Author Archives: TheAcsMan

Daily Market Update – February 4, 2015 (Close)

Another day without a single trade, at least not for any new positions.That makes three in a row to start the week.

That’s no way to make money.

Given the choice, I’d rather not be making any trades in the face of a market showing a great advance than sitting around and being paralyzed into inaction during a tremendous decline, as long as my positions aren’t already in the money.

Today, I got my wish, at least for a very short while as it was a really strange day in the markets and an especially strange final hour.

For that brief time that the market was up another triple digits I got that part of my preferences.

Why the market went from a day of complete boredom with the DJIA positive only because of strong performances by Disney and Visa, adding about 80 points, to a day where the broad market turned reasonably positive to one where even the DJIA was underwater until the final moment, all in the space of 60 minutes, is a mystery.

At least for part of the day we were able to see some green and at least they didn’t take off so much that positions ended up being deep in the money and unable to participate.

I think that’s actually my worst case scenario. There’s not much worse than seeing a slew of positions already in the money being unable to celebrate in a broad and sustained market rally.

On the other hand, if your positions are well covered there’s a strange sense of comfort, maybe even satisfaction if a large decline suddenly hits.

As the past 2 days 500 point advance served to bring positions closer to assignment or easier to rollover, that two day move was much welcomed, especially as there was some further catch-up by the energy sector, which is now helping to continue the string of relative out-performance, just as it led to under-performance late in 2014, as it was in the throes of its decline.

Today began the 3 days of employment related data that will be streaming in.

As I wrote this morning’s update the ADP data has already been released and it was a little weaker than expected. Tomorrow’s Jobless Claims and Friday’s Employment Situation Report complete the story, but just as this morning’s ADP report, shouldn’t have too much influence on where the market will be going.

Later this morning came the release of the counterpart to the ISM Manufacturing Index. The Non-manufacturing Index measures changes in the services sector.

Lately, despite logic telling us that both manufacturing and services should be growing, and perhaps even growing at a greater rate, that hasn’t really been the case and the continuing increase in employment and the extra money in people’s pockets from higher wages, growing employment and from their energy dividend, hasn’t been finding its way back into the economy in any measurable way.

But in a nice surprise, the non-manufacturing numbers were actually better than expected and coupled with some better than expected guidance from Kohls and Macys in advance of their earnings reports in 2 weeks, came some reason to be optimistic.

While Wednesdays are usually quiet days and I don’t often make any new purchases during the latter half of the week, this week may be a little different, seeing as there haven’t been any so far this week. Although I knew that there wouldn’t be much activity as I wanted to conserve cash and hopefully add to it from week ending assignments, the hunt never ends.

While I do want to see my cash reserve grow right now and would be more interested in generating weekly income from existing positions, I’m not completely adverse to adding new positions. The big concern that I have right now, however, is related to the same thing that makes for some joy.

That is, the past 2 days.

While it’s great seeing the past 500 points get added, there’s till no escaping the reality that those kinds of moves, especially coming on the heels of some equally large declines, are not the sort of thing that you see in bullish runs.

Today’s 100 point gain that was methodically built upon the scaffolding provided by Disney and Visa was nice, but its quick collapse was not.

Taking a wide angle look at things those large moves higher are typically seen as a part of a developing bear market and create a bull trap fr those getting in just to share in what they think will be the party to come.

“FOMO,” or the “fear of missing out,” can be just as deadly as greed and panic, as the final 30 minutes of trading could have illustrated.

While I’ll be content to let things ride that can benefit from the ride, having seen a series of reversals over the past 6 weeks makes it hard to believe that the past two days are the real thing.

I have no idea what today’s trading means. It certainly wasn’t very real and it would be really hard to draw any conclusions from the changes in direction and sentiment.

Instead, if the market can continue this sort of back and forth and do so with big moves in both directions, the beneficiaries will be those that can take advantage of the volatility.

