Author Archives: TheAcsMan

Daily Market Update – January 15, 2015 (8:30 AM)

This morning brought more bad news, at least in the financial sector, as Citigroup and Bank of America added to yesterday’s disappointments from JP Morgan and Wells Fargo.

That’s a very tough way to get an earnings season underway. If the financial sector, specifically the major banks aren’t healthy, that casts a shadow on everything else, even if the lower revenues may be related to lower and lower interest rates, which may in turn be good for consumers and businesses.

But even as that significant bad news hits the wires this morning, the futures are still trading higher and it appears as if this morning will be different from the rest of this week’s openings.

The difference may simply be that oil is trading higher this morning after suddenly have turned higher late in yesterday’s session as energy options were expiring.

The question that was posed yesterday was whether that late climb would be lasting or whether it was due solely to those option expirations.

So far this morning those energy prices are again a little bit higher and that may be enough to prop the market up a little, as it has had three very bad days, despite yesterday’s oil related recovery late in the afternoon.

All that’s left for this week is to now try and dispose of whatever positions are set to expire this  week as getting prepared for the February 2015 option cycle.

In hindsight, it has helped.that of the 12 originally set to expire this week, 5 have already been rolled over and one assigned. That leaves this Friday as somewhat less important or critical if subject to the kind of declines as we’ve seen in the past three days, that would have put more positions out of contention for expiration or assignment.

Hopefully today will bring a break to the really terrible trading of the past three days that, if considering only the past 3 years, has brought about yet another sharp decline, in just the past month. Instead of what we have become used to, that is seeing a 5% decline every 2 months, we’ve now seen 3 of these declines in the past month, with the market now about 4% off from its high just 3 weeks ago.

In the meantime while the US economy seems to be improving, this week’s data suggesting that the improvement wasn’t resulting in more retail sales, added to falling energy and commodity prices points to a world economy that isn’t necessarily doing that well.

As long as this now remains an international effort, US companies and their stocks rely on more than the US economy to thrive, so while no one necessarily wants to pay more for oil or copper, it may be the key to the next catalyst to drive share prices higher if consumer spending doesn’t kick in soon.

Daily Market Update – January 14, 2015 (Close)

This morning was already getting off to a bad start as last night’s futures trading had the DJIA down nearly 100 points. Given the kind of reversal that we saw yesterday, the continuing weakness in the after hours futures market wasn’t very good.

This morning, when we could have expected a little bit of help from the earnings reports of both JP Morgan and Wells Fargo, that help didn’t come.and the market sold off even more.

Then came news of the Retail Sales Report, which isn’t usually that big of a deal, but this time it was.

That’s because people were expecting to see some evidence of increased consumer spending as people were supposed to be feeling richer from the drop in oil prices and then converting that feeling into spending.

I know that I was.

But according to those retail sales figures that wasn’t the case. That’s even though yesterday’s JOLT Survey showed that the majority of the new jobs created in 2014 were at wages that were above the average of all wages in the US, meaning that it was higher paying jobs that were being created and not just more burger flipper jobs.

But this morning the interpretation of all of that news was decidedly negative, as oil fell a bit more, as well, to start the trading day.

With today’s expected downturn, it was reasonable to believe that this may have ended up being the lightest trading week in a long while, as the added downturn, after the first two weak days already encountered, made the ability to rollover positions more out of reach and also made it less likely that new call positions will be sold on existing uncovered positions.

It’s not lost on me that it has been the Gold Miners ETF (GDX) options that have seen a lot of trading activity lately. That’s generally not a very healthy sign when you see that proxy for precious metals bouncing back and forth. Certainly that kind of bouncing has also been seen in the broader market, but when you see it in that very speculative sector it demonstrates lots of uncertainty among those that generally thrive in uncertainty and chaos.

I actually tried to get yet another rollover in those shares done today, trying to match last week’s two rollovers of that position.

The market opened really weakly this morning as the preliminary earnings from JP Morgan and Wells Fargo were disappointing. You generally need strong performance from the financial sector to have a strong market. Those two banks represent very different markets and so together they send a powerful message when reporting in tandem. That message can be one speaking of a strong economy or one of a weak one.

