Daily Market Update –  October 25, 2016 (Close)


Yesterday was a good day for the markets, today not so much.

Despite a fairly sharp decline in oil prices, the market managed to hold onto its gains and was perhaps buoyed by some spreading merger and buyout news.

This morning earnings continued and the first thing that struck me was hearing the early morning release from DuPont, which actually offered some improved guidance.

That’s only one company, but the company matters, as does the sector it’s in.

But not today, because pretty much every other company reporting earnings either disappointed or failed to give cheery guidanve.

DuPont is a building block kind of company. When it sees good things ahead that means that its end users are likely to see good things ahead, especially when DuPont’s revenues are anticipated to rise without currency or pricing being factored into the equation.

The morning’s futures weren’t reflecting much in the way of new optimism, but at least it wasn’t squandering yesterday’s small move forward. 

It took the day’s market to do that as most of the previous day’s gains were lost.

With lots of earnings still to come this week and next and those to then be followed by retailer earnings, there is still plenty of reason for the FOMC to begin feeling justified in inching closer and closer to a December interest rate increase, despite today’s downer of a day.

I think that if investors get to see that there is actually tangible improvement in the economy, particularly if this Friday’s GDP shows an active consumer at work, it may look at that interest rate increase the way it should be interpreted.

That would mean new enthusiasm for stocks, rather than running away for fear of cheap money being taken away.

With one new position opened yesterday and 2 expiring this week, along with 4 ex-dividend positions, I don’t have much need for adding any additional income generating positions.

Yesterday’s trade was a little on the unusual side, in that it was an in the money put sale.

That, of course, lead to a bigger than usual premium and it was done on the weakness in shares.

When selling puts, there’s nothing like doing so on the downslide, as long as there’s not too much more downslide to come. Some of that downside did come today, though, but there are still 3 days in which to recover.

In the case of Marathon Oil, even if there is some more to come, there has been enough volatility in its shares to believe that there will be a chance to live another day and see the downslide reversed.

However, earnings are next week and so I may like the idea of being able to extricate myself, although expectations probably still remain low for the sector as a whole.

I didn’t expect, otherwise to be doing too much today, other than hoping for an isolated chance or two to sell some calls, so I wasn’t totally disappointed, although i did try to get some trades made.

Getting those trades made doesn’t happen frequently enough, but slowly those uncovered positions are finding some of their own income generating opportunities.

Patience has helped, but more may be needed.

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