If that volatility does rise and stay at elevated levels, you don’t have to create as many new positions to generate your income. All you have to do is try and trade your existing positions and rolling over as often as possible, taking advantage of the better and better premiums.

Daily Market Update – February 4, 2015 (8:45 AM)

Another day without a single trade, at least not for any new positions.

Given the choice, I’d rather not be making any trades in the face of a market showing a great advance than sitting around and being paralyzed into inaction during a tremendous decline, as long as my positions aren’t already in the money.

I think that’s actually my worst case scenario. There’s not much worse than seeing a slew of positions already in the money being unable to participate in a broad and sustained market rally.

On the other hand, if your positions are well covered there’s a strange sense of comfort, maybe even satisfaction if a large decline suddenly hits.

As the past 2 days 500 point advance served to bring positions closer to assignment or easier to rollover, that two day move was much welcomed, especially as there was some further catch-up by the energy sector, which is now helping to continue the string of relative out-performance, just as it led to under-performance late in 2014, as it was in the throes of its decline.

Today begins the 3 days of employment related data that will be streaming in.

As I write this the ADP data has already been released and it is a little weaker than expected. Tomorrow’s Jobless Claims and Friday’s Employment Situation Report complete the story, but just as this morning’s ADP report, shouldn’t have too much influence on where the market will be going.

Later this morning will be the release of the counterpart to the ISM Manufacturing Index. The Non-manufacturing Index measures changes in the services sector.

Lately, despite logic telling us that both manufacturing and services should be growing, and perhaps even growing at a greater rate, that hasn’t really been the case and the continuing increase in employment and the extra money in people’s pockets from higher wages, growing employment and from their energy dividend, hasn’t been finding its way back into the economy in any measurable way.

While Wednesdays are usually quiet days and I don’t often make any new purchases during the latter half of the week, this week may be a little different, seeing as there haven’t been any so far this week. Although I knew that there wouldn’t be much activity as I wanted to conserve cash and hopefully add to it from week ending assignments, the hunt never ends.

While I do want to see my cash reserve grow right now and would be more interested in generating weekly income from existing positions, I’m not completely adverse to adding new positions. The big concern that I have right now, however, is related to the same thing that makes for some joy.

That is, the past 2 days.

While i
t’s great seeing the past 500 points get added, there’s till no escaping the reality that those kinds of moves, especially coming on the heels of some equally large declines, are not the sort of thing that you see in bullish runs.

Taking a wide angle look at things those large moves higher are typically seen as a part of a developing bear market and create a bull trap fr those getting in just to share in what they think will be the party to come.

“FOMO,” or the “fear of missing out,” can be just as deadly as greed and panic.

While I’ll be content to let things ride that can benefit from the ride, having seen a series of reversals over the past 6 weeks makes it hard to believe that the past two days are the real thing.

Instead, if the market can continue this sort of back and forth and do so with big moves in both directions, the beneficiaries will be those that can take advantage of the volatility.

If that volatility does rise and stay at elevated levels, you don’t have to create as many new positions to generate your income. All you have to do is try and trade your existing positions and rolling over as often as possible, taking advantage of the better and better premiums.

Daily Market Update – February 3, 2015 (Close)

Not a single trade yesterday, but at least there was some good news with the market’s turnaround after nearly a 200 point decline early in trading.

While the size of these gains, seeing multiple 200 point advances in the last 6 weeks, and not really seeing the market move any higher, should be good if you like volatility, the problem is the sheer size of those moves.

Granted that 200 points don’t mean as much at these record levels as it would have meant 5 years ago, but unusually large advances are typically seen during bear markets or leading up to them.

That’s part of the reason that I’m not overly anxious to add any new positions and would especially like to add to cash, instead.

Along with that I’d also especially like to simply add the protection that cover gives, as that protection also gets more rewarding as this kind of volatility continues or even increases.