Today it was on the weak side.

But later this week we also hear from Goldman Sachs and they could offer some saving grace.

Daily Market Update – January 14, 2015 (9:00 AM)

This morning was already getting off to a bad start as last night’s futures trading had the DJIA down nearly 100 points. Given the kind of reversal that we saw yesterday, the continuing weakness in the after hours futures market wasn’t very good.

This morning, when we could have expected a little bit of help from the earnings reports of both JP Morgan and Wells Fargo, that help didn’t come.and the market sold off even more.

Then came news of the Retail Sales Report, which isn’t usually that big of a deal, but this time it was.

That’s because people were expecting to see some evidence of increased consumer spending as people were supposed to be feeling richer from the drop in oil prices and then converting that feeling into spending.

But according to those retail sales figures that wasn’t the case. That’s even though yesterday’s JOLT Survey showed that the majority of the new jobs created in 2014 were at wages that were above the average of all wages in the US, meaning that it was higher paying jobs that were being created and not just more burger flipper jobs.

But this morning the interpretation of all of that news is decidedly negative, as oil falls a bit more, as well, to start the trading day.

With today’s likely downturn, this may end up being the lightest trading week in a long while, as the added downturn, after the first two weak days already encountered, makes teh ability to rollover positions more out of reach and also makes it less likely that new call positions will be sold on existing uncovered positions.

It’s not lost on me that it has been the Gold Miners ETF (GDX) options that have seen a lot of trading activity lately. That’s generally not a very healthy sign when you see that proxy for precious metals bouncing back and forth. Certainly that kind of bouncing has also been seen in the broader market, but when you see it in that very speculative sector it demonstrates lots of uncertainty among those that generally thrive in uncertainty and chaos.

The preliminary earnings from JP Morgan and Wells Fargo are disappointing, as you generally need strong performance from the financial sector to have a strong market. Those two banks represent very different markets and so together they send a powerful message when reporting in tandem.

Later this week we also hear from Goldman Sachs and they could offer some saving grace.

It will still be a few weeks before we start to hear from the major retailers, but today’s Retail Sales Report makes it less likely that they will be able to report earnings that reflect any significant increase in consumer spending. However, they will have had the advantage of seeing a few weeks of data after the close of the quarter that may indicate whether any trend in increased spending is developing
.

If it is and ends up being part of a more optimistic pattern of forward guidance, the market may respond very positively.

In the meantime, if those sales aren’t there and there is no upward pressure on prices, the likelihood of an interest rate coming from the FOMC is reduced, and that can be a positive for the markets.

For the rest of the week, though, it may be a case of strapping in and hanging on to see whether fear or opportunism takes hold.

Daily Market Update – January 13, 2015 (Close)

This morning was getting off to the same kind of start that yesterday did.

That’s not necessarily a good thing.

Yesterday the pre-open futures got off to a triple digit gain and then saw some slight erosion of those advances before the opening bell.

It then only took a few minutes to see those gains all lost and we ended up the day with a triple digit loss.

This morning, the early triple digit gain in the futures had also eroded just a bit, but hopefully the similarity would end there, was my thought as sipping coffee.

Yesterday, the culprit was said to be oil prices, which continued their decline.

This morning that decline goes even further as OPEC has reiterated its decision to not curtail production.

The difference between yesterday and today’s early trading may be the good earnings news that Alcoa provided after the closing bell.

There’s going to be lots more news coming this week, predominated by bank earnings.

While the economy needs good earnings from its banks, they don’t necessarily tell the story of how the other sectors will perform. There have been a number of quarters over the past few years where the banks have done very well, while everyone else fell behind. Had it not been for the impact of unprecedented buy backs over these past few years and the continuing reliance on the “EPS” metric, some of those quarters would have been abysmal.

Another factor that can potential propel today’s market is the morning’s JOLT Survey.

A few months ago we were all told by Janet Yellen to pay more attention to this report, which indicates the willingness of people to give up the security of their jobs in the expectation that they can find something even better.

