’s a dividend to be captured. With a few positions already set to expire this week and some ex-dividend positions already in the mix, while willing to spend, I may be waiting for some relative weakness and would likely think about weekly contracts, if parting with some money.

For now, I’ll probably let the early trades work themselves out tomorrow, because they sure didn’t cooperate today and see what kind of tone develops by mid-morning before making any decisions on new positions.

Daily Market Update – November 2,  2015  (7:30 AM)

While it’s still a busy week for earnings ahead, the real action starts at the end of the week and then next week.

At the end of this week is yet another Employment Situation Report and next week begins a slew of earnings from big box retailers.

It was just a month ago that following an initial negative reaction to a worse than expected Employment Situation Report that the market turned things around and has, in the course of those 4 weeks, almost entirely erased a 12% decline.

That turned out to help make October a really great market month, as long as you started your investing career in the market after 10 AM on that Friday morning.

Undoubtedly, in a few years there will be someone on some financial news network show whose returns will be based on having started tracking perfromance from that mid-morning.

What makes those two events so important is that good numbers from both could easily give the FOMC the push that it wants from the data.

Particularly since the FOMC has seemed to suggest that 150,000 new jobs would be sufficient to give them reason to do what now seems very clear that they are aching to get done.

While the FOMC has repeatedly said that they will be data driven, they have never said what thresholds they would use in making their decisions, so the suggestion that 150,000 may be enough, particularly as the last report, which was a rare one coming in at below 200,000, would no longer be considered “disappointing.”

Beyond that, next week’s retail reports will probably give an earlier indication of what the consumer is doing, as opposed to the official GDP reports.

While the earnings are backward looking, if retailers start painting some optimistic pictures with regard to forward guidance, you can feel pretty assured, that barring some unforeseen calamity, things are going to get better and better.

That would really be what the FOMC would be looking for as a signal to finally raise interest rates.

While we are all expecting that such a decision won’t come before the December meeting and many believe that it won’t come until 2016, back in October when the word didn’t come, it was made clear that the FOMC didn’t have to wait until its next meeting to make and announce a decision.

So everyone should still be on their toes between now and Thanksgiving.

The market is set to start the week off with a mild gain, but like last week, there’s not too much reason to expect any big moves.

Of course, last week didn’t need an excuse to start running higher in advance of the FOMC STatement release and then had sufficient reason to make big moves afterward.

That was mid-week. This time around we may have to wait until the end of the week to get a fire lit, but you never do know.

With some assignments and cash to spend, I’m willing to do so, especially if there’s a dividend to be captured. With a few positions already set to expire this week and some ex-dividend positions already in the mix, while willing to spend, I may be waiting for some relative weakness and would likely think about weekly contracts, if parting with some money.

For now, I’ll probably let the early trades work themselves out and see what kind of tone develops by mid-morning before making any decisions on new positions.