Whether those 200+ point moves are indicative of a bear market around the corner is, however, irrelevant when enjoying the advance. By that measure, today’s advance was about 50% more enjoyable than yesterday’s, which is generally infinitely more enjoyable than a 200 point loss.

Today made two days of enjoyment in a row, as the market went above and beyond yesterday’s gains, but there still wasn’t too much opportunity to make trades.

This morning the pre-open futures was indicating some follow-up to yesterday’s large late day gain. That gain was one that just kept picking up steam in the final hour similar to that seen in the mid-afternoon on Friday, except that one ended up waving the white flag when no real reason for the advance in oil prices, which led the market’s advance, could be figured out and seemed to be either rumor driven or hedging driven.

There was no real reason for Monday’s turnaround either, although the good news for the day was that the news continues to not be so bad from the energy sector as they report earnings and the disappointment that’s being provided in forward guidance already seems to be factored in.

This morning the only real economic news of any importance was one that isn’t generally so important. After the morning’s trades begin Factory Orders are reported and oddly, given that we’re supposed to be in an expanding economy, those factory orders have been down for the past 4 months. Going down for a fifth consecutive month doesn’t really send a signal that the economy is humming along on all cylinders.

But as it turned out it didn’t really matter that it did show a fifth consecutive month of declines. Instead, what mattered was that oil prices continued to strengthen.

After two nice days, essentially the rest of the week focuses on jobs, with ADP statistics coming on Wednesday, Jobless Claims on Thursday and the big Employment Situation Report on Friday.

None of those should really have much of an impact on markets unless they contain some really big surprises.

If the numbers are too big, then the fear of the FOMC increasing interest rates sooner rather than later creeps in, but the bond market, which usually gets things right, was going in the opposite direction. That is until today when it rocketed higher.

Much higher.

As far as the Employment Situation numbers go If the number is too small, or if there are big adjustments downward, there comes the doubts about the story we’ve been all believing and investing in.

So while I would, at least theoretically, like to be participating in whatever rally may come our way this week, if yesterday and today’s good graces can continue, I’d rather be in a position to take advantage of any moves higher, regardless of for how long they may turn out to last.

At least while sitting and doing nothing I won’t find reason to complain if some catch up in the bottom line starts occurring, whether there’s a good reason for energy sector positions to be moving higher or not.

Daily Market Update – February 3, 2015 (9:00 AM)

Not a single trade yesterday, but at least there was some good news with the market’s turnaround after nearly a 200 point decline early in trading.

While the size of these gains, seeing multiple 200 point advances in the last 6 weeks, and not really seeing the market move any higher, should be good if you like volatility, the problem is the sheer size of those moves.

Granted that 200 points don’t mean as much at these record levels as it would have meant 5 years ago, but unusually large advances are typically seen during bear markets or leading up to them.

That’s part of the reason that I’m not overly anxious to add any new positions and would especially like to add to cash, instead.

Along with that I’d also especially like to simply add the protection that cover gives, as that protection also gets more rewarding as this kind of volatility continues or even increases.

This morning the pre-open futures is indicating some follow-up to yesterday’s large late day gain. That gain was one that just kept picking up steam in the final hour similar to that seen in the mid-afternoon on Friday, except that one ended up waving the white flag when no real reason for the advance in oil prices, which led the market’s advance, could be figured out and seemed to be either rumor driven or hedging driven.

There was no real reason for Monday’s turnaround either, although the good news for the day was that the news continues to not be so bad from the energy sector as they report earnings and the disappointment that’s being provided in forward guidance already seems to be factored in.

This morning the only real economic news of any importance is one that isn‘t generally so important. After the morning’s trades begin Factory Orders are reported and oddly, given that we’re supposed to be in an expanding economy, those factory orders have been down for the past 4 months. Going down for a fifth consecutive month doesn’t really send a signal that the economy is humming along on all cylinders.

