Monthly Archives: November 2016

Daily Market Update –  November 17, 2016 (Close)

Now that the excitement about the election seems to be over, we’ve had a fairly boring week, but at least there haven’t been any attempts to peel back the gains of last week.

Neither has there been any alarm about what is now very likely to happen next month.

With more retail reports coming out this morning that have had more upside surprises and more good cheer to forecast for 2017 and what remains of 2016, it seems pretty obvious that we will finally see an interest rate hike in 2016, a full year after the first in 9 years.

Janet Yellen pretty much confirmed that today even as it wasn’t always clear that her Congressional questioners really had much understanding about anything at all.

In the meantime, we had been expecting several interest rate increases, but small ones, for the past year.

The only surprise that could come is if the FOMC decides to do more than just institute a small increase and in effect do nothing more than to keep up with market forces that have been driving the interest rate on the Treasury Department’s 10 year note higher and higher.

That might be taken well by investors.

But it seems unlikely that the FOMC would saddle the incoming President with that kind of unexpected move, even as they are supposed to be above politics.

I haven’t heard anyone yet speak of the possibility, but as more and more good news seems to be coming in, someone, somewhere, has to remember and fear the old days and can recall how inflation actually gets started.

Over the next days I just hope that there continues to be some share inflation so that I can add to my cash reserves and maybe generate a little bit of income for the week.

Today, I took advantage of some price strength to rollover 2 positions that didn’t look like they would get assigned. It was easier to do that because there are about 3 positions that have a fairly good degree of certainty that they will contribute to my cash reserves.

Besides, I also wanted the cash stream and didn’t want to lose a chance of getting it. 

Unlike some recent call sales, I don’t have to live that long in order to reach the expiration dates used today.

Still, I’m really not certain whether I want to have lots of cash going into 2017 or not, but I do like the market taking a little breather to consolidate these gains.

Traditionally, that means a step higher, but the past 2 years it hasn’t really worked that way, even as we do reach new highs.

If it’s any consolation, 2017 won’t be any less confusing

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Daily Market Update –  November 17, 2016 (7:30 AM)

Now that the excitement about the election seems to be over, we’ve had a fairly boring week, but at least there haven’t been any attempts to peel back the gains of last week.

Neither has there been any alarm about what is now very likely to happen next month.

With more retail reports coming out this morning that have had more upside surprises and more good cheer to forecast for 2017 and what remains of 2016, it seems pretty obvious that we will finally see an interest rate hike in 2016, a full year after the first in 9 years.

We had been expecting several increases, but small ones.

The only surprise that could come is if the FOMC decides to do more than just institute a small increase and in effect do nothing more than to keep up with market forces that have been driving the interest rate on the Treasury Department’s 10 year note higher and higher.

That might be taken well by investors.

But it seems unlikely that the FOMC would saddle the incoming President with that kind of unexpected move, even as they are supposed to be above politics.

I haven’t heard anyone yet speak of the possibility, but as more and more good news seems to be coming in, someone, somewhere, has to remember and fear the old days and can recall how inflation actually gets started.

Over the next 2 days, I just hope that there continues to be some share inflation so that I can add to my cash reserves and maybe generate a little bit of income for the week.

I’m really not certain whether I want to have lots of cash going into 2017 or not, but I do like the market taking a little breather to consolidate these gains.

Traditionally, that means a step higher, but the past 2 years it hasn’t really worked that way, even as we do reach new highs.

If it’s any consolation, 2017 won’t be any less confusing

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Daily Market Update –  November 16, 2016 (Close)

Here we are now past mid-week and the earnings reports are going to begin slowing down considerably as the option cycle comes to its end.

For the most part retailers have been good and their guidances haven’t been dour.

Today, in fact, there was some downright positive news from a middle tier retailer, including some nice guidance.

With the bond market doing its work for it and employment closing in on that level referred to as “structural unemployment,” it seems a pretty safe bet that the FOMC will do what it did last December.

Now the question will be whether it does what it was expected to do in 2016, once 2017 opens its doors for business.

At this point, I think we may finally get it, though.

Inflation, especially in its early stages is a good thing and low oil prices are a good thing.

That combination should be wonderful and I think that if the latter can continue to stay in the $50 range, 2017 will be a very good year for stock markets, as the past 2 years have been simply treading water.

