Author Archives: TheAcsMan

Daily Market Update – August 28,  2015  (7:30 AM)

The Week in Review will be posted by 12 Noon on Saturday and the Weekend Update will be posted by Noon on SUnday.

The following trade outcomes are possible today:

Assignments:   none

Rollovers:    none

Expirations:   none

The following were ex-dividend this week: MAT (8/24 $0.38), ANF (8/28 $0.20), SBGI (8/28 $0.16)

The following will be ex-dividend next week:   HAL (8/31 $0.18), HFC (8/31 $0.33), COH (9/3 $0.34), BAC (9/2 $0.05), MOS (9/1 $0.28), JOY (9/2 $0.20), KSS (9/4 $0.45)

Trades, if any, will be attempted to be made prior to 3:30 PM EDT

Daily Market Update – August 27,  2015  (Close)

This has been a week of some really jaw dropping moves, but still, in percentage terms, nothing like some of the plunges, surges and then more plunges that we saw in 2008 and the early part of 2009.

Some people are mentioning that, but they treading very softly. They’re not saying the unsaid. That is that all of those incredibly stunning moves higher were more than offset by stunning moves lower, in addition to death by a thousand cuts.

In addition to the really large moves higher, back in 2008 and 2009, as well as late 2007, there were lots of smaller moves that simply added up to move markets significantly lower.

What was missing were the same kind of smaller moves strung together to bring the market higher.

I was happy to be able to get some trades in yesterday to take advantage of some of the strength, but the options market is still not fully participating in terms of volume and willingness to make trades.

While yesterday may have added a little more to the overall sense of confusion about which way things will move next, this morning’s strong open to the futures trading may bring some of those reluctant option buyers out from the woodwork.

Although two consecutive days don’t really make a trend, the bar is set pretty low and people are looking for any sign of stability in the market.

The overnight action by China to purchase stocks in the open market turned things around in Shanghai and may have helped today get off to a positive start as we awaited GDP numbers and any other comments that might come from the Federal Reserve party at Jackson Hole, that is not being attended by Janet Yellen.

Those GDP numbers were strong and may have given the very first suggestion that the economy is getting stronger.

What was fascinating today was that the mrket could close up more than 350 points after yesterday’s 600+ points on a day that could have made it easier for the FOMC to raise rates and on a day that oil surged.

Go figure,

So instead of hearing anything from Janet Yellen after today’s unusual combination of events, we may get to hear someting from her Vice-Chair, and nearly everyone’s mentor, Stanley Fischer. in her absence.

With no positions set to expire this week, but with some rollovers, new positions opened and an isolated call sale on an uncovered position, in addition to some ex-dividend positions, it has been a decent income week, but there’s still much more to be done.

Today’s action also mde it more appealing, on paper, anyway.

I don’t know how much of what remains undone will get done during the rest of the week, but I definitely would welcome the climb higher.

It would be much nicer, though to see that climb come in little bits and drabs. You may or may not believe in technical analysis, and by and large, I don’t, but there is something to be said for the unsustainability of real surges higher.

When there’s not a very good foundation underneath a stock’s price, it really is very easy to see those shares tumble. As much as everyone talks about a V-shaped recovery, they’re not necessarily the kind that you like to see for longer term stability.

On the other hand, if you established some positions before the climb higher, you can definitely take advantage of the higher premiums available even on out of the money strikes.

That’s what has really been missing for the longest time. In that kind of environment you find yourself not opening very many new positions, but rather trying to keep playing and re-playing the same ones, as even in the money
positions may make more sense to keep that to let be assigned.

We’re not quite at that stage yet, but if this back and forth does continue it could end up being a trader’s best friend. For now, though, it would really be good to create some base beneath these past two days and set up markets and portfolios to challenge resistance, now that it has challenged support.

Daily Market Update – August 27,  2015  (7:30 AM)

This has been a week of some really jaw dropping moves, but still, in percentage terms, nothing like some of the plunges, surges and then more plunges that we saw in 2008 and the early part of 2009.

Some people are mentioning that, but they treading very softly. They’re not saying the unsaid. That is that all of those incredibly stunning moves higher were more than offset by stunning moves lower, in addition to death by a thousand cuts.

Ib addition to the really large moves higher, back in 2008 and 2009, as well as late 2007, there were lots of smaller moves that simply added up to move markets significantly lower.

What was missing were the same kind of smaller moves strung together to bring the market higher.

I was happy to be able to get some trades in yesterday to take advantage of some of the strength, but the options market is still not fully participating in terms of volume and willingness to make trades.

While yesterday may have added a little more to the overall sense of confusion about which way things will move next, this morning’s strong open to the futures trading may bring some of those reluctant option buyers out from the woodwork.

Although two consecutive days don’t really make a trend, the bar is set pretty low and people are looking for any sign of stability in the market.