After that report is made essentially the rest of the week focuses on jobs, with statistics coming on Wednesday, Thursday and the big Employment Situation Report on Friday.

None of those should really have much of an impact on markets unless they contain some really big surprises.

If the numbers are too big, then the fear of the FOMC increasing interest rates sooner rather than later creeps in, but the bond market, which usually gets things right, is going in the opposite direction.

If the number is too small, or if there are big adjustments downward, there comes the doubts about the story we’ve been all believing and investing in.

So while I would, at least theoretically, like to be participating in whatever rally may come our way this week, if yesterday’s good graces can continue, I’d rather be in a position to take advantage of any moves higher, regardless of for how long they may turn out to last.

AT least while sitting and doing nothing I won’t find reason to complain if some catch up in the bottom line starts occurring, whether there’s a good reason for energy sector positions to be moving higher or not.

Daily Market Update – February 2, 2015 (Close)

It’s good to see January over.

Even if you outperformed the market, the likelihood is that it was still a loss for the month, so that’s not too much solace. Although it’s really important to do better than the market during downturns, most people would still rather see their assets grow, even if lagging the index.

With oil still going to be an ongoing issue, as was clearly the case late Friday afternoon, as some rumors sent oil surging and momentarily took the market with it, right now there’s not much else that’s causing markets to move.

That may change if we ever start getting some evidence that all of the money that’s not being spent on energy is being spent on other things.

So far there hasn’t been too much indication of that as Retail Sales last month were less than expected and Visa and MasterCard are both saying that people are saving more and paying down debt instead of spending their newfound cash.

It will sill be another 3 weeks until the big guns of retail, such as Macys, Kohls and Target report their earnings, although Wal-Mart reports a week earlier. By the time they all report they will have had nearly 2 months of further evidence to help form their guidance for the next quarter, even as their earnings for the previous quarter may not have had much reason to celebrate decreased energy prices.

This week started with the usually unimportant “Personal Income and Outlays Report” that could show what, if any, increased consumer spending has been going on.

It didn’t though.

Consumers aren’t spending.

So all that really leaves this week is Friday’s  Employment Situation Report, although it doesn’t seem as if there’s much reason to expect that those results could send markets much higher at this point. On the other hand, if decreased energy drilling activity is spreading, there could be a much less than expected increase in new jobs creation, which could take markets lower and maybe even interest rates even lower.

With last week being another week of virtually no upward movement, other than a very brief interlude on Thursday, the assignments that I thought were going to happen never did materialize.

That means that I’m not too likely to add much in the way of new positions this week and I was hopeful that the early morning’s mild move higher in the futures translated into something more meaningful. With a handful of positions set to expire this week I would love to see them get assigned, but would still be happy if at least I got to roll them over, as was mostly the case last week.

If making any new purchases this week they are probably going to use this week’s expiration, in order to have a better chance of generating assignments and resultant cash to help fund next week’s potential purchas
es.

For the morning I was prepared to be in a watching mode, but didn’t really expect to be in that mode all day, as the market went back and forth without any real commitment to one side or the other, although it did recover nicely from what had been an early triple digit loss shortly after the open, despite the positive futures.

The rally heading into the close was a nice change from what 2015 has been about so far this year, although it does play into the over-riding theme of going back and forth and having large intra-day swings. The only differences were that this time it was a good swing and that good swing was sustained into the closing bell for a change

 After the past few weeks that have seen a nearly 5% decline despite repeated efforts to rally back, I’m not willing to simply accept that this most recent decline which has taken the S&P 500 below 2000 is going to be just as easily corrected as has been the case over the past month.

Today was one of those days that did attempt to do some repair of the past week and even of today’s earlier trading, but it will take more than today.

Any rally, if it does occur, will hopefully be an opportunity to generate some income from existing positions and keep holding on until that time comes that either energy prices start showing some rebound or GDP really does start moving higher and taking markets with it.

Today turned out to be an alright day, but not the day we were looking for.