That’s an optimistic thing if that’s what’s indicated by the report, but ever since Janet Yellen told us to pay attention to it, we’ve only done so right after she told us, having ignored its data for the past two months.

Regardless of what would be in this month’s report, even if spectacular, its impact will disappear by the time the next economic report is delivered.

Instead, the earnings reports may offer something every day for the next couple of weeks to move us forward.

Still, I didn’t think that there will be much opportunity to do trading today, but would have gladly accepted any if it came my way. While I always want to open new weekly positions and was disappointed that I couldn’t get some of those trades done yesterday, there’s usually something more satisfying about being able to generate the income with what you already have in hand.

My hope was that satisfaction wouldn’t be in short supply, but it was.

What wasn’t expected was that a 250+ point gain would degenerate into about a 140 point loss at its lowest point, representing one of the largest reversals we’ve seen in a while, although lately those reversals have been more frequent.

Yesterday’s decline moved some of those opportunities to get rollovers done and new call sales executed further away, but that was exactly the situation last week, as well and that turned out nicely.

After today’s really negative action, even though the net result is now just like last week, the reversal is in the wrong direction if you’re a bull.

Last week the first two days of the week were really, really bad, but then a reversal came and the middle of the week was a completely different story.

Nothing would be more welcome right now than a repeat of the middle part of last week and seeing a couple of strong days in succession and providing the opportunity to get those rollovers and call sales done, even if no new positions are open.

With volatility a little bit higher, there may be reason to look at some expanded option opportunities, but now earnings also have to be kept in mind.

It’s just too bad that today wasn’t the start of those successive days moving higher, but we still have the possibility of stringing three of those together to end the week and it’s no less bleak than it was this time last week.

Daily Market Update – January 13, 2015 (8:45 AM)

This morning is getting off to the same kind of start that yesterday did.

That’s not necessarily a good thing.

Yesterday the pre-open futures got off to a triple digit gain and then saw some slight erosion of those advances before the opening bell.

It then only took a few minutes to see those gains all lost and we ended up the day with a triple digit loss.

This morning, the early triple digit gain in the futures has also eroded just a bit, but hopefully the similarity ends there.

Yesterday, the culprit was said to be oil prices, which continued their decline.

This morning that decline goes even further as OPEC has reiterated its decision to not curtail production.

The difference between yesterday and today may be the good earnings news that Alcoa provided after the closing bell.

There’s going to be lots more news coming this week, predominated by bank earnings.

While the economy needs good earnings from its banks, they don’t necessarily tell the story of how the other sectors will perform. There have been a number of quarters over the past few years where the banks have done very well, while everyone else fell behind. Had it not been for the impact of unprecedented buy backs over these past few years and the continuing reliance on the “EPS” metric, some of those quarters would have been abysmal.

Another factor that can potential propel today’s market is the morning’s JOLT Survey.

A few months ago we were all told by Janet Yellen to pay more attention to this report, which indicates the willingness of people to give up the security of their jobs in the expectation that they can find something even better.

That’s an optimistic thing if that’s what’s indicated by the report, but ever since Janet Yellen told us to pay attention to it, we’ve only done so right after she told us, having ignored its data for the past two months.

Regardless of what will be in this month’s report, even if spectacular, its impact will disappear by the time the next economic report is delivered.

Instead, the earnings reports may offer something every day for the next couple of weeks to move us forward.

Still, I don’t think that there will be much opportunity to do trading today, but would gladly accept any if it comes my way. While I always want to open new weekly positions and was disappointed that I couldn’t get some of those trades done yesterday, there’s usually something more satisfying about being able to generate the income with what you already have in hand.

Hopefully that satisfaction won’t be in short supply.

Yesterday’s decline moved some of those opportunities to get rollovers done and new call sales executed further away, but that was exactly the situation last week, as well and that turned out nicely.

In that case, that was the situation for the first two days of the week and then the middle of the week was a completely different story.

Nothing would be more welcome right now than a repeat of last week and seeing a couple of strong days in succession and providing the opportunity to get those rollovers and call sales done, even if no new positions are open.

With volatility a little bit higher, there may be reason to look at some expanded option opportunities, but now earnings also have to be kept in mind.