You probably also have to factor in the early days of a Trump Presidency in which some of the uncertainty right now may disappear and we may learn about those policy decisions that could help business and the business cycle.

That’s all fine, but I just want to finish the November 2016 option cycle and do something with the 8 different positions that are coming up for expiration in a few days.

At this point I expect that there will be a mix of assignments, rollovers and expirations.

Unlike the past year, I’m not too concerned about the expirations.

Even in a low volatility environment, I think that there will be upside price movement and opportunity to sell calls on those positions.

It’s all about continuing patience.

Ultimately, you would like to see every position you own out-performing the index for the holding period in question and you want to see your net assets showing a gain better than the index or a loss less than the index for the time period in question.

For me, 2016 has been a good one, just like 2015 was not.

I’m more optimistic about 2017’s prospects both for the market and for personal fortunes, but let’s get through November and December, first.

Or maybe we should just get past this week.

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Daily Market Update –  November 16, 2016 (7:30 AM)

Here we are at mid-week and the earnings reports are going to begin slowing down considerably as the option cycle comes to its end.

For the most part retailers have been good and their guidances haven’t been dour.

With the bond market doing its work for it and employment closing in on that level referred to as “structural unemployment,” it seems a pretty safe bet that the FOMC will do what it did last December.

Now the question will be whether it does what it was expected to do in 2016, once 2017 opens its doors for business.

At this point, I think we may finally get it, though.

Inflation, especially in its early stages is a good thing and low oil prices are a good thing.

That combination should be wonderful and I think that if the latter can continue to stay in the $50 range, 2017 will be a very good year for stock markets, as the past 2 years have been simply treading water.

You probably also havve to factor in the early days of a Trump Presidency in which some of the uncertainty right now may disappear and we may learn about those policy decisions that could help business and the business cycle.

That’s all fine, but I just want to finish the November 2016 option cycle and do something with the 8 different positions that are coming up for expiration in a few days.

At this point I expect that there will be a mix of assignments, rollovers and expirations.

Unlike the past year, I’m not too concerned about the expirations.

Even in a low volatility environment, I think that there will be upside price movement and opportunity to sell calls on those positions.

It’s all about continuing patience.

Ultimately, you would like to see every position you own out-performing the index for the holding period in question and you want to see your net assets showing a gain better than the index or a loss less than the index for the time period in question.

For me, 2016 has been a good one, just like 2015 was not.

I’m more optimistic about 2017’s prospects both for the market and for personal fortunes, but let’s get through November and December, first.

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Daily Market Update –  November 15, 2016 (Close)

This week could be the beginning of a little bit of a return to normalcy, even as the DJIA may be climbing to new daily closing highs.

It did so yesterday and again today, even as the DS&P 500 played a little bit of catch up today trying to narrow its fall behind the pace of the DJIA.

A mixed market yesterday ended the day with a relatively narrow trading range that probably served to disappoint many as the early gains were squandered.

Today managed to do the opposite as the market finished on an up note after spending quite a bit of time treading water.

This morning’s futures weren’t looking to be a very exciting day and there isn’t really too much scheduled for this week, although some important earnings are still coming in as we get ready for an holiday shortened week next week.

To no one’s disappointment, the day did end up being pretty boring, but still a good day all in all, if all you do is measure your bottom line.

After that, it’s just right around the corner to the next FOMC meeting, as the free markets move interest rates higher, doing the work for the FOMC.

I’m happy to have been able to sell some calls on uncovered positions yesterday, but those calls continue what has been the story for about the past 15 months.

That is, using longer dated options in an effort to buy some time for price recovery and to scrape together some kind of meaningful premium in the face of low volatility.

While that has actually worked well in 2016, I would much rather see a 2017 with lots more trading and the use of more weekly expirations.

For now I won’t complain, but may reserve the right to do so once this week comes to an end.

At the end of this week sits 8 expiring positions and I would like to have the chance to either see them generate more income or at least contribute to my cash reserves as we head into the FOMC decision and what may still be an irrational market in the face of news.

Today at least brought the bottom line to a better position and brought more of those expiring positions into contention.

That leaves plenty of opportunity for the rest of the week even if not adding any additional positions.

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