The overnight action by China to purchase stocks in the open market turned things around in Shanghai and may have helped today get off to a positive start as we await GDP numbers and any other comments that might come from the Federal Reserve party at Jackson Hole, that is not being attended by Janet Yellen.

Instead, everyone is waiting to hear what her Vice-Chair, and nearly everyone’s mentor, Stanley Fischer will say. in her absence.

With no positions set to expire this week, but with some rollovers, new positions opened and an isolated call sale on an uncovered position, in addition to some ex-dividend positions, it has been a decent income week, but there’s still much more to be done.

I don’t know how much of that will get done during the rest of the week, but I definitely would welcome the climb higher.

It would be much nicer, though to see that climb come in little bits and drabs. You may or may not believe in technical analysis, and by and large, I don’t, but there is something to be said for the unsustainability of real surges higher.

When there’s not a very good foundation underneath a stock’s price, it really is very easy to see those shares tumble. As much as everyone talks about a V-shaped recovery, they’re not necessarily the kind that you like to see for longer term stability.

On the other hand, if you established some positions before the climb higher, you can definitely take advantage of the higher premiums available even on out of the money strikes.

That’s what has really been missing for the longest time. In that kind of environment you find yourself not opening very many new positions, but rather trying to keep playing and re-playing the same ones, as even in the money positions may make more sense to keep that to let be assigned.

We’re not quite at that stage yet, but if this back and forth does continue it could end up being a trader’s best friend.

Daily Market Update – August 26,  2015  (Close)

It’s hard to describe the disappointment that accompanied yesterday’s trading, but being entirely surprised should probably not have been one of the things felt during the course of the day.

The final hour, though, was surprising, as you did have to wonder where the selling originated.

The “why” part of the question isn’t too hard to understand, as some may have seen the gain as an opportunity to get just a little more before getting out.

Deep down I thought that there still might be a wave of selling related to the need for mutual funds and ETFs to honor redemption orders. There’s no stated rule that says that they have to do that by flooding the order desks with those market depressing orders all at once and first thing in the morning.

This morning the Chinese stock market, the one that really matters, in Shanghai was again lower, but this time by less than 2%. That’s the same as a rally.

I’ve definitely lost track of how much that market has lost in the past 2 weeks or so, but after looking it up, it’s an astonishing 28%, while our own S&P 500 is down about 8% in the same time period heading into today’s session.

I guess in a world where everything is relative that should leave you feeling warm and fuzzy, but it didn’t really feel like that this morning, even as the futures were suggesting that they may just go and erase yesterday’s loss.

Even though last week we finished higher than the averages and even though this week is on that same path for now, it’s one of those mixed blessings, as overall performance for these two weeks past is still showing a loss. While comparative results are important, it’s still the bottom line that really matters.

When you look at today’s performance, would you ever think that you would see a day that the S&P rose 4%, yet the index was still down 1.4% for the week and with still 2 days to go?

It’s still hard to believe that we can talk about yesterday as having been a loss, even though there’s plenty of precedence for this sort of thing after very large losses and early reversals the following morning.

With no positions set to expire this week, partially by design, I’m still looking at any opportunities to roll over any contracts expiring in subsequent weeks, but despite some increases in volatility, the volume has been exceptionally light on both calls and puts.

That just shows that there is absolutely no sense of confidence about what may come next. Not by speculators, not by portfolio hedgers.

It didn’t change too much even as the bulls started to stampede in the latter half of the afternoon.

With some surprisingly good earnings from beaten down retailers Abercrombie and Fitch, both of which also go ex-dividend very soon, there was some opportunity to get rollovers done into price strength.

Yesterday’s early trading would have been a nice time to try and sell some new option contracts or even consider doing some rollovers, but the liquidity just wasn’t there, as the market’s decline has just been to sudden to get very many to re-align their strategies and implement them.

The sell-off during yesterday’s final hour should do very much to bolster option trader’s confidence today, even as the market was pointing higher. In fact, that early move higher may just send more confusion through the system.

As expected, the options market wasn’t very busy today, either as by mid-morning the big gains were cut by nearly 75%f and gave little reason to feel assured of anything other than continuing confusion and the very real possibility of re-testing lows.

With those kind of expectations the next wave of confusion hit as the mar
ket found a way to bounce right back from that mid-day slide and started approaching and then exceeding its highs for the day as the final hour began its countdown.

I hope that the Federal Reserve Governors who convene their meeting in Jackson Hole are less confused that we deserve to be as the week is coming to its end.

I don’t expect to be doing much for the rest of the week other than to see what else the Chinese government and the People’s Bank of China will attempt to do to calm their markets and control their currency.

For now, whatever they do, we are going to be held captive, although maybe tomorrow’s GDP Report and Jobless Claims will give us reason to focus within for a few brief moments and remember that there’s nothing in our economy that remotely warrants the kind of reaction we have seen in our markets, even though they’ve been comparatively muted compared to a half world away.